On July 27, NextEra Energy, the operating owner of the Duane Arnold Energy Center (DAEC), Iowa’s only nuclear power plant, announced that commercial operations at the Palo plant will cease in 2020. Next Era and Alliant Energy have agreed to shorten the term of their existing power purchase agreement for the output of the plant by five years in exchange for a buyout agreement.
Corn Belt Power Cooperative owns 10 percent of DAEC and sells the output of its 61-megawatt share to Basin Electric Power Cooperative, Bismarck, N.D. Any negative impact of the early 2020 closure has been mitigated to member cooperatives through Corn Belt Power’s membership in Basin Electric, which has adequate supplies of generation to cover all member cooperatives’ needs.
Ken Kuyper, executive vice president and general manager, Corn Belt Power, said, “Corn Belt Power has valued DAEC as a well-run, reliable source of emission-free power that is available 24/7. Although we were prepared to have the plant continue to operate through its 2034 license, we still have an adequate supply of power to serve our member cooperatives.”
With an immediate focus to minimize any financial impact that early closure may have on its membership, Corn Belt Power plans to modify its internal accounting procedures to reflect the change in the plant closure date.
Alliant Energy and NextEra Energy said the existence of cheaper forms of energy prompted the decision to shut down DAEC. The market value of other sources — primarily renewables such as Iowa’s growing wind portfolio — have dropped below the cost of nuclear generation.
In May of 1968, to respond to growing shortage and rising costs of fossil fuels, Corn Belt Power, Iowa Electric Light and Power Company – which is Alliant Energy today – and Central Iowa Power Cooperative (CIPCO) became partners in DAEC. This was the first time in the history of the nation’s electric power industry that an investor-owned utility and generation cooperatives shared ownership of a nuclear plant.
In 2005, FPL Energy – the previous name of NextEra Energy – purchased Alliant Energy’s 70 percent share of DAEC. After analyzing potential sale of their shares, Corn Belt Power and CIPCO retained their ownership in the plant. At that time, Alliant Energy signed a contract to continue purchasing 70 percent of the output until 2025.
In December of 2010, the Nuclear Regulatory Commission (NRC) approved a 20-year license extension for the facility, allowing the plant to operate until 2034. The NRC approval came just over two years after the joint owners of the plant entered the rigorous and comprehensive process to relicense the unit.
Next Era Energy expects a gradual reduction in staffing at DAEC over the next seven years as the decommissioning process takes place. Alliant Energy’s Iowa customers are expected to save nearly $300 million stating on or before Jan. 1, 2021, contingent on the Iowa Utilities Board’s approval of Alliant Energy’s request.