Entergy will keep its 845-MW Palisades nuclear plant near South Haven, Michigan, open until 2022 instead of shutting it next year, the company said Thursday.
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The company said the decision was made following a September 22 Michigan Public Service Commission order that denied Consumers Energy full rate recovery for the costs of terminating a power purchase agreement with Entergy early. The plan to terminate the PPA early in exchange for a payment to Entergy was key to the plan to shut the reactor in 2018, Entergy said.
Consumers Energy, a subsidiary of CMS Energy, had agreed to pay $172 million to end the PPA, but the Michigan PSC said it would allow the utility to recover only $136.6 million of that amount from ratepayers, Entergy said.
"Today's announcement reverses Entergy's December 2016 decision to close Palisades on October 1, 2018, but Entergy remains committed to its strategy of exiting the merchant nuclear power business," Entergy said.
Entergy, which owns merchant and regulated assets in the southern US, Midwest and Northeast, has said it is seeking to become a regulated utility company given the financial challenges facing merchant generation.
The company's Energy Wholesale Commodities subsidiary holds 3,568 MW of merchant nuclear capacity, including Palisades, the Pilgrim reactor in Massachusetts and the two-reactor Indian Point plant in New York. All of those reactors had been scheduled to shut between 2018 and 2021 before Thursday's announcement.
Some Michigan officials had opposed the decision to shut Palisades prematurely, and Attorney General Bill Shuette had intervened with the PSC in the rate case, questioning whether the termination of the PPA benefited consumers.
The PPA covers sales of about 6,800 GWh of power annually from Palisades to Consumers, the utility said in a filing with the PSC this year. Consumers had asked the PSC for permission to collect from ratepayers and securitize the cost of the buyout.
The PPA runs through April 2022. An anti-nuclear group has said Consumers was paying $57.75/MWh for power under the PPA, higher than spot electricity prices in the region.
Prior to the decision, a newly established utility, Upper Michigan Energy Resources Corp., asked the PSC for authority to construct two natural gas-fired plants totaling about 180 MW of capacity in Michigan's sparsely populated Upper Peninsula. UMERC is a subsidiary of WEC Energy Group of Wisconsin.
Also, DTE Energy on August 1 applied for a certificate of necessity to build a 1,100-MW gas-fired, combined-cycle plant at its Belle River Power Plant in Michigan by 2022.
And Consumers itself issued a request for proposals in April 2017 to acquire a gas-fired plant of up to 800 MW.
The Midcontinent Independent System Operator and the Organization of MISO States said in a study in June that Michigan's lower peninsula area could experience a power capacity shortfall in 2018-2019 even without the Palisades retirement.
--William Freebairn, firstname.lastname@example.org
--Edited by Keiron Greenhalgh, email@example.com