Our Palisades Problem began before Palisades generated its first watt of electricity.
After construction and installation problems put Palisades about a year behind schedule, it finally started running on New Years Day, 1971. Our Palisades Problem continued thirteen months later when its steam generators started leaking radioactive water. In the plant’s second year its owner, Consumers Power, filed suit against the builder and four other companies for shoddy workmanship and defective equipment and materials. For more information on this “inauspicious” beginning and a recounting of how the plant won its “controversial” label – and why the label has stuck to our Palisades Problem for 45 years – see this August, 2014, MLive report.
Thursday, June 23, 5:00 PM to 9:00 PM, Beach Haven Event Center, 10420 M–140, South Haven, MI 49090
The Nuclear Regulatory Commission will “have a meaningful dialogue between the U.S. Nuclear Regulatory Commission (NRC) and the public.” This will be the “Palisades End-of-Cycle Performance Discussion.”
Wednesday, June 8, 6:00 PM to 8:oo PM, Milham Park, Kalamazoo
We will hold a strategy session to plan our involvement in the public portion of NRC’s Palisades review (above).
Consumers decided to solve its Palisades Problem by unloading it.
By 2006 Comsumers Power wanted to sell its Palisades Problem to Entergy. Michigan Attorney General Michael A. Cox opposed the idea. He believed the sale would benefit stockholders at the expense of ratepayers. Cox retained Synapse Energy Economics, Inc., to study the proposed deal. On December 20, 2006, Synapse expert David A. Schlissel testified on behalf of Cox before Michigan’s Public Service Commission. The following exchange about what it might cost Consumers to keep running Palisades (its cost of continued ownership, or “CCO”) appears on pages 15 and 16 of Schlissel’s 2006 testimony:
What causes the significant increases in Consumers’ Raw CCO prices beginning in 2013?
The significant increases in the Raw CCO prices beginning in 2013 result from projected costs associated with the replacement of the plant’s two steam generators. According to Consumers, these steam generator replacement costs would total $357 million in 2006 dollars. Expenditures would begin in 2013, although the actual in-service date of the replacements would not occur until 2016.
Is it reasonable to expect that Consumers’ would have to replace Palisades’ steam generators if it wanted to own and operate the plant through 2031?
Yes. It is reasonable to expect that the Palisades steam generators will have to be replaced at some point in the next 25 years because the generator tubes were fabricated from Alloy 600 material. Tubes fabricated from this material have experienced various forms of degradation and defects in just about every other steam generator in which they were used.
Is it certain that the steam generators will have to be replaced in 2016?
No. The rate at which the tubes will degrade and the specific degradation mechanisms they will experience are uncertain. Given changes that Consumers has made in water chemistry control, it is possible that the current steam generators would not have to be replaced until some time after 2016. Or, it is possible that the tubes will degrade and the steam generators would have to be replaced before 2016.
So. One reason Consumers wanted to unload its Palisades Problem was because the plant was getting older and maintaining it was going to get expensive.
Those steam generators are a big part of today’s Palisades Problem.
Consumers Power didn’t want to have to pay to replace the steam generators. They predicted this would have to happen in 2016. In his testimony, David Schlissel called that a “reasonable” expectation. Or maybe sooner than 2016. Or maybe later. Depending.
In case you’re wondering how a couple of steam generators could cost $357 million ten years ago: Each generator is about 20 feet wide, 60 feet long, and weighs about 450 tons. When Palisades replaced the original generators, in 1991, they got an award for figuring out how to do it. Twenty-five years later, those old generators are stored in a vault on Palisades property. They are still highly radioactive. They are nuclear waste.
Those monsters were 20 years old when they were replaced 25 years ago. We’ve reached the hypothetical 2016 date for the plant’s third set of steam generators. A few months ago, at a Palisades Open House in South Haven, an Entergy representative said there were no plans to replace the generators again. If that became necessary, he explained, Entergy would shut Palisades down permanently. It would cost too much.
Embrittlement is another huge Palisades Problem.
Nuclear particles bombarding the reactor pressure vessel (RPV) gradually make the RPV more brittle. The RPV is the huge shell that houses the nuclear reaction. The palisades RPV has been getting bombarded for 45 years. It’s considered among the most embrittled in the U.S. Some say it’s the most embrittled.
An embrittled RPV can crack under certain kinds of stress, such as an earthquake, say, or pressurized thermal shock (PTS). When a nuclear reactor overheats, it has to be cooled – usually by dumping in cold water. Sudden cooling – PTS – can crack the RPV. Overheating can happen when a piece of equipment malfunctions. Like, say, a 25-year-old steam generator. If an overheated reactor core gets cooled too quickly in an attempt to prevent a meltdown, an embrittled RPV can crack and cause a meltdown.
When a nuclear plant is first built, removable samples of its RPV’s materials – called “capsules” or “coupons” or “capsule coupons” – are installed so that RPV embrittlement can be tested without taking a chunk out of the RPV itself. Shutting the plant down and removing a capsule and testing it and then studying the test results is a major project. It’s expensive. It’s especially expensive if the test results say the RPV isn’t safe any more.
On December 1, 2014, nuclear engineer and former nuclear energy executive Arnold Gundersen testified before the NRC as an expert witness about RPV embrittlement at Palisades. The NRC was considering a license amendment that would keep Palisades going until 2031. On pages seven and eight of his testimony, Gundersen pointed out that the last time Palisades removed a capsule and tested it for embrittlement was in 2003. Palisades’ “tentative” plan is to conduct its next capsule test in 2019. Through the remaining ten pages of his testimony, Gundersen expressed his alarm about this sixteen-year gap between actual embrittlement tests.
Instead of expensive physical testing, Palisades came up with a cheaper workaround.
Do you have your potassium iodide pills?
If Palisades has a serious accident, one of the airborne contaminants will be the radioactive isotope iodine-131. It causes thyroid cancer. Potassium iodide (KI) pills taken shortly before exposure to iodine-131 will prevent thyroid cancer. This means you must have the pills on hand before the accident. The pills won’t work after you’re exposed.
If you live, work, or attend school within 10 miles of Palisades, you are entitled to free KI pills. For information on how to get your free pills click here. If you’re outside the 10-mile radius, check with your pharmacist. KI pills are not expensive, and they have a fairly long shelf life.
On page seven of his testimony, Gundersen explained that “Palisades has chosen…to mathematically analyze its embrittlement rather than perform additional metallurgical measurements and tests.” To allow this, and to let Palisades save money and keep operating, the NRC adopted an “updated” safety standard. This update lets Palisades avoid the expense of pulling a capsule and testing it. The update gives Palisades an okay to trust mathematical extrapolation and computer modeling based on history at Palisades and other plants.
Expert nuclear engineer Arnold Gundersen had a problem with this update. “The NRC,” he testified, “has allowed Palisades to compare itself to reactors of disparate designs from other vendors, built in different years and operating at diverse power levels.” Grand Rapids Mayor George Heartwell also had a problem with this update. He wrote a letter to the NRC expressing his alarm. Kalamazoo Mayor Bobby Hopewell also had a problem with this update. He also wrote a letter to the NRC. He called for an actual capsule test.
The NRC does not have a problem with this update.
Another Palisades Problem: The plant is built on sand dunes. The concrete slabs beneath the casks of nuclear waste sit on sand dunes.
- February 17, 1994: A letter from Dr. Ross Landsman, NRC Region III dry cask storage inspector, to NRC Chairman Ivan Selin warned that an earthquake could result in high-level radioactive waste storage casks falling into Lake Michigan or being buried in loose sand. Landsman said, “It is apparent to me that NMSS [NRC’s Office of Nuclear Material Safety and Safeguards] doesn’t realize the catastrophic consequences of their continued reliance on their current ideology.” Nuclear waste falling into Lake Michigan could start a nuclear reaction. If it gets buried in the sand it could dangerously overheat.
- September 15, 2005: Dr. Landsman, now retired, repeated his earthquake warning in greater detail in a four-page letter opposing Palisades’ application for a 20-year license renewal.
- April 4, 2006: Dr. Landsman added his expertise to a petition on behalf of Nuclear Information Resource Service, four Southwest Michigan organizations, and 30 individuals calling on the NRC to enforce its own dry cask storage pad specifications.
- February 2, 2007: The petitioners filed their comments and objections to NRC’s rejection of their April 2006 petition.
- August 23, 2007: The NRC partially relented, but not substantially, and NIRS issued the press release excerpted on the right.
- March 11, 2011: Fukushima had an earthquake.
- May and June, 2015: Southwest Michigan had two earthquakes.
This just in! Financial news about our Palisades Problem
Deciphering the abbreviations in the excerpts on the left:
- “ETR” is Entergy, owner-operator of Palisades.
- “CMS” is Consumers Energy, former owner (as Consumers Power) and Palisades’ only customer.
- “PPA” is “power purchase agreement.” In this case, it’s the agreement under which Consumers buys electricity from Palisades.
- “NPV” is “net present value,” which Investopedia defines as “the difference between the present value of cash inflows and the present value of cash outflows… [A] positive NPV will be a profitable one and one with a negative NPV will result in a net loss.”
- “EBITDA” (from Investopedia again) is “Earnings before interest, taxes, depreciation and amortization.” Palisades “negative EBITDA” essentially means that it’s operating at a loss.
CMS Could Pay to Close Palisades Contract Early
Palisades Nuclear plant in Michigan is currently loss-making both at the plant level (for ETR) and the contract level (vs alternatives for CMS). We expect CMS to announce plans to sever its Palisades PPA with ETR within the next 2-3 quarters and possibly pay a portion of lifetime savings through the 2022 contract expiration date. We estimate that total obligations under current contract of ~$2.3B could yield NPV savings of ~$790M assuming contract is cancelled and replaced with market prices. The question is how much if anything would be paid of the savings to Entergy as part of agreeing to the early retirement.
So Would ETR Accept a Contract Cancellation?
ETR’s Palisades acquisition in the early 2000s was designed to help address costs through the acquisition of a portfolio operator like Entergy; actual results in light of ongoing cost increases of the past decade have painted a much different picture and made the PPA signed at the time effectively under-water for Entergy. In fact, we think ETR could effectively choose to close Palisades for free given its negative EBITDA contribution, especially since single unit sites like Palisades are much more difficult to extract any incremental costs from, as discussed in our recent note on Nuclear costs.
What can we do about our Palisades Problem?
Learn more about our Palisades problem, and help spread the word.
- Palisades hasn’t been completely straight in its dealings with the Nuclear Regulatory Commission.
- Palisades has had security issues, unplanned shutdowns, equipment failures, safety violations.
- Palisades employees have suffered from overexposure to radiation.
- Palisades says it will try to be more transparent.
Join our coalition with Michigan Safe Energy Future.
We have joined up with Michigan Safe Energy Future and their Palisades Shutdown Campaign. You can help us work together on our Palisades problem by planning to join us at the U.S. Nuclear Regulatory Commission’s June 23 “Palisades End-of-Cycle Performance Discussion.” The discussion is scheduled for 5:00 PM to 8:00 PM June 23 at Beach Haven Event Center, 10420 M–140, South Haven, Michigan. Click here for more information.
Please plan to join us. Help us make our presence and our concerns known.
More info on our Palisades problem:
- Clean Safe Nuclear Energy?
- Clean Nuclear Energy?
- Safe Nuclear Energy?
- For a report on our April 21, 2016, Palisades Earth Week Forum, click here.