How Much Money Palisades Has For Cleanup And Why It Matters

Feb 22, 2017

A photo from the 1999 demolition of the Hanford Nuclear Reservation near Richland, Washington. It was part of the decommissioning of the former nuclear power plant.
Credit Jackie Johnston/AP Images

If you get your power from Consumers Energy, you’ve likely been putting money into a savings account for Palisades Nuclear Power Plant for years. Consumers charges rate-payers a small fee that goes into what’s called a decommissioning trust fund. That money will be used to clean up radioactive contamination at the site once Palisades shuts down. Right now there’s more than $400 million in the trust fund, but environmentalists worry it won’t be enough. 

When a nuclear power plant shuts down, eventually the company that owns it has to tear down the buildings and clean up any radioactive contamination at the site. How much does that cost? The Nuclear Regulatory Commission says the average is anywhere from $200 million to $600 million. 

Decommissioning some nuclear plants today costs a lot more than that. Zion Nuclear in Illinois and Vermont Yankee Power Plant, for example, are expected to cost more than a billion dollars in the end. Kevin Kamps is from Beyond Nuclear, a national group that wants to see nuclear power plants shut down. He says these numbers matter.

“The job is cleaning up radioactive contamination of the environment that has built up for years and decades. This is very dangerous and hazardous contamination,” says Kamps. 

A 2015 Nuclear Regulatory Commission report showed that the plant had about $100 million less than the agency’s suggested minimum. But the NRC says that no such shortfall exists and that Palisades is meeting the agencies requirements.

How Consumers Energy "Raided" Palisades Decommissioning Funds

Consumers Energy sold Palisades to Entergy Nuclear in 2006. As part of the deal, Consumers got to keep more than $300 million of the decommissioning money. That was more than half of the plant’s fund at the time, according to the St. Joseph Benton, Harbor Herald-Palladium.

“It was really incredible that they got away with that. That was ratepayer money that they put in their pockets,” says Kamps.

Kamps says Consumers did give about a third of that money back to its customers.

“And I guess that was their justification hopefully to keep ratepayers quiet. Most ratepayers didn’t even know that this was happening,” he says.

At the time, Entergy - Palisades’ new owner - thought the plant would easily make up that money. After all, it was supposed to operate until 2031, not 2018.

Plant Has 60 Years To Save Up Money

The NRC says Palisades still has quite some time to gather enough funds for decommissioning. Nuclear energy companies can let a plant sit for up to 60 years after shutdown until they’re ready to dismantle its buildings and clean up any contamination at the site.

“That allows for radioactive decay of any material that’s at the site. And that in turn results in less dosage to workers that are actually going to be involved in the cleanup,” says Rhex Edwards, a senior health physicist at the NRC.

Environmentalists argue that has more to do with funding than safety.

Outdated Math Leads To Uncertain Funding

Right now, almost half of the country’s shuttered nuclear plants are just waiting to be torn down. But why don’t these plants have enough money to decommission right away?

Another government agency says there’s a problem with the NRC’s math. Frank Rusco is the director of the natural resources and energy group for the Government Accountability Office. The GAO audits other federal government agencies and reports back to Congress.

“What really is the issue is NRC’s formula for establishing how much decommissioning money needs to be collected before the retirement of the plant, it’s very old and so it’s based on old data,” says Rusco. 

In 2012, a GAO report found the NRC’s formula often miscalculated the cost of decommissioning nuclear plants. Of the plants the GAO studied, many underestimated the cost. Some estimates accounted for only about 60 or 70 percent of the final total. A few times the formula overestimated. Rusco says the GAO recommended that NRC revise its formula.

“So they could build in uncertainty about cost and also forecast better what they expect costs to be doing in the future. And they have not yet implemented that recommendation,” he says.

In fact, the formula was created long before any nuclear plants were ever decommissioned. That’s according to Greg White, he’s with a trade group that represents state utility commissions.

“It was not an exact science. It was just kind of a ballpark or best guesstimate if you will,” he says.

How A Shortfall Could Turn Into A Surplus

If a company doesn’t have enough money to decommission on its own, it might explore cheaper options. White says sometimes nuclear companies will hire for-profit firms that decommission plants at a lower cost.

Kevin Kamps of Beyond Nuclear says Entergy - the company that owns Palisades - is already doing this at its Vermont Yankee plant. It recently sold Yankee to a company called Northstar.

“And the whole idea is to expedite decommissioning and to get the job done quickly and NorthStar again will try to simply pocket the proceeds, the leftover funding,” says Kamps.

But how much money will end up in Palisades’ decommissioning fund and what Entergy will decide to do with it is up in the air for now. Palisades is expected to complete a more in-depth decommissioning cost estimate two years after it shuts down.