Holtec’s “nuclear white elephant” secret plans revealed: SMRs at all decommissioning sites, $3.3+ billion bailout for unprecedented Palisades zombie reactor restart

Beyond Nuclear has obtained Holtec International’s secretive 42-page application, dated July 5, 2022, submitted to the U.S. Department of Energy (DOE). In it, Holtec seeks “roughly 2 billion dollars” (“Page 2,” p.4 on the PDF counter) from the Office of Nuclear Energy, in Civil Nuclear Credit (CNC) funding, to restart the closed Palisades atomic reactor, an unprecedented scheme. The figure is $800 million larger than previously known.

In addition, Holtec has also requested a “bridge loan from the LPO [DOE Loan Programs Office] to fund the project starting…when the State’s funding of $300 million will have been exhausted.” (Application, “Page 2,” p.4 on PDF counter)

Holtec’s application was obtained by Beyond Nuclear as part of a 967-page response to its Freedom of Information Act (FOIA) request to the State of Michigan Department of Licensing and Regulatory Affairs (LARA). Kevin Kamps, radioactive waste specialist at Beyond Nuclear, as well as a board of directors member for Don’t Waste Michigan, representing his hometown Kalamazoo chapter, filed the FOIA request, and has prepared analysis and commentary on Holtec’s application.

CNC funding was authorized by the 2021 Infrastructure Investment and Jobs Act, also known as the Bipartisan Infrastructure Law. But only operating reactors are legally eligible, not closed ones like Palisades. A broad state-wide and national environmental coalition opposed to the “zombie” reactor restart has reminded DOE repeatedly that the closed Palisades reactor is not eligible for CNC funding.

Holtec’s application to DOE, submitted just five days after the company acquired Palisades on June 28, 2022, reveals Holtec never intended to decommission Palisades, its purported objective, as communicated publicly in the years-long run up to its taking ownership of the atomic power plant. In the first paragraph of its “Introduction,” Holtec writes:

“Despite the success in decommissioning, we are not loath to admit that we are unabashed promoters of nuclear energy…In fact, one of the principal reasons Holtec has been acquiring aging nuclear plants is because such sites are near-perfect locations for building the SMR-160 reactors that the company has been developing for over a decade.” (“Page 1”, p.3 on PDF counter.)

In the past several years, Holtec has acquired several shutdown nuclear power plants — at Oyster Creek, New Jersey; Pilgrim, Massachusetts; Indian Point, New York; and most recently Palisades and also Big Rock Point, Michigan — under the now clearly false pretense of decommissioning them. Although Holtec first floated trial balloons about building its SMR-160s (so-called “Small Modular Reactors” of 160 Megawatts-electric generation capacity) at Oyster Creek several years ago, and Palisades and Big Rock Point last year, this is the first indication Holtec may also be scheming to build SMRs at Indian Point, Pilgrim, and any additional shutdown nuclear power plant sites elsewhere it acquires in the future, under the bait and switch trick of decommissioning purposes only.

Holtec first floated the trial balloon of building SMRs at Palisades in April 2022. Watchdogs immediately expressed strong opposition. But the extreme extent of Holtec’s con job at Palisades was not revealed until September 9, 2022, when the company announced it had applied two months earlier to DOE for CNC funding to restart the more than half-century old, permanently closed reactor.

With messianic zeal, Holtec entitled its CNC application “Palisades Resurrection Grant Request.” The company described its unprecedented scheme as not only a national, but even international symbol. Holtec stated: “We believe that with a strong spirit of collaboration this project, with each party performing its role, can well become a shining talisman for the global nuclear industry.” (Application, “Page 2,” p.4 on PDF counter)

“Such magical thinking by Holtec and its zombie reactor restart supporters, far from benefitting the region, is endangering it,” Kamps responded.

Holtec also stated: “Successfully reviving Palisades…would be an unprecedented achievement that would not only rescue a proven clean energy generator for Michigan from demise, but it would re-energize the fledgling nuclear operators in Western Europe where the move to shutter nuclear plants has been even more pernicious than the US.”

Kamps responded: “Germany’s hard won shutdown of its last atomic reactors earlier this year was a tremendous environmental victory, supported by not only the Greens and Social Democrats, but also the Conservatives, in response to nuclear power’s hazardous radioactive pollution, nuclear waste dilemma, and exorbitant expense, as well as to its severe dangers, as exemplified by the Chornobyl and Fukushima nuclear catastrophes.”

Despite widespread opposition, the State of Michigan has already approved $150 million of grants to Holtec for the Palisades restart, strongly supported by Governor Gretchen Whitmer, and approved by the State Legislature on June 28, 2023 as part of the budget bill. Some have interpreted the legislation to have actually approved the full $300 million requested by Holtec, split between the past and current fiscal years. The state subsidies are contingent upon federal bailouts also being approved.

Holtec’s grand total of $3.3 billion in requested state and federal taxpayer funding does not even account for a recently announced Power Purchase Agreement (PPA), between Holtec and the Wolverine of Michigan and Hoosier of Indiana rural electric cooperatives, that Holtec has revealed would be worth an estimated $412.5 million per year in revenues. (See, for example, Application, “Page 29,” p. 31 on PDF counter) The new PPA is modeled on the 2007-2022 PPA between Palisades’ original owner, Consumers Energy (1967-2007), and second owner, Entergy (2007-2022). A Consumers Energy spokesman, in a 2022 interview with Bridge Michigan, published the very day Entergy closed Palisades for good, revealed the previous PPA at times charged electricity customers up to 57% above market rates. The Michigan Public Service Commission (MPSC), despite its mandate to ensure cost competitive electricity for Michiganders, not only blessed the past PPA, but appears poised to approve the new PPA as well, if it hasn’t already. This is reflected by internal MPSC staff and commissioner emails, including MPSC communications with the governor’s executive office, included throughout the 967-page FOIA response.

In fact, the end of the previous PPA in May 2022 was the very reason that Palisades’ previous owner, Entergy, decided to permanently close the nuclear power plant. Entergy made the decision that needed major repairs were too expensive for Palisades to compete in the free market of electricity generation going forward. Holtec’s scheme would protect it from free market competition at the Palisades zombie reactor via $3.3 billion in government subsidies, and $412.5 million per year in new PPA revenues, yet another form of subsidization.

On Page H-29 of 114, as posted on Beyond Nuclear’s website (p.735 of 967 in LARA’s FOIA response, as delivered), LARA staffer Kevin Krause, referring to “Beyond Nuclear et al,” in an email to MPSC Commissioner Katherine Peretick (who has enthusiastically supported Palisades’ restart from the very beginning), brushed off environmental watchdogs’ safety concerns, saying: “The unsafe claims are claims these organizations have been claiming for a long time and the NRC has looked at them before.”

Kamps responded: “Krause is correct that our coalition has warned repeatedly about Palisades’ grave risks for many decades now. But NRC is an infamously captured regulator, long the industry’s lapdog, not its watchdog. For one thing, NRC has repeatedly weakened pressurized thermal shock (PTS) regulations, over decades, in order to accommodate ever more risky continued operations at the worst neutron embrittled reactor pressure vessel in the country, namely Palisades. For State of Michigan officials to incuriously accept NRC’s flippant assurances of safety is inviting disaster.”

Investigative reporter Jeff Donn’s post-Fukushima nuclear catastrophe, four-part Associated Press series, “Aging Nukes,” cited PTS as a top example of NRC’s dangerous, ongoing, decades-long regulatory retreat.

“Governor Whitmer, the state legislature, MPSC, our Michigan U.S. congressional delegation, and even DOE, should not fall for the lie that NRC is somehow on top of safety at Palisades,” Kamps said. “NRC is the enabler of ever more alarming risk-taking, as by Holtec at Palisades.”

But even Krause of LARA expressed skepticism that Palisades could actually be restarted, a sentiment shared by other MPSC staffers, as revealed a number of times in the FOIA response documents. At Page F-108 of 109 (p.663 of 967 in LARA’s FOIA response, as delivered), Krause, in a September 9, 2022 email he gave the subject line “Palisades – you won”t believe this…..,” wrote several other LARA staffers that “I talked to a few people this afternoon, and we are in uncharted territory. It is not even clear that keeping the plant open is possible from a licensing perspective.” Krause’s email came in response to the “buzz,” news coverage about Holtec’s surprise announcement that day that it had abandoned its decommissioning plans at Palisades, instead was pursuing an unprecedented restart scheme, and had already secretively applied, more than two months earlier, for DOE CNC funding, all with Michigan Governor Gretchen Whitmer’s enthusiastic support. Whitmer had first floated the idea of restarting the Palisades reactor five months earlier, in mid-April 2022.

“Krause’s word choice is apt. But the uncharted territory is not limited to bureaucratic regulatory approvals. Holtec’s unprecedented Palisades restart scheme represents uncharted territory in terms of the unbelievable risks to health, safety, security, environment, and vast amounts of public funding,” Kamps said.

“In terms of MPSC’s seemingly unconcerned, unquestioning approvals for PPAs that gouge ratepayers, the agency serves the public all right — up for dinner to Holtec,” said Kamps. (See the note relating to MPSC on Page 73 of the analysis and commentary prepared by Kamps, regarding Holtec’s CNC application.)

“And can someone please explain to me why Governor Whitmer, the Michigan state legislature, and the MPSC are so eager to benefit a rural electric co-op in Indiana with hundreds of millions of dollars of hard-earned Michigander taxpayer funds?”, asked Kamps.

Another revelation in the 967-page FOIA response is Consumers Energy’s clear willingness, even at the highest levels of the company, to entertain yet another PPA at Palisades, this time with Holtec. This contradicts a Consumers spokesperson, who in the May 20, 2022 Bridge Michigan article said Consumers is no longer interested in taking part in an above market rate PPA at Palisades.

But in Holtec’s application to DOE, in a section entitled “Preservation of the Interconnect Rights to the Switchyard,” Holtec reveals that among several “major activities needed to restart the plant,” included is: “Modifications to the existing switchyard, which is owned by Consumers Energy, have already been performed by the Palisades staff to remove the plant from certain regulatory requirements governed by the Midcontinent Independent System Operator (MISO). Discussions with the Consumers Energy have occurred regarding preserving the rights for 1-2 years and Consumers Energy is endeavoring to accommodate this; additional assistance may be required from the governor’s office. A replacement generation agreement will be required to bring the Palisades generation capacity back on the grid.” (Application, “Page 4,” p.6 on PDF counter)

“If restarting Palisades is such a good idea, why is there so much concealed coordination and communication between Holtec, Consumers Energy, and various State of Michigan officials and agencies, including the governor’s office and MPSC?”, asked Kamps. “Was that Consumers Energy spokesman as much in the dark as the public about his company’s policy position, or was he deceiving the public on behalf of the company? Why are Holtec and Consumers evading MISO regulations with secretive actions? Are Holtec and Consumers Energy conspiring to block grid access by renewables at Palisades?”, Kamps asked.

To the $3.3 billion in government subsidies, at taxpayers’ expense, and the $412.5 million per year of exorbitantly priced electricity sales to area households and businesses, would be added another $7.4 billion in federal taxpayer-backed DOE loan guarantees for the design certification, construction, and operation of four SMR-160s (160 Megawatt-electric, so-called Small Modular Reactors).  All told, the reactor restart and SMR new build schemes at Palisades would add up to $10.7 billion of government bailouts. Holtec envisions nearly doubling Palisades’ nuclear electricity generation, from around 800 MWe at the more than half-century old reactor, to 1,500 MWe. Although the July 5, 2022 Holtec application to DOE was for CNC funding to restart Palisades’ old reactor, the company went on at length about the supposed qualifications of its SMR-160 development division. Five operating reactors at the Palisades site would make it the largest nuclear power plant in the country, by number of reactors.

At an October 3, 2023 regulatory restart pathway meeting with the U.S. Nuclear Regulatory Commission (NRC), Holtec for the first time decreased the projected number of jobs to be restored at Palisades, from around 400 (as indicated in its July 5, 2022 application to DOE for CNC funding — see, for example, “Page 5,” p.7 on PDF counter), to just 280. Given the $3.3 billion sought in governmental bailouts to pay for reactor restart, each restored job would cost $11,785,714. (See “Page 13,” or p.16/30 on PDF counter, in the Holtec slideshow from Oct. 3, 2023, “~500 FTEs” (Full Time Employees)); Palisades’ current workforce has been repeatedly described by Holtec as “~220,” but its pre-permanent closure workforce had been described as 650 — Application, “Page 5,” p.7 on PDF counter. A recording of the Oct. 3, 2023 meeting is posted online; public comments begin at the 45:00 minute mark, including representatives of several groups opposed to the zombie reactor restart; Kamps’ comments begin at the 59:00 minute mark. The Oct. 3 meeting was the fourth such regulatory restart pathway meeting between Holtec and NRC since March 20, 2023.

“The off the charts, exorbitant expense of such so-called job restoration is outrageous and absurd in terms of its wasteful inefficiency, as well as the opportunity costs,” said Kamps. “Such is the moral hazard of simply handing the keys of the U.S. and Michigan treasuries to Holtec,” Kamps added.

Figures cited by Holtec in its CNC application indicate that many of the needed major repairs or replacements of safety-significant systems, structures, and components at the severely age-degraded Palisades reactor will continue to be neglected. Holtec uses the figure of $119 million for maintenance and operations costs in 2021 as an estimate for the same amount in annual expenditures after restart (Application, “Page 29,” p.31 on PDF counter).

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But 2021 was a year of ramping down to permanent shutdown. During the final years of Entergy’s ownership of Palisades, many repairs, replacements, and even previously required inspections were simply cancelled, with permission from NRC, in light of Palisades’ imminent, long-planned permanent closure in late May, 2022.

At certain points, Holtec acknowledges this. At “Page 5 of 42” (p.7/42 on PDF counter), Holtec states: “The long-term asset management and equipment reliability strategies at Palisades were suspended due to the permanent shutdown of the plant. Equipment maintenance and repairs are overdue, and upgrades are necessary.” Later on that same page, the company repeats: “Repair, Refurbishment and Upgrade work Needed for Palisades: The Palisades plant has deferred several upgrades in anticipation of permanent shut down.”

Although Holtec mentions “Reactor Vessel Head Penetration leak testing and repair/peening,” the head’s complete replacement, overdue for two decades, is apparently not planned by Holtec. The $90 million testing and repair costs Holtec would pay entirely with public subsidies. (Application, “Page 6,” p.8 on PDF counter)

While steam generator repair (tube plugging) or replacement (for the second time in Palisades’ history, rare to unique in industry, also overdue for two decades) is mentioned in the application, Holtec makes clear it plans to do that in-house. Thus, the $510 million required for “S/G design, fabrication, replacement (includes reactor coolant system redesign, cold-hot-fuel testing),” Holtec would pay itself, also entirely with public subsidies (Application, “Page 7,” p.9 on PDF counter). Holtec’s acknowledgement that the steam generators could well need replacement echoes a May 10, 2006 presentation by Consumer Energy to the MPSC, which acknowledged the need for steam generator replacement as one of several expensive major repairs that led it to sell Palisades to Entergy. But Entergy never carried out these vital safety-significant replacements, not in 15 years of ownership (2007-2022). After all, NRC did not require it.

Holtec’s work commitments and economic projections are highly suspect, however, given past industry, government, and even Holtec whistleblower allegations, including of safety-significant Quality Assurance violations, and of financial fraud (see “Ex-Holtec CFO accuses company of ‘misleading projections’ in whistleblower suit,” Asbury Park Press (New Jersey), July 7, 2023). Holtec, including its CEO, Krishna Singh, have also been implicated in a bribery conviction, and then covering it up by providing false information under oath on an application form for $260 million in State of New Jersey tax breaks. Additional bribery attempts by Singh, to silence safety whistleblowers in industry and at NRC, have also been alleged.

In a section entitled “Replacement Fuel Budget Support (no new fuel currently available),” Holtec estimates the cost will be $240 million for “New fuel for 2/3 Reactor Core due to excessive burn on the final operating cycle…” (Application, “Page 6,” p.8 on PDF counter). Again, this nearly quarter-billion dollar bill would be entirely paid by state and/or federal taxpayer funding.

But in a section entitled “Uranium and Fuel Source,” regarding “Information and supporting documentation on the known source of the fuel to be used in the Nuclear Reactor during the Award Period,” Holtec remarkably admits “Specific details are not available at this time.” (Application, “Page 35”; p.37 on PDF counter)

In a November 2022 media release (see it reproduced at the bottom of the linked press release), the environmental coalition’s expert witness, Arnie Gundersen of Fairewinds, warned about the exorbitant costs and challenges of ordering new uranium fuel, staffing back up and training new control room operators, major repairs/replacements, etc. associated with the Palisades reactor restart scheme.

In fact, much of Sections E (“Application Checklist Submission”) and F (“Bid Sheet”), “Page 26” to “Page 38” (Application, pgs. 28 to 40 on PDF counter) — or more than 25% of the entire application — includes many incomplete responses by Holtec, such as various ways of saying “Specific information not available at this time.”

Such incompleteness, Holtec admitted, was due to filing the application just five days after acquiring ownership of Palisades, on June 28, 2022. It had publicly and officially stated for years it wanted to take over Palisades for decommissioning purposes only. Even after submitting it, Holtec would keep its CNC funding application to DOE a secret for over two more months, not announcing it publicly until September 9, 2022.

Holtec’s incompleteness may help to partly explain why DOE rejected its 7/5/22 application, as announced by Holtec on 11/18/22. However, the large state-wide and even national environmental coalition, in addition to writing Energy Secretary Granholm (herself a former governor and attorney general of Michigan) multiple times (pointing out that the permanently closed Palisades reactor is not eligible for CNC funding, which Congress intended only for operating and operable reactors), has also written Governor Whitmer multiple times over the past 16 months, as well as each Michigan state legislator, opposing Palisades’ restart, as well as state subsidies, but to no avail.

Despite its rejection of Holtec late last year, DOE revised its CNC eligibility guidelines, in a clear attempt to make Palisades eligible. The environmental coalition responded yet again to Energy Secretary Granholm, pointing out the revised guidelines themselves were illegal, and did not match the restrictions set by Congress in the 2021 Infrastructure Investment and Jobs Act/Bipartisan Infrastructure Law. Just a month after DOE’s rejection, Holtec announced it would try again for DOE bailouts, including the CNC funding.

While Holtec has indicated the $300 million of state handouts, and $412.5 million of annual PPA revenues, have been its top priorities, they insist this must be quickly followed by the billion dollar “bridge loan” from the DOE Loan Programs Office, and then “roughly 2 billion dollars” of CNC funding from the DOE Office of Nuclear Energy. Otherwise, Holtec has warned, it may actually have to revert to decommissioning Palisades, as it had said it would do for years on end in order to acquire the nuclear power plant in the first place, before pulling its reactor restart bait and switch trick.

“Yes, please do decommission Palisades, Holtec, like you’d said you would,” said Kevin Kamps of Beyond Nuclear. “This is far preferable to the uncharted risks of the zombie reactor restart, and SMR new builds, both extremes — breakdown phase and break-in phase — of the nuclear risk spectrum, co-located at Palisades. While the $10.7 billion in public bailouts is bad enough, as is the PPA’s $412.5 million annual gouge on ratepayers, the risk of mass destruction in terms of casualties and property damage, due to one or more Palisades reactor core meltdowns on the Lake Michigan shoreline, and large-scale releases of hazardous radioactivity into the environment, are unimaginable,” Kamps added.

“It’s astonishing that Holtec and NRC are betting the farm on the dangerously old Palisades reactor,” said Kamps. “It was a poorly performing nuclear lemon for most of the past half-century, with ever increasing age-related degradation risks, now made even worse by lack of active management by Holtec for the past year and a half,” Kamps added.

“And its dumbfounding that DOE, Michigan Governor Whitmer, Michigan state legislators, and the Wolverine/Hoosier rural electric co-ops have fallen for NRC and Holtec’s assurances of reliability and safety, given their incompetence, complicity, and corruption,” Kamps said.

“Keeping with Holtec’s most Tolkienesque hyperbole, its Palisades ‘shining talisman’ is a dark ring, forged with malevolent metallurgy. Holtec’s ravenous dragon would not only devour our vast treasures, but would risk radioactive ruination for the entire region,” said Kamps. “Or, to shift to a Halloween season metaphor, the zombie nuclear monster on the beach already has one undead head, and would grow four more, unless we stop it,” Kamps added.