Is it really a permanent Palisades shut down?
Long story short: Executives at Consumers decided their company was paying Palisades too much for electricity. They negotiated with Entergy, owner-operator of Palisades, to knock the last four years off the fifteen-year purchase plan they agreed to when Consumers sold its Palisades plant to Entergy in 2007. Consumers, Palisades’ only customer, will stop buying electricity from Palisades in 2018, not 2022. For thirteen of the twenty extra years Entergy got in 2011 when the plant’s original 40-year license expired, Palisades has no buyer for its uncompetitively priced electricity. So Entergy officials decided on a permanent palisades shut down.
On December 8, Entergy issued a press release saying, “Entergy intends to shut down the Palisades nuclear power plant permanently on Oct. 1, 2018.”
Governor Rick Snyder and Republican State Representative Aric Nesbitt don’t consider Entergy’s permanent Palisades shut down a done deal.
Governor Snyder’s statement used words like “potential” and phrases like “proposed closure” and “whatever decision is made” and “if this closure occurs” and “the eventual decision.”
Aric Nesbitt represents the 66th District, including Van Buren County, home of Palisades. Until the recent Michigan House session ended, Nesbitt chaired the House Committee on Energy Policy and served as House Majority Floor Leader. Due to term limits, he’s no longer in office.
Nesbitt sent letters to Consumers, to Entergy, and to Midcontinent Independent System Operator (MISO), a power transmission company that doesn’t seem likely to have much – if any – influence in the matter. Nesbitt’s Michigan House Republicans website posted his reaction:
“The announcement by Entergy of the premature closing of the Palisades Nuclear Power Plant is not just a punch in the stomach to the hard-working employees and to our community, but it also puts Michigan’s energy future at greater risk,” Rep. Nesbitt said. “I call on Entergy to reconsider its decision to prematurely close Palisades and work with the state to find a solution to keep Palisades open and producing reliable, emission-free energy.
“This announcement further threatens Michigan electric reliability after 2018. This is not just a bad decision for our local families, but it is also the wrong decision for Michigan’s energy future. I demand that Entergy reconsider this poorly-made decision.
“This also shows the perilous state of the future of energy in our state and the need to pass a long-term update to our energy laws.”
Nesbitt then introduced a House Resolution “to urge the Michigan Public Service Commission to reject the premature termination of the power purchase agreement.” Nesbitt’s resolution claims that “Michigan faces serious electric reliability issues” and “the Michigan Public Service Commission has an obligation to protect electric reliability” and this “would be detrimental to electric reliability.” Nesbitt’s resolution passed on December 15.
Consumers disagreed with Nesbitt before he even opened his mouth!
Yes, Nesbitt is correct. MPSC will have a say. Entergy noted as much in its press release. But MPSC isn’t exactly famous for denying whatever Michigan’s biggest utility companies want. And anyway, Consumers addressed reliability and affordability long before Nesbitt and Snyder did.
Within hours of Entergy’s permanent palisades shut down announcement, a Consumers press release said the sale would save its customers “as much as $172 million.” The press release continues:
We have a comprehensive plan to ensure ongoing reliability and affordability for our 1.8 million electric customers,” said Patti Poppe, president and chief executive officer for Consumers Energy. That plan includes continued excellent power plant performance by Consumers Energy, robust waste-reducing energy efficiency programs, and adding more renewable energy and clean natural gas-fired generation to the company’s portfolio.
Two ways Palisades can avoid a permanent shut down in the near future
In the long run, of course, a permanent Palisades shut down is inevitable. But there are two strategies that might delay it.
- Can Entergy sell Palisades? Highly unlikely. Consumers and Entergy agreed to shut down Palisades because long-term trends are pricing nuclear power out of business. When Consumers sold Palisades to Entergy, both companies thought an experienced operator with several nuclear plants could figure out how to squeeze cheaper electricity out of Palisades. It didn’t work. Entergy isn’t likely to find a third company anxious to give it a try.
- Can Entergy get a bailout to keep the plant running? This uglier, scarier possibility is more likely, and it would make a sale possible.
Entergy could ask for a bailout. Or the State of Michigan could offer one. Or both. The idea could already be on the table.
If Snyder and other officials and legislators get the right messages from deep-pocketed Entergy lobbyists, bailout discussions will be likely. It should come as no surprise if we someday learn that talks started some time ago. While the December 8 announcement took the public by surprise, it seems doubtful that negotiators for Consumers and Entergy could keep Snyder and other officials completely in the dark.
Recent bailouts have kept several unprofitable nuclear plants running
- Entergy planned to close its problem-plagued FitzPatrick plant in upstate New York. Instead, they sold it to Exelon. A bailout sealed the deal. New York state’s $7.6 billion bailout plan saved three nuclear plants. That’s money New Yorkers will pay for their electricity in advance – when they pay their taxes – instead of when they get their electric bills.
- Just last week, a St. Louis Post-Dispatch report said that Illinois “handed a 10-year, $2.35 billion rate bailout to Exelon Corp. to preserve 1,500 jobs at two money-losing nuclear power plants.”
When energy giants start to fail, their spokespersons always emphasize that workers and the local economy will be the victims. It’s never, “Please save our failing business.” It’s always, “You have to give us more money so your economy doesn’t take a hit.” A recent Guardian report talks about “a startling new estimate by the International Monetary Fund.” Global fossil fuel subsidies are “equivalent to $10m a minute every day.”
This is not to say that the concerns Snyder and Nesbitt share for Entergy’s 600 employees and for Van Buren County’s tax base are misplaced. It’s an Entergy bailout that would be misplaced.
Reward success! No bailout for failure!
Southwest Michigan, the entire state, the nation, and the planet all owe Palisades’ workers a huge debt of gratitude.
For 45 years, 600 dedicated Palisades employees have kept us safe. They’ve protected us from the disasters that could’ve resulted from Entergy’s mismanagement and corner-cutting – not to mention the Nuclear Regulatory Commission’s lax enforcement of safety standards. If there’s a bailout, these 600 workers and the people of Van Buren County, which will lose Entergy’s tax revenue, deserve the bailout, not Entergy!
Here’s the simple math:
Decommissioning a nuclear plant can take decades and, according to the NRC, requires a staff of about 200. (See “Staff Responses to Frequently Asked Questions Concerning Decommissioning of Nuclear Power Plants” section 11.2.) According to MLive’s Rosemary Parker:
- Palisades plans to “retain a portion of the existing staff to help work through the various stages of the decommissioning process.”
- Consumers will “consider hiring” 180 Palisades employees.
- Entergy will try to find work for employees willing to relocate.
If all these dreams come true, as few as 200 Palisades workers could end up unemployed. Bailouts in New York and Illinois came to roughly $2 billion per plant – enough to give 200 unemployed workers TEN MILLION dollars apiece!
We should not be surprised if Entergy asks for a bailout to keep the plant running or to subsidize their decommissioning costs.
Other stuff to watch for
Make sure this permanent Palisades shut down doesn’t give DTE an excuse to argue harder for Fermi 3 to get built. Just the opposite, in fact! Consumers Energy is convinced that losing Palisades is a good thing. What makes DTE think it needs to bring a new nuclear plant online?
Stay in touch with the Alliance to Halt Fermi 3.
Keep an eye on the decommissioning. The process has to be as meticulous and safety-conscious as running the plant. We have to make sure the NRC inspectors stay on top of the process.