Wednesday July 12, 2006

Entergy to buy Palisades Nuclear Energy Plant

Owner of Fitz plant in Scriba expands holdings

    Entergy Corporation and Consumers Energy, the principal subsidiary of CMS Energy, have reached an agreement for Entergy to purchase the 798-megawatt Palisades Nuclear Plant near South Haven, Mich., for $380 million.

    Entergy owns and operates the James A. FitzPatrick plant at Nine Mile Point in Scriba.

    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 future."

    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.

    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.

    The sale transaction is targeted to close in the first quarter of 2007. 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.