Duane Arnold Energy Center in Palo, Iowa’s sole nuclear power plant, will shut down in late 2020, its owner announced Friday — five years sooner than the current power purchase agreement between NextEra Energy Resources and Alliant Energy.

That agreement, which requires approval from the Iowa Utilities Board, means the plant is expected to cease commercial operations in 2020, NextEra said.

Alliant’s agreement with NextEra originally was set to run until 2025.

“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 county,” NextEra’s President and Chief Executive Officer Armando Pimentel said in the release.

GRADUAL DRAWDOWN

Duane Arnold, which first began producing power in 1975, is located about nine miles northwest of Cedar Rapids and is one of the larger employers in Linn County.

Florida-based NextEra said Friday it expects “a gradual reduction in staffing” at Duane Arnold over the next seven years.

The plant currently employs about 540 people, NextEra spokesman Peter Robbins said. NextEra estimates that when the plant shuts down and stops generating power in late 2020, it will need only about 300 employees.

As the plant is decommissioned, that number will reduce until fewer than 50 employees are required, Robbins said.

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Robbins said NextEra will offer eligible employees enhanced retirement packages or provide job offers in other parts of NextEra. The company also plans to work with Alliant to help place interested employees in other jobs in the energy sector.

“Our focus is 100 percent on minimizing the impact on our employees and their families,” Robbins said.

UNCERTAINTY IN PALO

Palo Mayor Ryan Scheckel said he first heard Friday morning of plans to shave five years off Alliant’s agreement with NextEra for the 3277 Daec Rd. plant.

While located outside Palo city limits, Duane Arnold has been a “huge part of the community” of about 1,000 people Scheckel said.

“We’ve got families that have moved to Palo to work there,” he said, estimating that between 20 to 30 families in Palo include plant employees.

“It is going to have a definite impact ... . For me, I worry about the friendships, the people and where are they going to go.”

Duane Arnold has had a considerable influence in the community over the years — from donating funds for Palo Memorial Park’s splash pad to assisting in flood protection efforts in both 2008 and 2016, Scheckel noted.

“Whenever we’ve needed something, they’ve always stepped up,” he said.

CHEAPER SOURCES OF ENERGY

Max Freund / The Gazette

Officials for both Alliant and NextEra said the existence of cheaper forms of energy prompted the decision to close Duane Arnold.

Alliant spokesman Justin Foss said the market value of those other sources — primarily renewables such as Iowa’s growing wind portfolio — have dropped below the cost of nuclear generation.

“In our review of the cost for the energy that comes from that facility versus what you can buy it for and generate it for out in the market right now, it will save customers money by not getting it from that facility,” Foss told The Gazette Friday.

As part of the new agreement, Alliant will make a $110 million buyout payment to NextEra in September 2020. That payment, the companies said, will cover the costs of shortening the power purchase agreement by five years.

Alliant said it had planned to submit an application to the Iowa Utilities Board on Friday to receive approval for the buyout. The companies said the move should save Alliant’s customers about $300 million over 21 years, starting in 2020.

Savings for Alliant Energy customers will be reflected in the fuel cost portion of customers’ bills — representing about a three percent monthly savings, or about $42 a year — for residential customers starting in 2021, Foss said. Commercial and industrial customers will see a roughly 2.3 percent fuel cost savings.

NextEra owns a 70 percent stake in Duane Arnold, and 70 percent of the electricity produced there — about 430 megawatts — goes to Alliant. Des Moines-based Central Iowa Power Cooperative, or CIPCO, and Humboldt-based Corn Belt Power Cooperative own 20 percent and 10 percent stakes, respectively.

Under the new agreements, Alliant will purchase about 340 megawatts of energy from four existing NextEra-owned Iowa wind facilities.

“Partially replacing energy from Duane Arnold with NextEra’s additional wind investments in Iowa will bring significant economic benefits to our customers,” Patricia Kampling, chairwoman and chief executive officer of Alliant Energy, said in a Friday news release.

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CIPCO, which also has an office in Cedar Rapids, said Friday it has “guarded optimism” about the shutdown of Duane Arnold. The cooperative said 35 percent of its energy portfolio currently comes from the nuclear plant.

“We’re trying to understand how we manage this in the short-term, but we believe long-term this will be a net benefit for us,” CIPCO Chief Executive Officer Bill Cherrier said to The Gazette.

Cherrier said CIPCO believes it will be able to find cheaper sources of energy through wind and other renewable sources.

“We do have two years, but we’ll probably in the next six to 12 months have a pretty good plan of where we’re going,” he said. “There’s no immediate concern.

“There’s just a lot of analysis we have to go through and the impacts of it.”

NextEra also said Friday it expects to invest about $650 million in existing and new renewable generation facilities across Iowa by the end of 2020. About $250 million of that, Robbins said, will come from “re-powering,” or upgrading” NextEra’s existing wind turbines in Iowa.

WHAT HAPPENS AT THE PLANT?

After Duane Arnold shuts down and stops energy production in late 2020, the plant will have to go through a decommissioning process.

That process will include moving fuel rods from the plant’s reactor to a spent fuel pool, where it will cool for four to five years, Robbins explained.

Once the rods are cool, they will be moved to dry storage at Duane Arnold.

It was not clear Friday if or when the nuclear plant site could be redeveloped, given the length of the decommissioning process. NextEra did say it is “evaluating redevelopment opportunities” there, including building new solar energy, battery storage or natural gas facilities.

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