Breakdown of Bailouts at Holtec’s Palisades NPP

[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.]

 

[September 30, 2024 update: Bridge Michigan reports that the USDA (U.S. Department of Agriculture) grant to Wolverine (in MI) and Hoosier (in IN and IL) rural electric co-ops is worth $1.3 billion. Added to DOE’s finalized $1.52 billion bailout, and the State of Michigan’s $300 million in grants, the grand total thus far is $3.12 billion of federal and state taxpayer bailouts for the Palisades restart. (Please note, there is still some question whether a portion of the $1.3 billion USDA grant is associated with solar power for Hoosier. There is also a very significant question as to how long the USDA grants are for — a decade? Holtec plans to operate Palisades for a quarter-century into the future, from 2025 to 2051. This begs the question — will Wolverine and Hoosier re-apply later for yet more bailouts?!)]

 

[September 5, 2024 update: Holtec/Palisades has thus far received $2.79 billion in bailouts for the zombie reactor restart alone: $1.52 billion + $300 million + $970 million, compliments of a U.S. Department of Energy loan guarantee, State of Michigan grants, and a U.S. Department of Agriculture grant. (Per above, that $970 million in USDA grants applied for, appears to have been increased, to $1.3 billion awarded.) However, Holtec has requested numerous additional bailouts, to be paid for by the public, whether federal taxpayers, state taxpayers, or regional electric ratepayers. If Holtec gets all it’s asking for, it would surmount $8.62 billion for the reactor restart alone.]

 

Bailouts, giveaways, and subsidies, oh my! What are anti-nuke watchdogs to do, Todo? We must 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 (and decommissioned, although still radioactively contaminated) Big Rock Point NPP site, both on west Michigan’s Lake Michigan shoreline: $8.62 billion for “zombie” reactor restart at Palisades + $7.4 billion for SMR new builds at Palisades and Big Rock Point = a total of $16.02 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 [yet to be approved]

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, initially 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 — Holtec’s CEO, Krishna Singh, was quoted saying so in an ExchangeMonitor interview. For nearly two years thereafter, it proposed building four SMR-160s at Palisades (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 and decommissioned, but still radioactively contaminated, 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 — soon thereafter enacted by President George W. Bush — 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 nuclear loan guarantee funding from this source alone, 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?! [ongoing plundering?]

Holtec took ownership of Palisades, supposedly for decommissioning purposes, on June 28, 2022. This included taking ownership, and gaining access to, the ratepayer-funded Palisades Decommissioning Trust Fund (DTF). But 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, even though it is not even needed! On March 31, 2023, Holtec’s Decommissioning Trust Fund (DTF) expenditures report, for 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 stunned 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 repay, with interest. 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, published in late March 2024, revealed that Holtec’s high burn rate on the Palisades DTF continued after December 31, 2023, and actually worsened. Holtec reported that from January 1, 2023 to December 31, 2023, it had spent another $120 million from Palisades’ DTF. This is an average of $10 million per month, significantly higher than its 2022 spending rate! Again, stunned watchdogs asked, ON WHAT?! Thus, from June 28, 2022 to December 31, 2023, Holtec itself has reported spending a total of $164 million from the DTF at Palisades, but on what is most unclear. 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 clean up of the severely radioactively contaminated Palisades site, on the Lake Michigan shore, ever to be carried out. By March 2024, NRC had cited Holtec for misspending DTF moneys on unauthorized activities across its decommissioning fleet of closed reactors, as reported by Christine Legere in the Provincetown Independent. However, whereas NRC and Holtec put the figure of misspending at Palisades at a mere $53,000, watchdogs continue to allege the misspending of tens of even hundreds of millions of dollars. On April 10, 2024, NRC held a Title 10, Code of Federal Regulations, Part 2.206 emergency enforcement petition hearing on watchdogs’ allegation of DTF misspending by Holtec at Palisades. That proceeding is still in limbo. As of October 15, 2024 — more than 1.5 years after watchdogs wrote NRC’s OI and OIG, demanding investigaations — no clear accounting for how Holtec spent $164 million in Palisades’ DTF moneys, from June 28, 2022 to December 31, 2023, has ever been provided.

 

$300 million from the State of Michigan for Palisades zombie reactor restart [approved in 2023 and 2024]

As revealed in a secret July 5, 2022 application to DOE for Palisades restart bailouts, Holtec had been requesting $300 million from the State of Michigan for this purpose since at least that far back in time. In fact, Michigan Governor Gretchen Whitmer was the first to float the trial balloon of reactor restart at Palisades, on April 20, 2022 (as reported by the likes of Carol Thompson in the Detroit News) — exactly a month before Palisades was permanently closed by its previous owner, Entergy, on May 20, 2022. On June 28, 2023 (a year to the day after Holtec took over at Palisades), 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 began to happen on March 27, 2024, when Energy Secretary Granholm herself appeared at a love fest at Palisades, alongside Gov. Whitmer, to announce a conditional DOE loan guarantee for $1.52 billion; the conditional loan guarantee was finalized some months later (see below). In addition, in 2024, 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 approved this second request, and Whitmer signed the budget bill into law, in summer 2024. Like in 2023, a growing coalition of nearly 50 Michigan environmental organizations explicitly opposed, in letters to each and every state legislator, these state giveaways to Holtec for Palisades reactor restart, including the Sierra Club Michigan Chapter (with 150,000 Michigander members), and, most recently, via its own public statement, the Michigan Environmental Council (itself a coalition of more than 70 environmental groups statewide). But the coalition’s pleas fell on deaf ears at the state legislature and governor’s office.

 

$2 billion from DOE in Civil Nuclear Credits [not yet approved]

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 submitted the secret bailout application/reactor restart strategy document 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, unneeded, and 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, replaced by the reactor 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 due to multiple 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 previously stated 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 DOE’s now revised guidelines were themselves 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.

 

$1.52 billion “bridge” loan guarantee for Palisades reactor restart [approved summer 2024]

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%?! The awarding of the conditional loan guarantee was announced by Energy Secretary Jennifer Granholm and Governor Gretchen Whitmer at a love fest held at Holtec’s Palisades nuclear power plant on March 27, 2024. The U.S. Department of Energy Loan Programs Office issued its Record of Decision, finalizing this $1.52 billion loan guarantee, in summer 2024. Its finalization was announced yet again — for some strange reason — in autumn 2024, by DOE Loan Programs Office director, Jigar Shah, at a second love fest at Palisades, this time attended by high-ranking DOE and USDA officials.

This fear of escalating bailouts, above and beyond what Holtec and its partners had originally applied for, seems to have been validated by the USDA grants also reported in this posting, as well. Power Purchase Agreement customers Wolverine and Hoosier were originally reported to have applied for “only” $970 million from USDA. But they were awarded $1.3 billion, $330 million more than the originally applied for amount!

 

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 [sales have not yet begun; Holtec is aiming to restart Palisades by August, to October, or December, 2025]

On September 13, 2023 Holtec announced a buyer for the Palisades restarted reactor’s electricity: Wolverine (Michigan) and Hoosier (Indiana and Illinois) rural electric co-ops. However, the terms of the Power Purchase Agreement (PPA) were — and still are — kept secretive. Some of the secret terms of the PPA 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 (see above). 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, as well.) In it, Holtec stated it was modeling the PPA on the one between Entergy and Consumers Energy, also at Palisades, from 2007 to 2022. As stated by a Consumers Energy spokesman to Kelly House, as quoted in her article in 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 under the PPA would amount to $412.5 million per year, or more, under its proposed PPA. In October 2023, Holtec first announced its intention to apply to the NRC for an 80-year operating license, till 2051. Holtec has, at various times, stated its plans to restart Palisades in August (or October, or December) of 2025. This means 26 years of PPA electricity sales to Wolverine and Hoosier, from 2025 to 2051. 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, Indiana, and Illinois. Note that by charging 57%, or more, above market rates, Holtec would pocket more than $3.5 billion in excessive surcharges, by gouging electric ratepayers across the region, over the course of a quarter-century. Wolverine and Hoosier rural electric co-op ratepayers would be locked into this PPA, even if competitors (such as renewable sources, combined with storage and efficiency) offer ever more cost-effective electricity, which is expected.

 

Application for $970 million from the U.S. Department of Agriculture, to defray 25% of the PPA electricity sales costs [$1.3 billion actually approved, on September 5, 2024]

On October 19, 2023, application for another $970 million bailout for the restart, this time from the U.S. Department of Agriculture [USDA], 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 Holtec/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.

USDA approved this grant on September 5, 2024, as announced by Agriculture Secretary Vilsack, as well as by President Biden, as part of a presidential visit to Wisconsin. It was again announced by high-ranking USDA officials at the second love fest in six months held at Palisades. Bridge Michigan reported the USDA grant to be $1.3 billion, $330 million more than previously reported by other media outlets.

 

How big a cut from a billion dollar DOE Hydrogen Hub grant?! [Award announced in 2023, but Holtec/Palisades’ cut not yet specified publicly]

On October 20, 2023, reports of DOE’s award of a billion dollar federal Hydrogen Hub grant to a 70-member Michigan consortium begged the question, how much would member Holtec get at Palisades?! If the past is any indication, the nuclear power industry often hogs the trough, eating the lion’s share of funding, while others are left to split up the leftover crumbs.

 

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 (Holtec owns and controls both Lake Michigan shoreline sites).

What about the costs to taxpayers for the unprecedented, extremely high-risk Palisades zombie reactor restart? Holtec has requested, and received, $300 million from the State of Michigan. Holtec/Palisades has also been awarded $2.82 billion from DOE and USDA ($1.52 billion in loan guarantees from DOE, and $1.3 billion from USDA). Holtec is also likely still pursuing another $2 billion in Civil Nuclear Credits from DOE. Thus, if Holtec succeeds in securing the CNCs, as watchdogs fear, another $2 billion would be added to the $3.12 billion already received from federal and state taxpayers, for a grand total of $5.12 billion towards the restart scheme.

But what about the DOE’s billion dollar federal 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 more than $5.12 billion in taxpayer bailouts for Palisades’ restart that Holtec has already received, or is still seeking.

But what about ratepayers?

Holtec may have already illegally misspent many tens of millions of dollars, to well 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 facilities dismantlement, and 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. From June 28, 2022 to December 31, 2023, Holtec reports it has spent down $164 million from the Palisades DTF. On what is most unclear, but certainly not on decommissioning, supposedly the legal purpose of the DTF. Watchdogs allege a lot of it has been spent on Holtec’s Palisades restart scheme, which would be illegal — only NRC has done very little, to nothing meaningful, about it.

Most to all Wolverine (of Michigan) and Hoosier (of Indiana and Illinois) 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 and Illinois?!) 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, while gouging rural electric ratepayers across three states.

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? Is the USDA award of $1.3 billion only supposed to cover a ten-year period? Will Wolverine and Hoosier apply yet again after ten years, for yet more federal bailout money from USDA?

$5.12 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 $8.62 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 Holtec/Palisades’ sibling Big Rock Point site), then a grand total of more than $16 billion of public money would be given away to Holtec for its re-nuclearization schemes on Michigan’s Lake Michigan shoreline.