The owner of Vermont Yankee needs to provide “updated and independent” cost estimates for decommissioning its Vernon nuclear power plant, because both the technical data and underlying financial assumptions in a 2007 analysis are inaccurate and outdated.

That’s the chief recommendation of a new report, prepared for the Vermont legislature’s Joint Fiscal Office and Joint Fiscal Committee, by two of the state’s leading experts on nuclear power. In their report - highlights of which were outlined in an interview with Seven Days - Arnie and Maggie Gundersen raise questions about the decommissioning plan prepared for Entergy Nuclear Vermont Yankee by its own consulting firm, TLG Services.[*]

“The whole TLG report is wrong,” charges Arnie Gundersen of Fairewinds Associates, a Burlington consulting firm hired by the legislature to scrutinize VY’s decommissioning plans. “So, we’re going down the road based on no good information on what it’s going to cost to decommission this plant.”

Gundersen’s report is the second of three that Fairewinds has prepared for the JFO and JFC.

A former nuclear industry insider, Gundersen claims there’s a new methodology for dismantling defunct reactors since TLG submitted its last decommissioning report in 2007. The updated approach, which is being used to dismantle the Zion Nuclear Power Station just north of Chicago, dramatically reduces the cost estimates for decommissioning. But the projected quantity of resulting radioactive debris works out to be much greater than originally anticipated.

If Gundersen’s claim is correct, there may not be enough room at the west-Texas nuclear-storage dump to accommodate Vermont Yankee’s waste — especially since a judge ruled last week that the facility can accept low-level radioactive waste from 36 other states. The Texas site may eventually run out of usable “real estate” — that is, reach its legal capacity for total radioactivity — before the facility is fully dismantled, notes Gundersen, who has decommissioned nuke plants before. He says the process will take at least 10 years, even if it begins the day the plant closes.

Vermont Yankee’s 40-year license is due to expire next year. Both the Vermont legislature and newly elected Gov. Peter Shumlin have expressed opposition to Entergy’s application to renew the plant’s license for another 20 years.

This week’s report by Fairewinds Associates also raises doubts about the financial soundness of Vermont Yankee’s decommissioning fund.

In December 2007, Fairewinds released a “white paper” predicting that there may not be enough money in the decommissioning fund to dismantle the plant when it reaches the end of its usable life.

The global recession didn’t help. The fund lost about $100 million over the course of two years, but has since recovered.

Last fall, in response to a legislature directive, Vermont State Auditor Tom Salmon released the results of a three-year audit that declared the decommissioning fund was financially sound. However, Gundersen claims he’s since been in touch with a high-level trust banker from a “well-respected financial institution” who’s voiced serious doubts about the findings of Salmon’s audit.

The banker, who asked to remain anonymous, told Gundersen he’s concerned about the level of risk exposure in one of the three investment funds that make up the larger decommissioning portfolio.

Although in the report he concedes that “the assets appear to be housed in a safe location,” the banker warns, “there is no disclosure of the individual equities. I do find this odd. At the minimum I think the state should have in their files a list of the individual holdings at regular intervals. Without this, it is very difficult to benchmark performance or to get a sense of risk.”

A more glaring discrepancy in TLG Service’s 2007 decommissioning cost analysis is a projected $200 million expense for storing spent reactor fuel, which must be stored on-site indefinitely. Entergy officials have since acknowledged they can sue the U.S. Department of Energy to recoup those spent-fuel storage costs, since the federal government never opened the Yucca Mountain nuclear waste repository in Nevada. Gundersen says it’s unclear how current decommissioning estimates would be affected by that legal change.

The Fairewinds report recommends that a new, independent consulting firm unconnected to Yankee or its corporate parent, Entergy, prepare the updated decommissioning analysis. TLG, a nationally recognized nuclear decommissioning firm, was bought by Entergy in 2002.

Yankee spokesperson Larry Smith says he cannot comment on any of the Gundersens’ claims until the report is made public and company officials have an opportunity to review its contents. Nevertheless, Smith says that last week’s decision by the Low-Level Radioactive Waste Disposal Compact Commission in Texas to accept waste from other states shouldn’t affect Vermont Yankee’s decommissioning plans.

Many of the Gundersens’ predictions about Vermont’s aging reactor have come to pass.

For example, in 2003, when Yankee asked state regulators for permission to increase their power output by 20 percent, Arnie Gundersen warned that such an “uprate” would increase radiation levels exponentially at the facility’s fence line, posing a potential public-health threat. He also warned that the extra stress on the system caused by running the plant 20 percent harder could cause a cooling tower to collapse. Both observations later proved prescient.

Similarly, in July 2009, Gundersen challenged Entergy officials’ repeated claims that Vermont Yankee had no underground pipes that carry radioactive water. Several weeks later, elevated levels of radioactive tritium began showing up in underground monitoring wells.

Gundersen cannot say whether Entergy’s cost estimates for the eventual dismantling of Vermont Yankee are too low or too high; as he points out, official estimates now range from less than $550 million to more than $900 million.

But regardless of the final price tag, he says, a new analysis is needed so as to clarify exactly what lawmakers are debating — in 2011 dollars.