There’s an excellent chance you will hear a gigantic, collective, sigh of relief from many in the business community of Van Buren County and beyond today following news this morning that Entergy Corporation and Consumers Energy are terminating the early buyout of the Palisades Nuclear Power Plant that would have shut the plant down as early as next fall. Instead, the plant will continue operations for five more years.
Entergy Corporation announced this morning that it plans to operate the Palisades Plant in Covert, until the spring of 2022, under the existing Power Purchase Agreement with Consumers Energy.
Charlie Arnone is Site Vice President and Entergy’s top official at Palisades. He says, “In light of the Michigan Public Service Commission’s order issued September 22, which granted Consumers Energy recovery of only $136.6 million of the $172 million it requested for the buyout of the Power Purchase Agreement, the parties have agreed to terminate the buyout transaction.”
Today’s announcement reverses Entergy’s decision announced last December that they would close Palisades on October 1, 2018, however, Entergy remains committed to its strategy of exiting the merchant nuclear power business.
Arnone says, “We greatly appreciate the continued patience of our employees and the local community in Southwest Michigan throughout this regulatory process, and we will continue to focus on the plant’s safe and reliable operations.” He adds, “Entergy will continue to make all necessary investments and maintain appropriate staffing, in accordance with strict licensing standards.”
The impact of the decision on free cash flow at Entergy is expected to range in positive territory by some $100 million to $150 million compared to the Power Purchase Agreement amendment with Consumers Energy. In addition, due to the change in operating assumptions, under applicable accounting rules Entergy no longer expects fuel, refueling outage costs and capital expenditures to be expensed as incurred. Instead, those expenditures will be amortized or depreciated over their useful lives and the expense will be included in operational results for the company.
The Palisades Power Plant employs about 600 workers and has been a part of the Van Buren County community since it began generating electricity in 1971. The plant generates 811 megawatts of virtually carbon-free electricity, enough to power more than 800,000 homes.
Entergy Corporation is an integrated energy company engaged primarily in electric power production and retail distribution operations. Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity, including nearly 9,000 megawatts of nuclear power. Entergy delivers electricity to 2.9 million utility customers in Arkansas, Louisiana, Mississippi and Texas. Entergy has annual revenues of approximately $10.8 billion and nearly 13,000 employees.
