The operator of one of Michigan’s nuclear plants will shut it down earlier than expected after reaching an agreement with Consumers Energy to cut its power purchase agreement short.
The Palisades nuclear plant on the shore of Lake Michigan will shut down on Oct. 1, 2018, according to a news release from Entergy. Previously, Consumers Energy’s contract with the plant wasn’t set to expire until 2022.
The decision is contingent on approval by the Michigan Public Service Commission
Entergy says the closure will save Consumers ratepayers $172 million over the next four years. The company has recently closed or plans to sell plants in Vermont, Massachusetts and New York.
“Given the financial challenges our merchant power business faces from sustained wholesale power price declines and other unfavorable market conditions, we continually evaluate our portfolio of assets and review financial projections to determine their retention, sale or closure,” spokesperson Val Gent told Midwest Energy News earlier this month.
The decision comes close on the heels of Illinois Gov. Bruce Rauner signing a bill providing subsidies to nuclear plants in that state. Closing the Illinois plants would have affected the Midcontinent Independent System Operator’s reserve margin – and Michigan, which depends on imports during the summer.
“Since Michigan is currently dependent on imports to meet reliability requirements, we’ve been watching with interest what’s happening in Illinois,” said Valerie Brader, director of the Michigan Agency for Energy, in an interview last month.
Brader has also said that the Palisades plant “has reliability implications for Michigan.”
In August, the state asked MISO to study Michigan’s reliability in emergency situations, particularly if Palisades and the state’s Fermi 2 nuclear plant were to shut down simultaneously as they did in the summer of 2012. The first phase of that study is expected to be completed in spring 2017.
The Palisades plant employs about 600 workers, and Entergy along with the Consumers Energy Foundation plan to spend $10 million on economic development in the surrounding community.
“Entergy is committed to treating our employees fairly throughout this process and will assist employees who want to relocate within Entergy or leave the company,” said Bill Mohl, president of Entergy Wholesale Commodities, a business unit within Entergy.
The plant has had a history of safety violations, prompting heightened scrutiny from federal regulators in 2012. This summer, 22 security guards at the plant were suspended after the company says they fabricated fire inspection records.
Whether or how the generation from Palisades will be replaced isn’t clear. DTE Energy has filed for a license extension for its Fermi 2 plant through 2045 and has obtained a license to build a third reactor at the site.