Public Service Commission trims Consumer’s buyout proposal for Palisades
By Jon Bisnett
The Michigan Public Service Commission (MPSC) approved just over $142 million for the securitization plan Consumers Energy Co. has proposed to buying out the remainder of its Palisades nuclear plant power purchase agreement with Entergy Nuclear Palisades, LLC.
New Orleans based Entergy has the Palisades site slated to close in October 2018, assuming the MPSC agrees to terminate the current contract Entergy has to sell electricity to Consumers on terms agreeable to all parties. The decision of Tuesday, September 19, 2017 is significantly short of the $172 million Consumers requested for its payment to Entergy along with $12.6 million for transaction costs.
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The MPSC approved just over $142 million for securitization bonds with roughly $5.5 million in transaction costs, leaving only $136 million for Consumers’ proposed payment to Entergy.
If Consumers and Entergy come to a formal buyout agreement, it will then be up to Entergy as to whether it will follow through with its plan to permanently close the nuclear plant in Van Buren County’s Covert Township. Consumers’ Power Purchase Agreement (PPA) is currently scheduled through the end of April, 2022.
Both companies insist that the remaining cost of the PPA is actually higher than the projected cost of buying energy and capacity on the open market. They further claim that even with a buyout, Consumers’ Energy customers will save money in the long term.
The commissioners agreed in a statement; “Even if Consumers no longer receives power from Palisades, the Commission recently determined that the Midwest region has adequate electricity supplies over the next five years, based on available forecasts.”
The Commission in its decision cautioned the importance for Consumers to proceed quickly and efficiently to firmly secure electrical capacity to replace the 800 MW of power it gets via the Palisades contract.
Consumers said it will replace the power from Palisades by increasing energy waste reduction, boosting commercial and industrial demand and expanding its Cross Winds Energy Farm. It will also continue to operate its older generation plants to supply power during high demand periods.
The MPSC says Consumers would be allowed to recover the $142.1 million through surcharges on full-service electric customers’ bills for approximately six years after the bonds are sold, which Consumers anticipates will be in June 2018.
The Palisades plant was originally built for the Consumers Power Company back in 1971, at which time it was the second such nuclear facility on the Lake Michigan Shoreline. Consumers Energy sold the Covert plant to Entergy in 2007 under an agreement to then buy power from the facility.
At a recent open house held by Entergy, plant officials made it very clear that despite the impending shut-down, site VP Charlie Arnone stated, “There will be no shortcuts taken when it comes to matters of safety and reliability…”
Some 600 jobs and the fate Van Buren County’s largest property tax payer hang in limbo as the Covert Township site moves closer to Entergy’s plan to go dark in the fall of 2018.
While the MPSC has no regulatory role in the plant’s closing, the