Palisades to operate to 2022

29 September 2017

Entergy Corporation has reversed its December 2016 decision to close the Palisades nuclear power plant in 2018, the company announced yesterday. The Michigan plant will now operate under an existing power purchase agreement (PPA) with Consumers Energy until the spring of 2022.

Palisades (Image: Palisades Power)

The earlier decision to close the single-unit 798 MWe pressurised water reactor plant was linked to the early termination of the PPA, which had been due to expire in 2022. The closure decision, and the termination of the PPA, were both subject to regulatory approvals.

The Michigan Public Service Commission on 22 September approved Consumers Energy's request to the early termination of the PPA, but granted it recovery of only $136.6 million of the $172 million it had requested for the buyout. Palisades site vice president Charlie Arnone said the two parties have agreed to terminate the buyout transaction in light of the commission's decision.

"We greatly appreciate the continued patience of our employees and the local community in Southwest Michigan throughout this regulatory process, and we will continue to focus on the plant’s safe and reliable operations," Arnone said, adding that Entergy will continue to "make all necessary investments and maintain appropriate staffing" at the plant in accordance with licensing standards.

Palisades was built by Consumers Energy and was connected to the grid in December 1971. Entergy purchased the plant in 2007 for a total of $380 million - $242 million for the plant itself, $83 million for nuclear fuel stocks and $55 million for other assets such as spare parts. At the same time, it entered into the PPA committing it to selling back the plant's output to Consumers Energy until April 2022, a period of 15 years.

By December 2016 the two companies had decided the remaining cost of the Palisades PPA was higher than the projected costs of purchasing energy on the market. This led to their agreement to terminate the PPA in 2018, with Consumers Energy compensating Entergy for the early termination. Upon termination of the contract, Entergy would shut down Palisades in October 2018. At the time, Entergy estimated that closure of Palisades would result in expected savings of $344 million between 2018 and 2022.

Entergy's generating portfolio includes ten nuclear units in seven states. The company is committed to a strategy of exiting the merchant nuclear power business, in which the short-term nature of deregulated electricity markets, coupled with competition from low-cost gas and federally subsidised wind power, have left some otherwise well-performing US nuclear plants at risk of premature closure for economic reasons.

Palisades is currently licensed to operate until 2031 and is the smallest of Michigan's three operating nuclear power plants. The others are the two-unit DC Cook, owned and operated by American Electric Power, and DTE Energy's single-unit Fermi 2, operated by Detroit Edison.

Researched and written
by World Nuclear News