CT Senate passes bill to stabilize revenues in nuclear industry
A national campaign by the nuclear industry to stabilize profits in a volatile energy market scored a victory Friday night with the unanimous passage of bipartisan legislation changing the rules for procuring electricity in Connecticut, a state heavily reliant on nuclear power.
Barely a month after the industry testified at a special hearing in Hartford on the need for market changes, the Senate passed and sent to the House a bill broadening the regulatory role of the Department of Energy and Environmental Protection.
If the commissioner of DEEP deems it necessary, the Millstone Nuclear Power Station would be able to partly bypass the daily auctions that set wholesale prices and sell up to half its power in a new market under long-term contracts.
“It’s not a subsidy,” said Sen. Paul Doyle, D-Wethersfield, the co-chair of the Energy and Technology Committee. “It’s an open and competitive process.”
Millstone would compete by bidding against electricity generated by hydroelectric, solar, wind and trash-to-energy facilities and, theoretically, New England’s other remaining nuclear plant in Seabrook, N.H.
“It’s going to help drive prices down,” said Kevin R. Hennessy, Millstone’s director of state and federal government affairs. “It also gives us stability.”
Falling natural gas prices have driven down the daily auctions that currently set the wholesale price of electricity. Under the legislation, Millstone would be able to use long- term contracts to lock in prices for up to half its output as a hedge against daily market volatility.
Millstone had been insulating itself from the highs and lows of the spot market by selling energy through a series of futures contracts that run for three years. But the daily market is so volatile that the futures market has faltered.
Environmental and consumer interests watched with skepticism as the committee hurried to produce legislation altering the largely de-regulated energy market after Dominion Resources raised questions in March about the economic viability of its two-reactor Millstone plant in Waterford.
The measure passed Friday never was subjected to a public hearing, nor was it available for review until shortly before debate. Instead, the Energy and Technology Committee held an informational hearing about the financial pressures on the nuclear industry a month ago.
“We need some time to assess it, but it looks like a bad deal and an unnecessary deal,” said Chris Phelps, the director of Environment Connecticut. “What’s the rush? Where’s the crisis?”
State legislators said they acted prudently, noting a spate of early closings of nuclear plants, including two that the state of New York hurriedly tried to save with new economic incentives. Doyle and Rep. Lonnie Reed, D-Branford, the committee co-chair, said the legislation gives the DEEP commissioner a mechanism the agency can use to stabilize prices.
“The goal really is not to go out of session and leave a situation unresolved that is going to haunt us throughout the summer and leave us with an inability to make sure the administration has the tools to deal with the potential departure of Millstone,” Reed said.
The session ends at midnight Wednesday.
Doyle said the legislation includes a directive to the commissioner of DEEP that the interests of ratepayers must be the priority if he goes forward with the competition that is permitted but not required.
Hennessy said his interpretation: “It’s going to have to save the ratepayer money.”
Dominion neither threatened to close Millstone, nor did it say definitively there was no danger of closure, a passive-aggressive posture that legislators say they could not ignore. Millstone is the largest power plant in New England, producing about half Connecticut’s electricity needs and 97 percent of its carbon-free energy.
Sen. Paul M. Formica of East Lyme, the ranking Republican on the energy committee, said the bill was vital for the state’s energy needs and southeastern Connecticut’s economy. Millstone, which is located in his district, has an annual payroll of $108 million.
“They are a great corporate and community partner,” he said.
The nuclear industry hired Evan Bayh, a former U.S. senator and governor from Indiana, as co-chair of Nuclear Matters, to raise the alarm about nuclear plants that have closed prematurely for economic reasons in the face of cheap natural gas, a blow to U.S. goals of reducing greenhouse gases. He testified at the informational hearing last month.
Without Millstone, the state probably would rely on gas-fired plants to take up the slack, increasing carbon emissions by 27 percent, according to an assessment by the state. The state is now working to hit certain goals for reducing greenhouse gases by 2020 and 2050.
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