Florida-based NextEra Energy Resources and investor-owned Alliant Energy's Iowa energy company have agreed to shorten the term of their existing power purchase agreement for the output from the Duane Arnold Energy Center (DAEC) nuclear power plant in Iowa by five years in exchange for a buyout payment. The companies' new agreements also include new repowered wind PPAs.
Assuming all requisite approvals are received, the approximately 615-megawatt DAEC in Iowa is expected to cease commercial operations in late 2020, the companies said on July 27.
Alliant Energy has agreed to make a $110 million buyout payment to NextEra Energy Resources in September 2020 to cover the cost to shorten the term of the DAEC PPA from 2025 to 2020.
Alliant Energy intended to apply to the Iowa Utilities Board July 27 for approval regarding recovery of the buyout payment. Alliant Energy's Iowa customers are expected to save nearly $300 million, on a net present value basis, starting on or before Jan. 1, 2021, contingent on the Iowa Utilities Board's approval of Alliant Energy's request, the companies said. The savings estimate includes the cost of the amendment payment and the costs for replacing energy and capacity.
Under the agreements, NextEra Energy Resources will supply wind energy from four repowered Iowa wind facilities, representing approximately 340-MW.
NextEra Energy Resources plans to invest approximately $650 million in existing and new renewables generation across Iowa by the end of 2020, including the planned approximately $250 million to repower the four wind facilities as part of these transactions.
NextEra Energy Resources also is evaluating redevelopment opportunities at the DAEC site, including the construction of new solar energy, battery storage or natural gas facilities.
The companies said that at the appropriate time the Midcontinent Independent System Operator and the Nuclear Regulatory Commission will be notified of the intent to permanently cease operations and decommission the DAEC.
The plant’s current NRC operating license is scheduled to expire in February 2034. DAEC is the only nuclear power plant in Iowa.
The facility is owned by NextEra Energy Duane Arnold (70 percent), Central Iowa Power Cooperative (20 percent) and Corn Belt Power Cooperative (10 percent).
DAEC currently provides 35 percent of Central Iowa Power Cooperative’s energy portfolio.
Central Iowa Power Cooperative “hopes NextEra Energy and Alliant Energy will work with all parties involved in the ownership and operation of DAEC to achieve a net economic benefit for consumer-members who have funded this emission-free resource since 1974,” said Central Iowa Power Cooperative Executive Vice President and CEO Bill Cherrier. “As a minority owner of the DAEC, we’re concerned how the upfront financial burden associated with closing the plant may impact our members. We’re hoping to work with other owners for a positive outcome.”
Central Iowa Power Cooperative noted that payments on debt used to finance improvements to extend the life of the plant through its operating license and to improve safety and reliability “will be paid long after the plant is shuttered.”
Other nuclear plant closures announced
There have been a number of other announcements in the U.S. related to plans to close nuclear power plants.
Exelon Generation earlier this year said that the Oyster Creek Generating Station, a nuclear power plant in New Jersey, will permanently shut down in October 2018, at the end of its current operating cycle.
FirstEnergy Solutions (FES), a competitive generation subsidiary of FirstEnergy Corp., in April filed a certification letter with the NRC formally notifying the Commission of its decision to permanently deactivate nuclear power plants in Ohio and Pennsylvania over the next three years.