Whitmer backs federal aid to stop closure of Palisades nuclear plant

Carol Thompson
The Detroit News

Michigan officials are racing to take advantage of newly announced federal funding that could ensure the continued operation of Palisades Power Plant, a west Michigan nuclear energy plant slated for closure at the end of May.

Gov. Gretchen Whitmer announced her intention to support efforts to continue operating Palisades on Wednesday. Keeping the plant on the grid would help Whitmer fulfill her goal of making Michigan carbon neutral by 2050 and secure hundreds of higher-paying jobs in Van Buren County's Covert Township, but it will be a mad dash to prevent the plant's impending closure. 

Palisades' owner, New Orleans company Entergy Nuclear Operations Inc., does not want to operate the plant beyond May. It plans to transfer its operating license to Holtec International, a New Jersey company that is set to decommission the plant on May 31. The plant has an operating license until 2031.

If no company steps up to purchase and operate Palisades before that date, Entergy and Holtec will continue with their decommissioning plan, officials from both companies said Wednesday. 

State officials notified Entergy of their intention to find federal aid to keep Palisades operating, said Nick Culp, the company's senior manager of northeast government affairs. 

"In addition to these conversations, we have and will continue to entertain discussions with qualified nuclear merchant plant (owners and) operators who may want to purchase and continue operating Palisades," Culp said. "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."

On Tuesday, the U.S. Department of Energy announced it would seek applications for its $6 billion Civil Nuclear Credit Program, created through the federal infrastructure law. The credit program is designed to subsidize nuclear plants that are licensed to continue operations but set to close because of financial pressure.

The deadline to apply is May 19, less than two weeks before Palisades' expected closure. The first round of funding "will prioritize reactors that have already announced their intention to cease operations," the Department of Energy said in its announcement.

Whitmer wrote a letter Wednesday to U.S. Secretary of Energy and former Michigan Gov. Jennifer Granholm, telling the fellow Democrat that Michigan plans to "support a compelling application" for the Civil Nuclear Credit aid for Palisades.

"Keeping Palisades open is a top priority," Whitmer wrote. "Doing so will allow us to make Michigan more competitive for economic development projects bringing billions in investment, protect hundreds of good-paying jobs for Michigan workers, and shore up Michigan’s clean energy supply and provide reliable lower energy costs for working families and small businesses."

Finances pose a problem

Palisades, a 50-year-old plant on Lake Michigan's beach, employs 600 people with an average income of $117,845, Whitmer said in her letter to Granholm. The plant generates $363 million in annual regional economic development and produces more than 800 megawatts of reliable, carbon-free power, she said.

Finances are a problem for Palisades.

Consumers Energy built Palisades in the 1960s, but sold it to Entergy for $380 million in 2007. The companies also agreed to a power purchase agreement, which ensured Consumers would purchase Palisades' electricity. The agreement expires this spring. 

In depth:State fears nuclear nightmare on Lake Michigan shores

Palisades' power has become expensive, at times as much as 57% more per megawatt hour than the market price, Consumers officials previously told The News.

"Consumers Energy is not interested in operating a nuclear plant again, but if the power from the plant could provide competitively priced and reliable energy for our customers, we would consider working with our partners to keep the plant open," said Josh Paciorek, Consumers' west Michigan spokesman.

The Civil Nuclear Credit program would subsidize the cost of nuclear power to make it competitive with sources like solar, wind and natural gas, Michigan Public Service Commissioner Katherine Peretick said.

A company would have to step up to operate and purchase Palisades, then make the request for federal funding, Peretick said. The state would not apply for the funding.

"Since Palisades is slated to close at the end of next month, this application process really opens a door that, until the DOE's announcement yesterday, seemed like it was firmly closed," she said. "At the commission, we're responsible for ensuring Michigan has enough resources to meet our electric needs. While I'm comfortable that we do have enough resources to meet our load without Palisades online, this is 800 megawatts of zero-carbon energy for our electric grid."

If another company moves to operate Palisades, the energy could be sold onto the regional energy market or through power purchase agreements, Peretick said. The plant "could absolutely factor in" to the state's progress toward carbon neutrality, she said.

Some environmentalists say nuclear power is key to fulfilling the country's goals of creating a zero-carbon energy market. In February, a pro-nuclear group that included University of Michigan nuclear engineers wrote a letter to state lawmakers urging them to "do what is needed to keep Palisades operational."

More:A Michigan nuclear plant is set to close. Does it threaten state's zero-carbon future?

The Michigan Conservative Energy Forum, part of a coalition of 21 state organizations advocating for "conservative clean energy solutions," supports efforts to keep Palisades operating.

"Not only will it save hundreds of good paying jobs, but it provides a much-needed supply of emission-free energy as we look to a future of greater electricity demand," Executive Director Ed Rivet said. "With automakers moving us swiftly toward electric vehicles, reliable, clean nuclear energy will make that transition possible."

Palisades nuclear power plant in Covert

Anti-nuke foes respond

Anti-nuclear advocate Kevin Kamps said it would be reckless to keep Palisades operating, since Entergy has planned to close the plant and not had the incentive to invest in upgrades or maintenance.  

"We're just living with ever increasing safety risks," said Kamps, Beyond Nuclear radioactive waste specialist. 

Kamps is "adamantly opposed" to both the federal program to subsidize nuclear power and Michigan's pursuit of a new operator for Palisades.

"They're going to put the Great Lakes at risk for 600 jobs," he said. "This could all be quickly replaced with solar photovoltaics, wind power. Within a matter of months, brand new renewables could replace Palisades."

Beyond its imminent closure date and dearth of formal proposals to take over Palisades, there are other challenges in keeping the plant running, Entergy's Culp said. More than 130 Palisades employees plan to retire or transfer to other jobs within Entergy, and the company did not order enough fuel to operate past its expected spring shutdown.

"Our focus at Palisades Power Plant remains on the safe and orderly shutdown of the facility in May, followed by transfer of the plant to Holtec Decommissioning International for decommissioning under the terms of a previously executed contract consistent with our announced strategy to exit the merchant power business," Culp said.

Holtec, the company that plans to take control of and decommission Palisades this year, is aware of Whitmer's plan find federal funding to continue operating the plant, said Patrick O'Brien, Holtec senior manager of government affairs and communications. 

"We remain ready, should these efforts not be successful, to transition ownership to Holtec after the plant ceases operations for a safe, efficient decommissioning process," he said.

Holtec's plans have drawn warnings from Michigan Attorney General Dana Nessel and some environmental groups, which have objected to the company's plans to decommission the plant without spending anything beyond a trust fund established by Consumers Energy, the plant's original owner.

Holtec's plans raise "significant health, safety, environmental, and financial concerns for residents of the state," Nessel said in a 2021 letter to the Nuclear Regulatory Commission.

More:Nuclear waste storage clouds future of Michigan's Palisades Power Plant