Thomas Gardiner
The Palisades Power Plant in Michigan will remain operational more than three years longer than planned, to spring 2022, owner and operator Entergy announced Thursday following the mutual termination of plans for state utility Consumers Energy to buy the companies’ power purchase agreement.
The announcement comes less than a week after the Michigan Public Service Commission determined Consumers Energy would only have access to about $136 million in bonds for the contract buyout, roughly $35 million less than requested.
“After careful review, Consumers Energy and Entergy have mutually agreed that moving ahead under the terms of our current agreement through 2022 is the best path forward,” Consumers Energy spokeswoman Katie Carey in a prepared statement.
The Palisades plant supplies electricity to Consumers Energy under the terms of the power purchase agreement dating to Entergy’s 2007 purchase of the facility from the state utility. Had the agreement buyout gone through, Entergy planned to shut down the single Palisades reactor in October 2018 in the face of changing market conditions and less-expensive energy options.
At full capacity, Palisades can power more than 800,000 homes. The companies have contractual obligations under the current PPA that keep the plant operating until its end date in 2022. The now-terminated buyout agreement would have released Entergy from obligations it could begin decommissioning the facility in 2018.
According to a press release from the Michigan PSC following last week’s decision, the commission strongly emphasized the need for Consumers Energy to secure electrical capacity to replace the 800 megawatts of power currently provided by Palisades.
In a press release, Entergy said the decision could provide an additional $100 million to $150 million in cash flow for the company compared to the contract buyout agreement with Consumers Energy. Entergy also said it expects costs from refueling outages and other capital expenditures to decrease during the remaining years of operation.
Entergy spokesman Jerry Nappi said a restructured operations schedule plays a big role in liberating those funds.
“We are continuing to operate under the current PPA where customers pay for power generated. We are also moving from the originally planned three refueling outages. We will extend the fuel operating cycle which allows us to cut down to two outages,” he said.
With one fewer outage, Entergy won’t lose revenue when the plant would be offline and won’t incur additional costs for labor and time spent exchanging fuel assemblies.
Entergy does have a dry-storage pad for long-term storage of used fuel at Palisades. It was not immediately clear how much waste is currently in dry cask or wet storage at the site. Entergy did not provide figures for expected added waste from continued operations before Palisades closes its doors for good.
U.S. Rep. Fred Upton (R-Mich.) quickly released a statement in support of the decision.
“I am delighted to hear the news. As a long-time supporter of safe, reliable, and secure nuclear energy, my goal all along was to make certain there was never any political interference with the operations of our nuclear facilities. I will continue to support an ‘all-of-the-above’ energy strategy that includes the safe operation of our nuclear facilities,” he said.
Accelerated Decommissioning Partners, a joint venture of AREVA Nuclear Materials and NorthStar Group Services, had been studying the feasibility of purchasing Palisades to decommission the plant.
The deal would presumably be structured similar to NorthStar’s planned stand-alone purchase from Entergy of the Vermont Yankee nuclear power plant, in which the new owner would carry out decommissioning and site restoration and then retain a portion of what remains in the trust funds for those operations.
The company is ready to discuss prompt decommissioning whenever a utility makes a final shutdown decision, AREVA spokesman Curtis Roberts said Thursday.
ADP is said to be working on a similar strategy for buying Entergy’s Pilgrim nuclear power plant in Massachusetts.
“We are in discussions with multiple facility owners to apply ADP’s unique model and industry-leading capabilities to promptly decommission and restore sites throughout the country,” Roberts said.
