Breakdown of Bailouts at Holtec’s Palisades NPP

"Burning Money," image featured on cover of The Nation magazine by Gene Case/Avening Angels, used with permission.

[Image: Design by Gene Case, Avenging Angels; the image graced the cover of The Nation magazine in 2003, accompanying an article by Christian Parenti about the George W. Bush/Dick Cheney nuclear power relapse.]

Bailouts, giveaways, and subsidies, oh my! What are anti-nuke watchdogs to do, Todo? Summon tremendous heart, courage, and brains to fight back, it seems!

Holtec International has requested, and its friends in high places in government seem all too happy to accommodate, massive public bailouts for the unprecedented, extremely high-risk Palisades zombie reactor restart, as well as the so-called Small Modular Reactor (SMR) new builds scheme on the same tiny (432-acre) Lake Michigan shoreline site in Covert, southwest Michigan.

Here is a breakdown of the shoes that have already dropped in this regard, and those that could soon follow, at the closed Palisades nuclear power plant (NPP) site, as well as its sibling, the closed Big Rock Point NPP site, both on west Michigan’s Lake Michigan shoreline: $8.3 billion for “zombie” reactor restart at Palisades + $7.4 billion for SMR new builds at Palisades and Big Rock Point = a total of $15.7 billion, and still counting! Read on below for the devilish details of these nuclear nightmares:

$7.4 billion in DOE nuclear loan guarantees for SMRs

Some years ago now, Holtec applied to the U.S. Department of Energy (DOE) for $7.4 billion in nuclear loan guarantees, for the design certification, construction, and operation of multiple so-called “Small Modular Reactors” (SMRs). Thus far, Holtec has targeted three of its nuclear power plant sites, deceptively acquired for decommissioning purposes only, supposedly: Oyster Creek, New Jersey; Palisades, Michigan; Big Rock Point, Michigan. Holtec first floated the trial balloon of building SMRs at Palisades in early April 2022. For nearly two years, it proposed building four SMR-160s there (160 Megawatts-electric each). But on December 5, 2023, Holtec abruptly and without explanation changed its plan to instead proposing two SMR-300s at Palisades. While part of the nuclear loan guarantees could be used to build SMRs at those other sites (including Palisades’ sibling closed nuclear power plant, Big Rock Point, on the Lake Michigan shore in northern Michigan, near Charlevoix), two SMR-300s at Palisades alone would likely eat up a significant portion of the $7.4 billion. The source of these particular loan guarantees is the authorization of the nuclear power loan guarantee program in the 2005 Energy Policy Act, followed by the appropriations by Congress on December 23, 2007 for $22.5 billion in nuclear loan guarantees. Of that amount, “only” $12 billion has been expended, all at the Vogtle Units 3 and 4 new build in Georgia ($8.3 billion approved by the Obama DOE, and another $3.7 billion approved by the Trump DOE). This leaves $10.5 billion in funding, from which this $7.4 billion would come. Note that Holtec faces competition from other vendors of SMRs, so it is not a done deal yet.

Tens (to hundreds?!) of millions of dollars misspent from the Palisades Decommissioning Trust Fund?!

Holtec took ownership of Palisades, supposedly for decommissioning purposes, on June 28, 2022. This included taking ownership, and gaining access to, the Palisades Decommissioning Trust Fund (DTF). But, as laid out in the this post, Holtec pulled a con job, a bait and switch trick, instead secretly reversing its plans, as it announced on September 9, 2022: it would seek to restart Palisades instead, an unprecedented action, both outrageously expensive for the public, and extremely high-risk for safety, security, health, and the environment. On March 31, 2023, Holtec’s Decommissioning Trust Fund (DTF) expenditures across its fleet of permanently shutdown reactors (Oyster Creek, New Jersey; Pilgrim, Massachusetts; Indian Point, New York; Palisades and Big Rock Point, Michigan) was posted at the U.S. Nuclear Regulatory Commission’s (NRC) ADAMS (Agency-wide Documentation and Management System). Remarkably, just from January 1 to December 31, 2023, Holtec spent down $565 million from its various DTFs. The question was, how much decommissioning work was actually performed (as well as how much non-decommissioning work, such as spent nuclear fuel management and site restoration, which NRC has, most unfortunately, also allowed already inadequate DTF monies to be spent on). Holtec’s expenditures from the Palisades DTF are the most suspect and alarming. From June 28, 2022 to December 31, 2022, Holtec reported spending $44 million from the Palisades DTF. That means Holtec spent more than $7.33 million each and every month for six months. But on March 24, 2023, at a meeting with NRC regarding a regulatory pathway to unprecedented restart of a closed reactor, at Palisades, a senior Holtec spokesman revealed that Holtec had performed little to no decommissioning work up to that point. The only decommissioning work it had done was minor modifications to the mechanical draft cooling towers, all easily reversible, he stated. In addition, little to no spent nuclear fuel management, nor site restoration, had been done. This left watchdogs wondering what the $44 million — nearly 10% of Palisades’ severely underfunded DTF — had been spent on?! Doing what?! By the next month, the watchdogs, including Beyond Nuclear, filed official allegations at the NRC’s Office of Investigations, as well as Office of the Inspector General, calling for investigations of both Holtec (for misspending DTF monies) and NRC staff (for allowing Holtec to do so) for violating laws and regulations governing DTF expenditures. The NRC investigators got back to the watchdogs some months later, reporting that they found no misspending of Palisades DTF monies by Holtec, other than a relatively small amount, $53,000, which Holtec had supposedly promised to put back. This has left watchdogs baffled, because their original question — on WHAT had Holtec spent $44 million from the DTF — remained unanswered. Watchdogs continue to suspect Holtec spent the money on its restart scheme, which would be illegal. The next DTF expenditures report is presumably due out on March 31, 2024, which may shed light on whether Holtec’s high burn rate on the Palisades DTF continued after December 31, 2023. Watchdogs fear Holtec has treated the Palisades DTF as a slush fund to pursue its Palisades restart scheme, and perhaps even other schemes, meaning the already significantly inadequate DTF may vanish entirely, with little or no radiological clean up of the severely radioactively contaminated Palisades site, on the Lake Michigan shore, ever to be carried out.

$300 million from the State of Michigan for Palisades zombie reactor restart

As revealed in a secret July 5, 2022 application to DOE for Palisades restart bailouts, Holtec has been requesting $300 million from the State of Michigan for this purpose. In fact, Michigan Governor Gretchen Whitmer was the first to float the trial balloon of reactor restart at Palisades, on April 20, 2022 — exactly a month before Palisades was permanently closed by its previous owner, Entergy, on May 20, 2022. On June 28, 2023, the Michigan state legislature responded to Gov. Whitmer’s budget request for Palisades reactor restart subsidies, by approving $150 million as part of the annual budget bill. Gov. Whitmer signed the bill into law on July 31, 2023. The $150 million is contingent on federal monies flowing first, which has not yet happened, but could very soon. In addition, just a few weeks ago, Gov. Whitmer proposed a second installment of $150 million from the state, which would raise the total amount to Holtec’s requested $300 million. The state legislature has yet to act. Like last year, a growing coalition of nearly 50 Michigan environmental organizations opposes these state giveaways to Holtec for Palisades reactor restart, including the Sierra Club Michigan Chapter (with 150,000 Michigander members), and, most recently, the Michigan Environmental Council (itself a coalition of more than 70 environmental groups statewide).

$2 billion from DOE in Civil Nuclear Credits

On July 5, 2022, Holtec secretly applied to DOE for “roughly 2 billion dollars” in Civil Nuclear Credits (CNCs), a funding program for operating reactors at risk of “premature” closure due to their inability to economically compete with cheaper electricity sources such as renewables, established by the 2021 Infrastructure Investment and Jobs Act (more commonly known as the Bipartisan Infrastructure Law). Holtec did so just a week after taking over Palisades from Entergy, supposedly to decommission it. This turned out to be a con job, a bait and switch trick — Holtec proposed to use the $2 billion to restart Palisades, which is unprecedented, as well as extremely high risk for safety, security, health, and the environment. Holtec kept its application completely secret until September 9, 2022, when — together with Gov. Whitmer — it publicly announced its abandonment of the decommissioning plan, and restart scheme instead. Both Holtec and DOE kept the application itself, and its detailed contents, concealed from the public, invoking proprietary trade secrecy. However, on November 18, 2022, Holtec announced DOE had rejected its application. This could well have been do to environmental coalition letters to Energy Secretary Jennifer Granholm (herself a former governor and attorney general of Michigan), as well as Gov. Whitmer, expressing strong opposition to the restart scheme, and warning that Palisades, a permanently closed reactor, was not legally eligible for CNC funding. Holtec publicly announced on Nov. 18, 2022 that, due to DOE’s rejection of its CNC application, it would not again apply for the CNCs, and instead return to its previous plan to decommission Palisades. However, on December 20, 2022, Holtec reversed itself yet again, announcing it would still seek Palisades’ restart, and it would again apply for CNCs. In fact, DOE revised its CNC application guidelines, doing acrobatics to try to make Palisades eligible. The growing environmental coalition continued to write Energy Secretary Granholm, warning that the revised guidelines themselves were illegal. Although Brian Dabbs of E&E reported on January 8, 2024 that Holtec had stated it would no longer apply for CNCs, watchdogs — including Beyond Nuclear — do not believe this. After all, Holtec had said on Nov. 18, 2022 it would no longer seek to restart Palisades, instead returning to its original decommissioning plan; but just a month later, Holtec reversed itself yet again, announcing the restart scheme was back on. Thus, watchdogs suspect Holtec will again apply, when it is good and ready, and have likely been lobbying for CNCs behind the scenes, non-stop.

$1.5 billion “bridge” loan (guarantee) for Palisades reactor restart

By early 2023, trade press reporting indicated that Holtec’s top bailout priority for restarting Palisades was what it termed a “bridge loan” — a billion dollar DOE loan guarantee. However, in a January 30, 2024 Bloomberg article, the loan guarantee amount had grown by 50%, to $1.5 billion. Bloomberg also reported the Biden administration was poised to grant it in the near future. This loan guarantee would come from a fund established by the Inflation Reduction Act of 2022. The sudden and unexplained increase fro $1 billion to $1.5 billion begs the question — will more, or all, of Holtec’s bailout requests at Palisades suddenly jump in size by 50%?!

Power Purchase Agreement: Electricity sales at up to 57%, or more, above market rates; $412.5 million, or more, in annual gross revenues; total revenues of more than $10 billion in overpriced electricity sales over 26 years

On September 13, 2023 Holtec announced a buyer for the Palisades restarted reactor’s electricity: Wolverine (Michigan) and Hoosier (Indiana) rural electric co-ops. However, the terms of the Power Purchase Agreement were kept secret. The secret terms were brought to light a month later, however, when Beyond Nuclear published a press release, detailing the contents of Holtec’s secret July 5, 2022 application to DOE for CNCs. Beyond Nuclear had obtained the application from the State of Michigan via a Freedom of Information Act request. (The July 5, 2022 CNC application also shed a lot of light, and provided dollar-figure documentation, on the other federal and state bailouts laid out above.) In it, Holtec stated it was modeling the Power Purchase Agreement (PPA) on the one between Entergy and Consumers Energy, from 2007 to 2022. As stated by a Consumers Energy spokesman to the Bridge Michigan on May 20, 2022, that previous PPA charged Consumers Energy ratepayers up to 57% above market rates. Holtec’s July 5, 2022 CNC application to DOE stated that if it could, Holtec would charge more than 57% above market rates. Holtec also revealed that gross revenues for electricity sales would amount to $412.5 million per year, or more, under its proposed PPA. In October 2023, Holtec began the application process for an 80-year operating license, till 2051. Holtec plans to restart Palisades in August 2025. This means 26 years of PPA electricity sales to Wolverine and Hoosier. Over 26 years (not accounting for refueling outages, or other temporary shutdowns, as due to breakdowns or safety-related incidents), if the 57% above market rates surcharge was applied continuously, Holtec would garner $10.725 billion in overpriced electricity sales, the burden falling on rural electric co-op ratepayers in Michigan and Indiana. Note that by charging 57%, or more, above market rates, Holtec would pocket more than $3.5 billion in excessive surcharges from electric ratepayers, over more than a quarter-century.

$970 from the U.S. Department of Agriculture, to defray 25% of the PPA electricity sales costs

On October 19, 2023, another $970 million bailout for the restart, this time from the U.S. Department of Agriculture, was reported. It would reimburse the Wolverine rural electric co-op for 25% of the Power Purchase Agreement (PPA) electricity sales costs. If 25% of the PPA would cost $970 million, then the full PPA would cost four times that: $3.88 billion. Compare this to the figure just above, $10.725 billion if Holtec grosses $412.5 million per year, for 26 years. Much more light needs to be shined on the devilish details of the PPA, including how big the excessive burden of Palisades surcharges would be on rural electric co-op ratepayers. And yet Holtec, Wolverine, Hoosier, and the Michigan Public Service Commission have largely to entirely kept the terms of the PPA obscured. Given the stakes, full transparency is essential! Note that, if finalized, 25% of the burden for the overpriced electricity sales from Palisades would fall onto U.S. taxpayers (via the U.S. Department of Agriculture), while 75% would fall on rural electric co-op members’ electric bills.

How big a cut from a billion dollar DOE Hydrogen Hub grant?!

On October 20, 2023, reports of DOE’s award of a billion dollar Hydrogen Hub grant to a 70-member Michigan consortium begged the question, how much would member Holtec get at Palisades?!

What are the grand totals here?!

$7.4 billion in DOE nuclear loan guarantees for SMRs could be entirely spent at the Palisades site, for two SMR-300s. Or, the entire $7.4 billion could be spent at Palisades and Big Rock Point, assuming one or more SMRs are built in northern Michigan as well.

What about the costs to taxpayers for the unprecedented, extremely high-risk Palisades zombie reactor restart? Holtec has requested $300 million from the State of Michigan, as well as $3.5 billion from DOE ($1.5 billion in loan guarantees, and $2 billion in Civil Nuclear Credits). That alone would amount to $3.8 billion from mostly federal, but also state, taxpayers.
But another $970 million could also come from the U.S. Department of Agriculture, to defray 25% of the Power Purchase Agreement. That takes the taxpayer bailouts to a level of $4.77 billion.

But what about the DOE’s billion dollar Hydrogen Hub grant? How much of that would Holtec pocket at the restarted Palisades reactor? Tens of millions of dollars? Hundreds of millions of dollars? This would have to be added to the $4.77 billion in taxpayer bailouts for Palisades’ restart.

But what about ratepayers?

Holtec may have already illegally misspent many tens of millions of dollars, to more than $100 million, of the already inadequate Palisades Decommissioning Trust Fund on its restart scheme. The DTF was paid into, from 1971 to 2007, by Consumers Energy ratepayers. It was meant for clean up of the radioactive contamination of the Palisades site. But it may be completely spent, with no such work ever having been carried out. Will Holtec spend the entire around $500 million Palisades DTF on its restart scheme, and/or other schemes? Will NRC let them get away with that? Consumers Energy ratepayers are also taxpayers (both state and federal), of course, meaning they are getting slammed in both their ratepayer and taxpayer pockets at Palisades.

Most to all Wolverine (of Michigan) and Hoosier (of Indiana) rural electric co-op members are also taxpayers, of course. (Which begs the question, why are Michigan state taxpayers forking over $300 million to Holtec, to the supposed benefit of ratepayers in Indiana?!) Holtec has projected $412.5 million in annual electricity sales gross revenues, for up to 26 years, based on a Power Purchase Agreement (PPA) charging up to 57%, or more, above market rates. This would add up to $10.725 billion in gross revenues over 26 years. A 57%, or higher, surcharge above market rates, if applied for the entire 26 years for the entire amount, would mean that more than $3.5 billion of the revenues were simply Palisades surcharges going into Holtec’s pocket.

However, under the terms of the U.S. Department of Agriculture bailout mentioned above, sales from the Palisades restarted reactor might only amount to $3.88 billion, not $10.725 billion as stated immediately above. Would that be over 26 years, or are the terms of the Dept. of Ag. bailout assuming a shorter duration of Palisades’ operation?

$4.77 billion in federal and state taxpayer bailouts, plus $3.5 billion in ratepayer surcharges, and potentially hundreds of millions of dollars more in misspent ratepayer funds from the Palisades DTF, would add up to more than $8.3 billion in public giveaways to Holtec for the Palisades reactor restart alone.

And, if the entire $7.4 billion DOE loan guarantee is spent on two Holtec SMR-300s at Palisades (and one or more SMRs at Palisades’ sibling Big Rock Point site), then a grand total of more than $15.7 billion of public money would be given away to Holtec for its re-nuclearization schemes on Michigan’s Lake Michigan shoreline.

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