Entergy to close Palisades NPP

13 December 2016

US Entergy Corporation said on 8 December that it plans to close the Palisades NPP in Michigan by 1 October 2018, and has also agreed to the early termination of an agreement under which Consumers Energy was to buy almost all of the Michigan plant's output until 2022.  Entergy bought Palisades from Consumers Energy in 2007 for $380m. This comprised $242m for the plant, $83m for nuclear fuel stocks and $55m for other assets including spare parts. The company also entered into a power purchase agreement (PPA) committing it to selling the plant's output to Consumers Energy until April 2022. Both the early termination of the PPA and the closure of the plant are subject to regulatory approvals.

Palisades is a single unit 798MWe pressurised water reactor, which began commercial operation in December 1971 and is currently licensed to operate until 2031. It is the smallest of Michigan's three NPPs - the others are the two-unit DC Cook plant and the single-unit Fermi 2. The state generated 25.7% of its energy from nuclear in 2015, according to the US Energy Information Administration.

Energy said that, since then, market conditions have changed "substantially" and "more economic alternatives are now available" to provide power to the region. Closing the plant is expected to achieve savings of $344m over the early termination period from 2018 to 2022. "We determined that a shutdown in 2018 is prudent when comparing the transaction to the business risks of continued operation," Entergy chairman and CEO Leo Danault said.

Consumers Energy, a subsidiary of CMS Energy, is seeking approval from the Michigan Public Service Commission to terminate the PPA from 31 May 2018, and a new PPA will be signed under which the plant will continue to operate until 1 October 2018. Entergy is to notify power grid operator, Midcontinent Independent System Operator, and the Nuclear Regulatory Commission of its intent to permanently shut down and decommission the plant. If regulatory approvals are granted, Palisades will be refuelled as scheduled in the spring of 2017 and will then operate through to the end of its fuel cycle on 1 October 2018.

Entergy will recognise a non-cash pre-tax impairment charge of about $390m in the fourth quarter of this year as a result of the agreement to terminate the PPA and close Palisades. It expects to record additional charges of about $55m related to severance and employee retention costs over the period to the end of 2018. Consumers Energy said regulatory approval of the PPA's early termination would lower customer costs by up to $172 m. Investment in clean energy, reliability and demand reduction technologies driven by the decision would lead to further customer savings, the company said.

Entergy's announcement came only two days after the governor of Illinois signed legislation recognising the benefits of nuclear power and ensuring the continued operation of at-risk reactors, following the lead of New York. Earlier this year, New York became the first state to approve legislation explicitly recognising the zero-carbon contribution of nuclear power plants.

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