NextEra Energy Resources, LLC and Alliant Energy‘s Iowa energy company have agreed to shorten the term of their existing power purchase agreement (PPA) for the output from the Duane Arnold Energy Center (DAEC) by five years in exchange for a buyout payment.
The companies’ new agreements also include new re-powered wind PPAs. These transactions will save Alliant Energy’s Iowa customers nearly $300 million in energy costs, on a net present value basis, over 21 years. Assuming all requisite approvals are received, the DAEC is expected to cease commercial operations in late 2020.
“The Duane Arnold Energy Center has provided reliable energy to Alliant Energy’s Iowa customers for decades,” said Patricia Kampling, Chairman, and CEO of Alliant Energy. “Partially replacing energy from Duane Arnold with NextEra’s additional wind investments in Iowa will bring significant economic benefits to our customers.”
Alliant Energy has agreed to make a $110 million buyout payment to NextEra Energy Resources in September 2020 to cover the cost to shorten the term of the DAEC PPA from 2025 to 2020. Alliant Energy intends to apply to the Iowa Utilities Board (July 27, 2018) for approval regarding recovery of the buyout payment.
Alliant Energy’s Iowa customers are expected to save nearly $300 million, on a net present value basis, starting on or before January 1, 2021, contingent on the Iowa Utilities Board’s approval of Alliant Energy’s request. The savings estimate includes the cost of the amendment payment and the costs for replacing energy and capacity.
“The eventual closing of the Duane Arnold Energy Center is a difficult decision because of the approximately 500 highly skilled men and women who consistently have made it one of the top-performing nuclear facilities in the country,” said Armando Pimentel, President and CEO of NextEra Energy Resources. “You have our assurance that we will continue to practice our corporate values of doing the right thing by our colleagues and treating them with the respect they have earned and deserve.”
“We are committed to minimizing any impact today’s announcement may have on them, their families and the community they call home. Importantly, as we proceed into the next decade, several hundred jobs will remain at the plant for a number of years as a result of what will be a lengthy decommissioning process, along with the creation of new jobs through our continued investment in Iowa,” added Pimentel.
Under the agreements, NextEra Energy Resources will supply wind energy from four repowered Iowa wind facilities, representing approximately 340 megawatts of clean, emissions-free electricity for Alliant Energy’s Iowa customers.
Continuing its commitment to the state of Iowa, NextEra Energy Resources plans to invest approximately $650 million in existing and new renewables generation across the state by the end of 2020, including the planned approximately $250 million to repower the four wind facilities as part of these transactions. Repowering these facilities is expected to create 200 new construction jobs during the process, as well as extend payments to landowners and tax revenues for local communities for decades. NextEra Energy Resources also is evaluating redevelopment opportunities at the DAEC site, including the construction of new solar energy, battery storage or natural gas facilities.
NextEra Energy Resources expects a gradual reduction in staffing at the DAEC over the next seven years as the decommissioning process takes place. To support DAEC employees during the transition, NextEra Energy Resources has developed a comprehensive employee plan that includes an enhanced retirement program for eligible employees, placement in other jobs throughout the company, and job retraining, outplacement services, and severance packages, where applicable. NextEra Energy Resources also is partnering with Alliant Energy and other companies in the energy industry to identify opportunities for DAEC employees.