Michigan Gov. Gretchen Whitmer is looking to tap a newly created federal nuclear power plant bailout fund to keep Palisades Nuclear Plant open.
The Entergy Corp.-owned, 800-megawatt reactor five miles south of South Haven is scheduled to retire for good at the end of May. The shutdown removes a substantial power source from the grid, as Palisades generates 6.5 percent of Michigan’s electricity and 15 percent of the state’s “clean” energy.
On Wednesday, Whitmer wrote to the U.S. Department of Energy to urging to use funding from the $6 billion DOE Civil Nuclear Credit Program, created through the bipartisan infrastructure bill signed into law in November, to support the plant and prevent its early closure. The plant’s operating license is good through 2031.
“Doing so will allow us to shore up Michigan’s energy supply to prevent price spikes on working families and small businesses, make Michigan more competitive for economic development projects bringing billions in investment, protect hundreds of good-paying jobs for Michiganders, and meet our climate goals,” Whitmer said. “My administration will support an application for funding from this new federal program to keep Palisades open, and I urge the companies involved to think creatively and optimistically about how to leverage this opportunity.”
The DOE on Tuesday opened applications for nuclear plant owners interested in the Civil Nuclear Credit Program, which is designed to provide funding to keep afloat financially struggling nuclear plants that have shown they can still operate safely. Applications close May 19 for the first round of credits, which targets plants that have already announced plans to close.
U.S. Energy Secretary Jennifer Granholm, a former Michigan governor, has called nuclear energy essential to the U.S.’s transition to clean energy and supported investments to keep existing nuclear plants operating.
Whitmer’s letter to Granholm says the state of Michigan has had conversations with “leading nuclear operators who may be interested in purchasing the plant and keeping it open through its 2031 licensure date.”
Entergy, in a statement, said the company remains on schedule and focused on executing a May shutdown and transfer of ownership of the plant to Holtec Decommissioning International for dismantling.
“We acknowledge having recently been contacted by government officials about the facility potentially operating beyond May 2022. In addition to these conversations, we have and will continue to entertain discussions with qualified nuclear merchant plant owner/operators who may want to purchase and continue operating Palisades. However, it is important to note that no formal proposal to acquire Palisades has been made that provides an opportunity for continued operations and that eliminates the substantial financial and operational risks associated with unwinding the existing contract with Holtec.”
Whitmer called Palisades a “critical clean energy asset” in her comments to the DOE, echoing the calls to keep the plant open from pro-nuclear climate activists who see nuclear energy as an important component of a carbon-free future.
Nuclear’s status as clean energy is debated among environmentalists, due to the hazardous waste it leaves behind, the risks of radiation pollution in the environment and the emissions-heavy uranium mining and processing required to obtain nuclear fuel. The plants are also expensive to build and run.
Despite those issues, nuclear plants can generate high volumes of electricity, around the clock and in every season, without producing carbon dioxide emissions.
With promises from state and federal governments to decarbonize the power grid, states are looking at nuclear energy as a solution to keep the electric grid stable while turning off coal power plants. An Associated Press survey found a majority of U.S. states plan to use nuclear power to help transition away from fossil fuel energy sources.
Consumers Energy, which buys all of Palisades’ power, intends to eventually transition to supplying a majority of its power from renewable sources such as wind and solar by 2040.
In the near term, the company has announced investments in natural gas power plants to bridge the gap between nuclear/coal and solar.
Palisades, built by Consumers Energy on the shore of Lake Michigan, began operating 50 years ago, in 1971.
Consumers Energy sold the plant to power company Entergy in 2007 for $380 million, signing an agreement to buy power from Palisades until 2022.
The reactor’s closure was almost moved up by four years, but a plan to buy out Consumers’ contract with Entergy fell apart when the Michigan Public Service Commission did not agree to let Consumers recover the full amount they were seeking in the buyout. The parties agreed to revert to the original power purchase agreement, keeping the plant open through May 2022.
Local jobs also a consideration
Whitmer, in her statement about Palisades, noted “high-paying” union jobs that will be lost when the plant closes and the economic impact on the southwest Michigan region.
Palisades employs nearly 600 workers, 160 of them members of the Utility Workers Union of America Local 150.
“You’re going to lose several hundred great jobs in the community, that’s what it comes down to,” said Patrick Dillon, national executive vice president of the UWUA. “That’s our main concern. We’ve got a lot of members that are going to have to find new jobs, and we’ve got a lot of members that are going to have to move out of the community in order to find a comparable job.”
The average salary at the plant is $117,845.
When the decommissioning company, Holtec International, takes over in July, about 260 Palisades workers will stay on to work for Holtec for the first phase of decommissioning.
About 130 employees have accepted transfers to new positions within Entergy, according to Entergy spokesperson Val Gent.
Another 180 will “separate from the plant or company,” Gent said, noting that more than half of those employees are retirement eligible. Entergy plans to host a job fair with Michigan Works and local employers later this month to assist workers who will be out of a job in June.
An initial economic analysis of the plant’s closure, presented last week to the Palisades Community Advisory Panel, showed the ripple effects of the plant closure could result in an additional 400 job losses in the southwest Michigan region.
With the shutdown of the plant six weeks away, there is not much time to make a deal.
“The timeline is just so tight,” Dillon said. “We’re down to the 12th hour.”
Any new owner of the plant would have to heavily invest in upgrades to extend the life of the plant through 2031, Dillon noted.
“It’s not like a new owner can come in after May 31 and turn the plant back on the next day,” he said.
Entergy officials, in a statement, said they have been preparing to shut the plant since 2017, making it difficult at this stage to reverse course and keep the plant open.
“There are challenges that make continued operation of the facility beyond May 2022 difficult, including the pending transfer of more than 130 employees to other parts of Entergy’s business and planned employee retirements post-shutdown,” the company said.
“Additionally, the plant is unable to operate beyond the target closure date due to the diminished power of its nuclear fuel as it reaches the end of its two-year operating cycle. Entergy did not order new nuclear fuel because the plant is scheduled to permanently shut down. The shutdown of Palisades will complete our planned transition out of the merchant power business.”
Source: Yahoo News