Bill Mohl president of Entergy announces the planned shutdown of the Pilgrim Nuclear Power station as Timothy G. Mitchell, Senior Vice President, Nuclear Operations, and John Dent, Jr., Vice President of Pilgrim Nuclear Power Station look on. (Jeese Costa/WBUR)

Sad times for Bill Mohl, President of Entergy Wholesale Commodities. Happy times for humanity.

“PALISADES TO CLOSE IN 2018 by Andrew Lersten

COVERT — It was a shocker.

There’s no other way to describe Thursday morning’s surprise announcement by Entergy that it plans to shut down its Palisades nuclear power plant Oct. 1, 2018.

The plant is a huge economic powerhouse in Van Buren County and in Southwest Michigan. It is the county’s largest taxpayer and employs 600.

The decision is all about the cost of doing business, Entergy officials said.

Changes in the market price of energy and electricity, driven mainly by the natural gas revolution, have made it unprofitable for merchant nuclear plants like the Palisades plant to continue operations.

Increased regulations have also hurt the bottom line, officials said.

When the company bought the plant from Consumers Energy in 2007, it was deemed a good business deal because Entergy signed a 15-year deal with Consumers to sell 100 percent of the electricity to Consumers.

But changing market conditions brought the two companies together six months ago to review the power purchase agreement.

The companies concluded it makes business sense to terminate the power purchase agreement four years early, in 2018 instead of 2022, said Bill Mohl, president of Entergy Wholesale Commodities, a business unit within Entergy that owns and operates Entergy’s merchant nuclear power plants.

Merchant nuclear power plants don’t have the ability to raise prices, as non-merchant plants do, Mohl explained.

No one wanted to buy the plant

Before reaching the deal to terminate the plan, Entergy tried to find a buyer for the plant, Mohl said.

“We have looked at opportunities to sell the plant but have seen no interest in purchasing the facility,” he said.

Mohl flew in from Houston on Wednesday and on Thursday morning he had the tough task of making the announcement to Palisades workers.

“It’s been a tough day,” Mohl said Thursday afternoon just before getting back on a plane to Houston.

He cited “deteriorating market conditions” in the energy sector for the decision to end the power purchase agreement with Consumers for Palisades.

Entergy’s board of directors signed off on the plan a week ago, he said.

The early termination of the power purchase agreement will need to be approved by the Michigan Public Service Commission. Entergy will request approval next month, he said.

The original license from the federal Nuclear Regulatory Commission allowed the plant to operate through 2011. However, in 2007, the NRC approved a 20-year license extension allowing the plant to operate until 2031.

Breaking the news

Palisades called an all-employee meeting Thursday morning to make the announcement, said plant spokeswoman Val Gent.

It was an emotional meeting, she said.

“We acknowledged this is a tough day for employees and the community,” Gent said.

The company stressed it will do everything it can to relocate Palisades employees within the company. Consumers Energy has also agreed to help place up to 180 Palisades employees in its company.

“We’re going to work with” the employees, Gent said.

The meeting was at Listiak Auditorium at South Haven High School, and workers were caught off guard by the nature of the announcement, said a longtime employee who did not want to be identified.

There was a wide range of emotions on display after the announcement, he said.

“There was shock, disappointment, dismay, all of those emotions,” he said. “There is also a lot of anger toward the corporation. This will continue.

“But it’s a financial decision. That’s the way it is with business these days.”

Only half the plant’s 600 workers will be let go when the plant closes Oct. 1, 2018, Mohl said.

The other 300 will remain at the plant for another 15 months, at which time half of them will be dismissed, Mohl said. That will leave the remaining 150 workers.

Exiting the business nationally

The Palisades plant is one of five merchant nuclear power plants owned by Entergy Wholesale Commodities.

Mohl said that based on energy market analysis, the company is moving away from operating those plants.

Next month Exelon Corp. will take over operations of Entergy’s James A. FitzPatrick nuclear power plant in New York. The Pilgrim Nuclear Power Station in Massachusetts will shut down in 2019.

It closed its Vermont Yankee nuclear power plant in December 2014.

At the time Entergy bought the Palisades plant in 2007, Consumers Energy was able to buy Palisades’ electricity at a cost below market pricing. That made the power purchase agreement attractive, Mohl said.

But the market has changed drastically since then.

“Two things have happened over time. The key driver is that natural gas products’ (pricing) has dropped substantially,” he said.

“Fracking and shale formations have really created an abundance of natural gas, and even an oversupply in some cases. Correspondingly, we’ve seen the price of electrical power follow the price of natural gas.

“The other issue we’re facing is higher-than-expected costs of operating a nuclear facility. We’ve had things like changes in security rules and post-Fukushima required upgrades.”

Once Palisades closes, its only merchant nuclear plant will be the Indian Point Energy Center in New York, Mohl said.

“We will continue to shrink our footprint and then exit the wholesale business,” he said. “We’ve made that strategic business decision.”

The future is away from nuclear merchant power plants to the new generation of gas-fired, combined-cycle plants. The company is already building those new plants, Mohl said.”

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