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After years of litigation and political jousting, Vermont is set to close its only nuclear power plant by the end of next year. As John Dillon of Vermont Public Radio reports, the plant's closure is a sign of how much the country's energy market is changing.

JOHN DILLON, BYLINE: Vermont Yankee is located on the banks of the Connecticut River, close to the Massachusetts border. The reactor went on line in 1972, and its end comes as the state and the Entergy Corp. were locked in a lengthy legal battle over its continued operation. William Mohl, Entergy's president of nuclear operations, delivered the news Tuesday morning to the plant's workers. He blamed the closure on the energy market, not the ongoing fight with the state.

WILLIAM MOHL: This decision was based on the economics of the plant - not operational performance, not litigation risk nor political pressure. Simply put, the plant costs exceed the plant revenue, and this asset is not financially viable.

DILLON: The Yankee plant is the same General Electric model as the reactors in Fukushima, Japan, that were disabled and damaged by an earthquake and tsunami in 2011. In the wake of Fukushima, Entergy was facing expensive modifications that will be required by the federal government to improve safety.

The debate over the future of the Vermont Yankee nuclear plant went from the state legislature to a federal appeals court. Entergy successfully challenged two state laws in federal court that would have forced the plant to close. But financial experts say in the end, it was low natural gas prices that doomed the 41-year-old reactor.

Julien Dumoulin-Smith is an energy analyst with UBS Financial Services. He says competition from power plants in New England fired by abundant, cheap natural gas cut deeply into Entergy's margins; and, he says, the problems facing Vermont Yankee also plague other older reactors.

JULIEN DUMOULIN-SMITH: This is likely a bellwether, as far as it goes, for the nuclear industry. In some senses, this is the first - or perhaps the second - of a large wave of potential nuclear plant retirements in this country.

DILLON: The news stunned people in southern Vermont who've long seen the plant as a stable source of both taxes and high-paying jobs. Laura Sibilia is with a local economic development corporation. She says Yankee's shutdown is a serious financial setback, especially since the region is still recovering from the devastation inflicted by Tropical Storm Irene two years ago.

LAURA SIBILIA: It's a little like whoo - you know, enough with the body blows, please. The good news is, I think we have proven ourselves worthy to coming up to big challenges like this.

DILLON: Entergy has 60 years to decommission the plant, under a plan approved by the Nuclear Regulatory Commission. The time will allow Entergy to accumulate money in a fund set up to pay for dismantling and cleaning up the site. Vermont Gov. Peter Shumlin says he wants to speed up that timetable so the plant's site can be used for industry or for another power station.

GOVERNOR PETER SHUMLIN: The sooner that we can return that to a green field, so that we can use the extraordinary resources there - the transmission - to help power our green energy future, the better off for Vermont in terms of jobs.

DILLON: The decommissioning issue may lead to another fight between Entergy and the state. Vermont wants more money to clean up the site, and lawmakers may try to raise that through taxes on Vermont Yankee.

For NPR News, I'm John Dillon in Montpelier, Vt.

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This is ALL THINGS CONSIDERED, from NPR News. Transcript provided by NPR, Copyright NPR.

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