Mich. PSC wants details on plans for early termination of PPA tied to nuclear plant

The Michigan Public Service Commission is seeking additional information on Consumers Energy's plans for an early termination of its power purchase agreement with Entergy Nuclear Palisades for the purchase of electricity from the Palisades Nuclear Power Plant in southwestern Michigan.

Investor-owned utility Entergy Corporation said Dec. 8 that it plans to permanently shut down its Palisades nuclear power plant in the fall of 2018. The utility said that the electricity market has changed substantially over the last decade, and that "more economic alternatives are now available to provide power to the region." The plan would have to be approved by regulators.

New Orleans-based Entergy said that it and Michigan-based Consumers Energy have agreed to an early termination of their PPA for the 811-megawatt Palisades plant.
Closing the plant will reduce costs to Consumers Energy's electricity customers by as much as $172 million over four years, Entergy said.

The Michigan PSC on Dec. 20 noted that under the PPA approved by the state commission in 2007, the utility purchases nearly all of Palisades' electricity generation. The PPA term runs through April 11, 2022.

Consumers Energy is looking to terminate the PPA as of May 31, 2018, at which time Entergy Nuclear Palisades will enter into a new PPA under which the plant will continue to operate until Oct. 1, 2018, when Entergy said it intends to close the plant permanently.

Michigan PSC proceeding to evaluate plan

The PSC said that it is initiating a proceeding to receive information that it will need to begin evaluating Consumers Energy's plan.

The Michigan utility commission said it recently received guidance from the Michigan House of Representatives on this matter in the form of House Resolution 410 "and it is the commission's role to ensure adequate resources are available to meet demands for energy and to ensure the interests of customers are fully considered."

The proceeding will provide the PSC and interested stakeholders with additional information at this early stage, the commission said.

A PSC order (Case No. U-18218) lists questions to which it seeks information from the utility as soon as possible, including: (1) what alternatives the utility considered; (2) detailed information on customer impacts from the contemplated early termination of the PPA, including plans to replace the energy and capacity now provided by Palisades; (3) whether there is sufficient replacement capacity and energy within the Midcontinent Independent System Operator to ensure reliability; (4) whether the utility has plans for a certificate of need filing; and (5) detailed information on all available cost recovery and financing options and how each compares in terms of ratepayer benefits.

In addition, the state commission wants an analysis of the effect on emissions and fuel diversity of closing Palisades.

The PSC directed the utility to file a revised five-year forecast in its pending 2017 power supply cost recovery plan case (U-18142) within 30 days of the Dec. 20 order.