* ISO grants Entergy request to exit power auctions
* Local power companies upgrade transmission system
* Vermont continues court battles to shut reactor
By Scott DiSavino
Dec 10 (Reuters) - Entergy Corp's Vermont Yankee nuclear power plant is no longer needed to maintain power reliability in New England because local electric companies have bolstered the region's transmission infrastructure, the region's power grid said.
ISO New England, which operates the power grid for the six New England states, told Reuters it has determined the capacity from Vermont Yankee is not needed to support grid reliability in the 2013-2016 timeframe.
To make certain there is enough energy capacity available in future years, the ISO holds annual forward-capacity auctions to secure generation and other resources needed to meet expected future power usage.
In 2010, 2011 and 2012, Entergy sought to keep Vermont Yankee out of the capacity auctions because the company was battling to keep the reactor operating after 2012. Vermont's governor and other state officials want to shut the 40-year-old reactor, citing environmental and safety concerns.
The ISO in the past denied Entergy's request to delist Vermont Yankee from the 2010 forward capacity auction number 4 and the 2011 auction number 5 because the grid operator determined the plant was needed to keep the grid reliable.
Auction 4 represents a one-year capacity supply obligation from June 1, 2013-May 31, 2014, and auction 5 is an obligation for the same period in 2014-2015.
The ISO in 2012 allowed Entergy to delist Vermont Yankee from forward capacity auction 6 (for 2015-2016) because local power companies were expected to bolster their infrastructure enough to keep the grid reliable without the reactor.
Vermont Yankee is located in Vernon in the southeast corner of the state near the New Hampshire and Massachusetts border.
ISO New England told Reuters the grid operator decided to let Vermont Yankee out of auction 4 in May 2012 and auction 5 in November 2012.
Now that the ISO has accepted Entergy's request to keep the reactor out of the auctions, Entergy could lose millions in guaranteed future revenue. But the company would not be on the hook for providing capacity in the event that the state was successful in its efforts to shut the reactor.
The prorated capacity prices were $2.52 per kilowatt-month for auction 4 and $2.86 per kilowatt-month for auction 5.
Assuming the ISO accepted the entire 620-megawatt capacity of Vermont Yankee in those auctions; Entergy would have received about $1.6 million a month in 2013-2014 for auction 4 and about $1.8 million a month in 2014-2015 for auction 5.
Entergy would not comment on the financials but said it could still sell capacity from the plant in the future.
The plant's capacity may no longer be needed for reliability but its supporters say the reactor continues to provide enormous environmental and economic benefits to the region.
"Vermont Yankee provides hundreds of good-paying jobs and generates lots of energy without producing carbon dioxide. When the reactor is running, you don't need to run so many fossil plants," Howard Shaffer of the American Nuclear Society's Vermont Grassroots project told Reuters.
Last week, ISO New England warned the grid may be forced to rely on the region's underused older coal and oil-fired plants if extreme cold weather causes problems with natural gas supplies.
To keep Vermont Yankee running, Entergy must overcome several more efforts by Vermont and others to shut the reactor.
Last week, the New England Coalition, an anti-nuclear public interest group, filed with the Vermont Supreme Court to shut the reactor after the state Public Service Board denied Entergy's motion for relief.
In its motion, Entergy asked the Board to modify a condition in the reactor's existing certificate of public good that required the company to obtain a new certificate or shut the reactor by March 21, 2012 when its original 40-year operating license expired.
Over the last several years, Entergy sought to renew the plant's federal operating license and state certificate, but state politicians blocked the company's efforts.
After the NRC granted the new 20-year license in 2011, Entergy sued to block the state from shutting the reactor.
A federal judge in January 2012 ruled the state could not shut the reactor in March 2012, but said Entergy still needed to get a certificate of public good from the Public Service Board.
The state has appealed the federal judge's decision.
The Public Service Board is expected to decide on the certificate of public good in the autumn of 2013.