Entergy Corporation and Consumers Energy, Michigan’s largest utility and the principal subsidiary of CMS Energy, have agreed to an early termination of their power purchase agreement (PPA) for the Palisades Power Plant in Covert Township in 2018.
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This is lowering the costs to Consumers’ customers by as much as $172 million over four years. The agreement is subject to regulatory approvals. Separately, and assuming regulatory approvals are obtained for the PPA termination, Entergy intends to shut down the Palisades nuclear power plant permanently on October 1, 2018.
The original agreement committed Consumers Energy to purchase nearly all of the power that Palisades generates through April 2022.
Under the current plan, and assuming regulatory approval of the request to terminate the PPA in 2018, Palisades will be refueled as scheduled in the spring of 2017 and operate through the end of the fuel cycle, then permanently shut down on October 1, 2018.
Since first entering into a PPA in 2007, when Entergy purchased Palisades from Consumers Energy, market conditions have changed substantially, and more economic alternatives are now available to provide reliable power to the region.
The transaction is expected to result in $344 million in savings, $172 million of which is expected to lower Consumers Energy customers’ costs over the early termination period from 2018 to 2022, and $172 million of which Consumers Energy will pay to Entergy for early PPA termination.
The early termination payment to Entergy will help assure the plant’s transition from operations to decommissioning, maintaining our commitment to meet US Nuclear Regulatory Commission requirements.
To support the community during the transition, Entergy and the Consumers Energy Foundation will provide a total of $10 million over several years in economic development funding for the Southwest Michigan region.
The companies will consult with the Council of Michigan Foundations and local stakeholders as it relates to the distribution of these funds. Of the $10 million, the Consumers Energy Foundation will contribute $2 million and Entergy $8 million.
The process for reviewing requests for funds and distributing them will be announced later, with a focus on sustainable economic development that will broaden the community’s tax base. ■