Entergy Corporation (NYSE: ETR) and Consumers Energy, the principal
subsidiary of CMS Energy (NYSE: CMS), have reached an agreement for Entergy to
purchase the 798-megawatt Palisades Nuclear Plant near South Haven, Mich., for
With the addition of Palisades, Entergy – the nation's second largest nuclear
power company – will own 11 nuclear generating reactors and manage a 12th.
Palisades is the company's second reactor in the Midwest. Five others are in the
South and five are in the Northeast.
The $380 million price represents $242 million for the plant itself, $83
million in nuclear fuel based on current market prices, and $55 million in
related assets. The sale also includes the Big Rock Point Independent Spent Fuel
Storage Installation and compensates Entergy for accepting this responsibility.
“The Entergy fleet advantage will assure customers of Consumers Energy that
Palisades will continue to be a safe, clean, reliable and low cost producer of
electric energy for Michigan for the long term,” said Entergy Nuclear Chief
Executive Officer Gary J. Taylor.
“This is also good news for Palisades employees because Entergy is a strong
people-oriented nuclear operator. Being a part of a fleet of 12 power reactor
units could open many new career opportunities for Palisades people in the
In addition to the $380 million purchase price, Entergy will make employment
offers to all 500 of the plant’s active employees at their same salaries for 18
months. Entergy has also committed to maintain the benefits programs for the
employees for 36 months.
As part of the purchase, Entergy also agreed to sell 100 percent of the
plant’s output, up to its current 798 megawatts, back to Consumers Energy for 15
years at a price structure that retains the benefits of the low-cost nuclear
generation for Consumers Energy’s 1.8 million electric customers.
Other highlights of the sales agreement:
- Entergy will assume responsibility for eventual decommissioning of the
plant. Consumers Energy will retain $200 million of the current $566 million
Palisades decommissioning funds balance, with the later return of $116 million
more pending a favorable federal tax ruling.
- Consumers Energy will pay Entergy $30 million to accept responsibility for
the spent fuel at the decommissioned Big Rock Point nuclear plant, which is
located near Charlevoix, Mich.
Palisades has operated at an average capacity factor of 89 percent from 2002
through 2005. The plant set a CMS Energy record in 2004 for the longest
continuous operation of any of its electric generating units at 478 days.
Palisades already has applied for a 20-year extension of its operating
license and expects to receive it in early 2007. Its current operating license
expires in 2011.
Entergy knows the reactor design of Palisades. Entergy already has two
Combustion Engineering pressurized water reactors in its 11-reactor fleet.
Palisades will be the third, opening up opportunities to improve Palisades’
operations through fleet purchasing, inventory management, and shared management
and other economies of scale.
The sale transaction is targeted to close in the first quarter of 2007. The
final purchase price will be subject to several adjustments at closing. The sale
must be reviewed by the Federal Energy Regulatory Commission, the Nuclear
Regulatory Commission, the Michigan Public Service Commission, and other
regulatory and state agencies.
The other nuclear plant operated by Entergy in the Midwest is the Cooper
Nuclear Station at Brownville, Neb., owned by Nebraska Public Power District.
David Joos, CMS Energy’s president and chief executive officer, said the sale
agreement with Entergy capped a competitive bid process launched in December.
“We are pleased with the outcome of this auction. Entergy has a national
reputation as one of the premier operators of nuclear energy plants in the country and
can continue the long tradition of safe, reliable, and economic production from
the Palisades plant,” Joos said.
Concentric Energy Advisors, located in Marlborough, Mass., served as
Consumers Energy’s financial advisor and auction manager for the Palisades sale.
Concentric Energy Advisors also is providing strategic support throughout the
transaction and regulatory approval process.
Entergy Corporation, headquartered in New Orleans, La., is an integrated
energy company engaged primarily in electric power production and retail
distribution operations. Entergy owns and operates power plants with
approximately 30,000 megawatts of electric generating capacity. Entergy Nuclear,
its nuclear businesses headquartered in Jackson, Miss., is the second-largest
nuclear power operator in the United States and the largest in the Northeast.
Entergy delivers electricity to 2.7 million utility customers in Arkansas,
Louisiana, Mississippi and Texas. Entergy has annual revenues of more than $10
billion and approximately 14,000 employees. Additional information regarding the
transaction is available in Entergy’s investor release dated July 12, 2006, on
Entergy’s investor relations website at
CMS Energy is a Michigan-based company that has as its primary business
operations an electric and natural gas utility, natural gas pipeline systems,
and independent power generation.
Consumers Energy is online at
Entergy Nuclear is online at