Michigan ratepayers will foot the bill for reactor resuscitation

By Jeff Alson

The 52-year old Palisades nuclear power plant near South Haven, Michigan, on the shore of Lake Michigan near both Chicago and Grand Rapids, is one of the oldest and most degraded reactors in the country. In 2006, Palisades’ original owner, Consumers Energy, cited a wide range of major safety concerns when it sold the plant to Entergy, including that Palisades had one of the most embrittled reactor vessels in the country, needed a new reactor vessel head and steam generator, and had suffered from control rod drive mechanism seal leaks since it first opened. 

As natural gas, and then wind and solar, became cheaper and cheaper, Palisades’ electricity became increasingly uncompetitive. Michigan ratepayers subsidized its electricity for years, sometimes paying as much as 57% above market rates. Trying to minimize additional costs, Entergy refused to invest in the most important safety repairs.

In 2018, Entergy announced it would sell the old and dangerous plant to Holtec, a decommissioning company, and the U.S. Nuclear Regulatory Commission (NRC) approved. The plant was formally closed on May 20, 2022, nuclear fuel was removed on June 13, and the plant was sold to Holtec on June 28, 2022. 

The NRC then terminated Palisades’ operating license.

For four years, from 2018 through 2022, every major stakeholder—Entergy, the NRC, the Michigan Public Service Commission, energy and environmental NGOs, groups representing electricity consumers, and, notably, Michigan Governor Gretchen Whitmer—agreed that Palisades should be shut down. 

The Governor’s own MI Healthy Climate Plan, released in April 2022, appropriately ignored Palisades’ imminent closure, since there are far cheaper and safer alternatives to reduce greenhouse gas emissions. 

What changed? Holtec saw an opportunity to feed from the public trough by getting billions of dollars of corporate welfare, from both the state and federal government, to raise Palisades from the dead.

Holtec has requested a $300 million subsidy from Michigan taxpayers and in late June got a $150 million blank check from the Michigan legislature added to the current state budget without any public debate whatsoever. More ominous, Holtec also wants Michigan ratepayers to, once again, be forced to buy electricity at above-market prices that could significantly raise Michigan’s electricity rates, already the highest in the Midwest.

For example, when operating properly, the 700 megawatt Palisades plant can generate about 6 billion kilowatt-hours of electricity per year. If this electricity were just one cent per kilowatt-hour more expensive than market prices, ratepayers would have to pay an extra $60 million per year. If it were five cents more expensive, the total subsidy would increase to $300 million per year. If Palisades operated for another 5 or 10 years, the total ratepayer subsidy could reach into the billions of dollars.

Holtec will likely apply for multiple federal subsidies as well. To reopen Palisades, Holtec has already applied to the Department of Energy (DOE) for a billion dollar nuclear loan guarantee under the 2022 Inflation Reduction Act, and may apply for an additional $1.2 billion from the 2021 Infrastructure bill. Separately, Holtec has applied to DOE for $7.4 billion in loan guarantees under the 2005 Energy Policy Act for one or more future small modular nuclear reactors.

Michigan taxpayers and ratepayers have had too many nuclear white elephants: 

• Detroit Edison’s Fermi-1 cost $130 million ($1.3 billion in today’s dollars) and was shut down in 1972 after generating electricity for a few months and suffering a partial fuel meltdown;
  
•  In the single greatest financial disaster in Michigan history, Consumers Energy spent $4.3 billion on the Midland nuclear plant before cancelling it in 1984 without generating a single kilowatt of electricity;
  
• DTE Energy’s Fermi-2 cost almost 20 times more than its initial estimate, and DTE charged ratepayers for the entire $4 billion plus the nominal 10% profit guaranteed by its monopoly status.
  

Of course, Michigan is not unique in this regard, as no U.S. nuclear power plants have been built on schedule or on budget in the last 50 years. In the wake of these and scores of other nuclear economic debacles across the country after Three Mile Island, Forbes business magazine concluded, “The failure of the U.S. nuclear power program ranks as the largest managerial disaster in U.S. business history….only the blind, or the biased, can now think that money has been well spent.” 

We all agree that addressing our climate emergency must be a Michigan and national priority. But resuscitating Palisades is a dead end climate energy strategy. A closed U.S. nuclear power plant has never been re-opened and would take, at best, many years. Investing in wind, solar, and battery storage provides much faster, cheaper, and more sustainable greenhouse gas emissions reductions. Of course, nuclear plants also entail unnecessary risks such as high-level nuclear waste, routine radiation releases, the potential for catastrophic accidents, and terrorist attacks. 

We must focus our state and federal resources on the most economical and sustainable climate energy solutions, and not squander more taxpayer and ratepayer funds on more misguided investment in nuclear power. 

If, like me, you live in Michigan, please contact your state legislators (www.house.mi.gov and www.senate.michigan.gov), Governor Whitmer’s office (517-335-7858), and Michigan Public Service Commission (517-284-8100) to demand a transparent debate about whether we focus our climate-related taxpayer and ratepayer monies on solar, wind, and batteries, as in the Governor’s MI Healthy Climate Plan, or waste money on more nuclear white elephants.

If you live outside of Michigan, but have family or friends in the state, please educate them and encourage them to take action.

Jeff Alson is an Alliance to Halt Fermi 3 board member and an environmental engineer who worked on auto pollution issues for 40 years at the U.S. Environmental Protection Agency.

The opinions expressed in articles by outside contributors and published on the Beyond Nuclear International website, are their own, and do not necessarily reflect the views or positions of Beyond Nuclear. However, we try to offer a broad variety of viewpoints and perspectives as part of our mission “to educate and activate the public about the connections between nuclear power and nuclear weapons and the need to abandon both to safeguard our future”.