Palisades Nuclear Power Plant to continue operations until 2022

Despite an earlier decision to close the Palisades Nuclear Power Plant on Oct. 1, 2018, Entergy Corporation said on Thursday it has reversed that decision and plans to continue operations until spring 2022.

The decision was the direct result of the actions of the Michigan Public Service Commission (MPSC). Consumers Energy, which has a Power Purchase Agreement (PPA) with Entergy and Palisades, had sought to buy its way out of the agreement early. However, the MPSC earlier this month approved less than the full $172 million in securitization funding Consumers Energy had requested for the task.

“In light of the Michigan Public Service Commission’s order issued September 22, which granted Consumers Energy recovery of only $136.6 million of the $172 million it requested for the buyout of the PPA, the parties have agreed to terminate the buyout transaction,” Charlie Arnone, site vice president and Entergy’s top official at Palisades, said.

Entergy still plans to exit the business in the future, but the delay now means, according to Arnone, that the Covert, Michigan, site will continue to be invested in and maintained with necessary staff as required under licensing. Entergy had indicated previously that, were the plant to close, opportunities for relocation or aiding in the shutdown work would be made available to existing staff.

The MPSC also reacted to the announcement.

“The commission will continue to work with Consumers Energy on its long-term power supply planning under Michigan’s new energy laws passed in 2016,” Sally Talberg, chairman of the MPSC, said in a statement provided to Daily Energy Insider. “This ongoing planning process will engage stakeholders and explore options to meet our energy needs in an affordable, reliable manner while protecting the environment.”

Since the planned closure was first announced, the Michigan Agency for Energy (MAE) has been planning with local officials how best to adapt – a process that will continue, even with the timetable bumped back.

“Today’s announcement that the Palisades nuclear plant will not be closing until Spring 2022 is
good news for workers at the plant and their families,” Valerie Brader, executive director of
MAE, said. “But that does not mean that local officials can put off making difficult decisions about how to prepare for life without the nuclear plant and the tax dollars it pumps into the local economy.”

As a result of the decision, Entergy also announced that it no longer expects fuel, refueling outage costs and capital expenditures to be as high as expected under the early termination of the PPA. Those expenses will instead depreciate over time, and in the end, the company expects a $100 million to $150 million free cash flow as a result of the arrangement. This also means the $10 million Consumers Energy and Entergy had planned to provide to help lessen the impact of an early Palisades closure will no longer be made available.

In December 2016 when Entergy had first announced it would terminate the PPA for the plant early, the company had said market conditions had changed substantially, and more economic alternatives were available to provide reliable power to the region.

The Palisades plant employs about 600 workers and has been generating electricity since 1971.