Michigan Gov. Gretchen Whitmer is playing with fire. She could end up repeating a mistake that is burning us here in New York for billions of dollars–running up electric bills with expensive subsidies for aging and unprofitable nuclear power plants. Michiganders beware: Gov. Whitmer’s push for a last-minute federal bailout to keep the Palisades nuclear power plant from closing could backfire, increasing your utility bills, and possibly even costing thousands of jobs around the state.
Last week, the governor announced she is in a last-minute scramble to try to prevent the closure of Palisades next month, which has been planned since 2017. Whitmer says she has been in discussions with the nuclear plant’s owner, Entergy, and the US Department of Energy to take advantage of a $6 billion bailout program created by the bipartisan infrastructure law enacted last year. Why hasn’t Whitmer, former governor Rick Snyder, or their Public Service Commission done anything about Palisades’ closure until now? They’ve all had five years to figure out how to cushion the blow to the 180 workers facing layoffs, support the local economy, and advance Michigan’s climate goals.
The trouble is that Entergy doesn’t want to continue running Palisades after its 15-year, overpriced contract to sell electricity to Consumers Energy expires in May. Entergy has already signed a contract to transfer ownership of Palisades to a nuclear waste company called Holtec, which plans to profit from its decommissioning, consisting of dismantling the plant and disposing of its radioactive waste.
New Yorkers are watching this with an unshakable feeling of deja vu. This is all remarkably similar to what happened here six years ago, even down to one of the central players. At the time, Entergy wanted to close the FitzPatrick nuclear power plant on Lake Ontario, near Syracuse. FitzPatrick was reported to be losing millions of dollars per year, because it was too expensive to earn a profit selling electricity. That was known since 2013, but Gov. Cuomo was unconcerned. He had also failed to support a call to ramp up the state’s renewable energy goals, despite talking big on climate change.
But when Entergy announced it would close FitzPatrick, it suddenly became one of Gov. Cuomo’s top priorities to prevent it. “Keep the jobs! Protect the climate! Save FitzPatrick, no matter the cost!” He ordered the Public Service Commission to create a major subsidy for all four upstate nuclear reactors. Entergy was not interested, even as the PSC considered granting subsidies totaling $2.4 billion to FitzPatrick and the other old reactors. Just like with Whitmer and Palisades now, the only option was to get another company to step in and take the unprofitable, old reactor off Entergy’s hands and continue running it with public subsidies.
The only taker was Exelon, which owned the other three reactors in New York. But Cuomo had to make it worth Exelon’s while to take on running a nuclear plant that Entergy was planning to scrap. The bailout ended up costing New York ratepayers over three times the original amount: $7.6 billion over 12 years. The PSC never considered other options that would have been less costly for consumers and created more jobs. It was “FitzPatrick or Bust.”
In reality, the nuclear bailout is costing New Yorkers two to six times more than it would to generate the same electricity with wind and solar. It is costing $10 billion more than if the PSC had chosen energy efficiency, which would have reduced electricity bills for households, businesses, and cities, and school districts. Instead, people throughout the state are paying more because Gov. Cuomo didn’t plan ahead.
Gov. Whitmer could make the same mistake now. Energy companies are not public charities. They make decisions based on their bottom line, and if the government wants them to take a business risk, they don’t do it without getting paid, with a profit. No one is going to take over Palisades and continue running it without Michiganders footing the bill. The federal bailout? It’s only around for four years–and nuclear plants are only eligible for it if they prove they can continue running after the federal subsidies end.
Palisades wouldn’t be closing in the first place if Entergy or another company could run it profitably without subsidies or gouging consumers with over-priced contracts. To make this happen, Gov. Whitmer will need the PSC to put ratepayers on the hook, one way or another.
Wind and solar–even coupled with battery storage–are the cheapest electricity we can buy now, with no radioactive waste and no carbon pollution. Energy efficiency is even cheaper, saving households and businesses money on energy they’ll never have to buy. Gov. Whitmer should learn from Gov. Cuomo’s folly. Make sure the community and workers at Palisades land on their feet, help save the climate, and transition Michigan to an affordable, sustainable future with good jobs in the new energy economy.