CMS utility banks on flexible generation options to make up for Palisades

Along with the announcement that it will terminate a power purchase agreement with the 800-MW Entergy (NYSE:ETR) Palisades nuclear plant early, CMS Energy (NYSE:CMS) utility Consumers Energy will rely on “flexible capacity options without big bets” to make up the difference.

Entergy now plans to close the Palisades nuclear plant in Michigan during the fall of 2018. Entergy bought the pressurized water reactor (PWR) from the CMS utility in 2007.

Under the original 15- year power purchase agreement, Consumers Energy was scheduled to purchase almost 100% of the power generated by Palisades through April 2022.

The two companies said Dec. 8 that they have agreed to terminate the contract in 2018 pending approval from the Michigan Public Service Commission (PSC).

CMS also released a “Future Capacity and Capex Update” on Dec. 8. The company said it is increasing its capital spending by $1bn between now and 2027. The company is focusing on more gas infrastructure, renewable energy and the Palisades PPA replacement.

The CMS utility expects to reap $45m in annual customer savings from early curtailment of the nuclear contract.

To make up for the lost generating capacity, CMS expects to tap 73 MW from the Ludington pumped storage project; the 540-MW Jackson combined-cycle gas plant; the 100-MW Apple Blossom wind project among other sources. Apple Blossom, which the Michigan utility bought earlier this year, is expected online by the end of 2017.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.