The Palisades nuclear power plant in Covert Township, Michigan in 2010. Credit: John Madill/The Herald-Palladium via AP, File

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Entergy plans to shut down the Palisades nuclear plant in spring of 2022, fulfilling its current power purchase agreement with a Michigan utility, the company announced today.

The decision extends the life of the plant, which Entergy had said in December that it planned to close in 2018.

The announcement follows a decision last week by Michigan regulators to allow Consumers Energy less than it had asked for to terminate its contract with the plant. The Michigan Public Service Commission approved a $142 million securitization plan for buying out the remainder of the power purchase agreement, while Consumers had sought $184.6 million.

“After careful review, Consumers Energy and Entergy have mutually agreed that moving ahead under the terms of our current Palisades’ Power Purchase Agreement through 2022 is the best path forward,” Consumers spokesperson Katie Carey said in a statement. “We appreciate the thoughtful, deliberate approach by all parties during the process, and remain committed to delivering affordable, reliable, safe and clean energy to our customers across Michigan.”

Of the $142 million plan approved by regulators, $136.6 million was for the buyout of the power purchase agreement. Consumers originally proposed to pay Entergy $172 million to terminate the contract early. Consumers would have been allowed to recover the costs of the buyout through surcharges on electric customers’ bills for roughly six years.

Until the MPSC decision last week, the companies had maintained that the power purchase agreement would be more expensive than a buyout and purchasing capacity on the market.

However, Entergy spokesperson Kay Jones told Midwest Energy News that “Palisades will gain economic advantages by continuing to generate revenues under the current (power purchase agreement) beyond Oct. 2018 and extending the plant’s operating cycle from 18 to 21 months, which reduces the number of required refueling outages from three to two until permanent shutdown.”

The company expects the decision to be cash-flow positive by $100 million to $150 million.

Despite the longer operational period for Palisades, Entergy says it “remains committed to its strategy of exiting the merchant nuclear power business,” as it has done in Vermont, Massachusetts and New York.

Following the December announcement to close Palisades early, questions were raised over whether Michigan would be able to maintain capacity requirements after losing the 811 MW plant. Consumers had said it planned more investments in energy efficiency and demand response; accelerating the development of a wind project in eastern Michigan and buying an existing natural gas plant.

While the MPSC determined the Midwest region had adequate electricity supplies for at least the next five years, it encouraged the utility to continue pursuing replacement supply.

“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,” MPSC chair Sally Talberg said in a statement today. “This ongoing planning process will engage stakeholders and explore options to meet our energy needs in an affordable, reliable manner while protecting the environment.”

While Palisades will continue to operate for another five years, the state — through the Michigan Agency for Energy — wants to ensure the local communities are still prepared for the loss of a major employer.

Valerie Brader, executive director of the Michigan Agency for Energy, said in a statement that it is urgent for neighboring communities to plan ahead for the closure.

“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. 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.”

Brader said state agencies “are eager” to partner with local leaders and philanthropy to mitigate the impact.

Andy Balaskovitz

Andy compiles the Midwest Energy News digest and was a journalism fellow for Midwest Energy News from 2014-2020. He is managing editor of MiBiz in Grand Rapids, Michigan, and was formerly a reporter and editor at City Pulse, Lansing’s alternative newsweekly.