The announcement from New Orleans-based Entergy Corp. came after the Michigan Public Service Commission said last week that Consumers Energy could opt out of buying power from the plant but couldn't recover all of the $172 million requested as part of the deal.
Entergy said Consumers Energy would have been able to recover $136.6 million through surcharges to electric customers.
"We greatly appreciate the continued patience of our employees and the local community in southwest Michigan throughout this regulatory process, and we will continue to focus on the plant's safe and reliable operations," Charlie Arnone, site vice president and Entergy's top official at Palisades, said in a statement.
The Palisades Power Plant employs about 600 workers and generates enough electricity to power more than 800,000 homes. The planned 2018 closure had prompted worries about the future for workers at the major employer in the region, but had been welcomed by environmental activists.
Radioactive waste specialist Kevin Kamps with Beyond Nuclear, a watchdog group focused on the nuclear power industry, said keeping the plant open until 2022 keeps the Great Lakes region at risk of potential public health and environmental threats.
He said the full recovery cost requested of electric customers — or even a higher cost — "would have been a bargain compared to the catastrophe that could occur if the high-risk Palisades atomic reactor is operated for another five perilous years."
The plant was built by Consumers Energy, which sold it to Entergy in 2007. Entergy last year announced plans to permanently close Palisades in 2018, but now the companies plan to continue an existing power purchase agreement that runs until 2022.
Consumers Energy said in a statement that maintaining the power purchase agreement is the "best path forward." The company said the company remains "committed to delivering affordable, reliable, safe and clean energy to our customers across Michigan."
“After careful review, Consumers Energy and Entergy have mutually agreed that moving ahead under the terms of our current Palisades’ Power Purchase Agreement through 2022 is the best path forward," according to a statement by Consumers Energy.
The plant is in Van Buren County's Covert Township, along Lake Michigan. Consumers Energy is part of Jackson-based CMS Energy Corp.