Millstone cool to Malloy’s ordered study of nukes’ viability

Dominion Resources

The Millstone nuclear power station

Gov. Dannel P. Malloy signed an executive order Tuesday aimed at resolving hotly contested questions about the economic viability of the Millstone Power Station, a nuclear-powered generator of electricity crucial to Connecticut’s goals for reducing greenhouse gas emissions. But Millstone’s owner warned the governor’s action may be too late.

An intense lobbying campaign by Dominion Energy, the owner of Millstone, failed to convince the Malloy administration or a majority of legislators over the past two legislative sessions that it needs more favorable rules governing the sale of electricity to keep the plant open. The company reiterated Tuesday it wants action in a special session this year, not recommendations for change in 2018.

Malloy’s order directs the Department of Energy and Environmental Protection and the Public Utility Regulatory Authority to assess the regional energy market, procurement rules and the economics of Millstone, whose two nuclear reactors in Waterford can meet nearly half the state’s electric needs and produce most of its carbon-free power. He set a deadline of Feb. 1.

Dominion said that was insufficient.

“We have now been engaged with Connecticut leaders for more than 21 months on this issue. Without action this year, the prospects for continued operation of Millstone diminish,” said Paul Koonce, head of its power-generation group. “In Wisconsin, Dominion engaged with government leaders for 18 months about the viability of a nuclear power station in that state without coming to a solution. We then made a business decision to close the plant. We continue to conduct our strategic assessment of Millstone and will make a business decision regardless of Connecticut’s latest study.”

Malloy’s order says the agencies are to assess the viability of the two active Millstone reactors “using the best available information, including such facilities’ audited financial statements and such other financial data that is reasonably requested by DEEP or PURA.”

It was unclear if Dominion, a publicly traded company already required to make substantial financial and operational disclosures, will be asked to share information not already public, a demand of some legislators wary of the need to tinker with a complex, partly deregulated energy economy.

Stock analysts who have examined publicly available data have concluded that Millstone is profitable, but is trending toward unprofitability, raising the question of whether or when Dominion would follow other nuclear operators in retiring reactors that still have useful life.

Malloy told the two agencies they must make their findings public no later than Feb. 1, just prior to the opening of the General Assembly’s annual 2018 session. Malloy’s order requires them to “provide opportunity for public participation.”

Dominion’s reaction, however, suggests that timetable could be moot.

“Dominion appreciates the governor’s leadership in helping to ensure Millstone continues to provide critical energy, environmental and economic benefits for Connecticut. However, the time for a study without action has passed,” Koonce said.

CTMIRROR FILE PHOTO

Rep. Lonnie Reed

The governor, a Democrat who clashed with Dominion over taxes when Millstone was generating substantial profits, cast his order in the context of Connecticut’s need to continue reducing greenhouse gases.

“Connecticut has become a leader in building a 21^st century approach to energy, and we must not stop,” Malloy said in a statement. “We are deploying more renewable power resources and energy efficiency measures, while pursuing new, clean technologies such as battery storage and fuel cells.”

He said continued progress requires that “we must objectively and thoroughly review and evaluate the relevant information and market conditions of the Millstone facility and the sustainability of legacy zero-carbon generation in the context of reducing costs for consumers and moving our clean energy strategy forward.”

In 2016 and again this year year, the Senate passed legislation aimed at stabilizing the profitability of Millstone. Each time, the House declined to take up the bill.

The 2016 bill, if the commissioner of DEEP deemed it in the public interest, would have allowed Millstone 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.

The 2017 bill would have authorized the commissioner to conduct an appraisal of the nuclear station and report in January on whether he would implement any one of several changes allowed by the legislation. The bill directed the commissioner to act in the best interest of the consumer and the reliability of the electric grid.

The legislature would have had the option of passing a second bill next year to stop new procurement rules.

The consumer group AARP, which fought the previous legislation, and lawmakers who see the need to address Millstone’s viability, welcomed the governor’s order.

Rep. Lonnie Reed, D-Branford, co-chair of the legislature’s Energy and Technology Committee, said the study is badly needed.

“I think its really crucial that we get on this train and start to figure out what’s really going on,” Reed said. “If we can possibly do something to settle Millstone down, give them the feeling they are encouraged to stay open in ways that are good for the consumers, we want that to happen.”

Sen. Paul Formica, R-East Lyme, not only is a co-chair of the energy panel, but he represents a district where Millstone is a major source of property taxes and well-paying jobs.

“Millstone plays a huge role not only in our local community for the thousands of jobs it creates, but to all of Connecticut for the power it provides throughout our state every day,” Formica said in a statement. “This is an economic issue as well as an energy issue, and I appreciate the governor’s efforts to look more closely at Millstone’s role in Connecticut.”

Formica said the study must be only a first step.

“It’s apparent that there is a problem in the market. Given the many nuclear facility closings around the country, it’s clear we need to act now before we become the next state where such a closure occurs – which would cause not only the loss of a stable power source and lead to higher energy rates, but would also eliminate many jobs we cannot afford to lose,” he said.

John Erlingheuser, the advocacy director of AARP Connecticut, read Malloy’s order as demanding more financial disclosure.

“The governor’s order reflects AARP’s call for Millstone to disclose their financial need for a state-funded subsidy by requiring the assessment include an examination of audited financial statements and other financial data when making its recommendations to the legislature for action in 2018,” Erlingheuser said. “We look forward to participating in the public proceedings in order to ensure the voices of Connecticut ratepayers are heard.”

CTMirror. file photo

Sen. Paul Formica

A coalition funded by industry competitors, Stop the Millstone Payout, applauded Malloy.

“Governor Malloy made the right call today in seeking additional information from Millstone before any decision is made regarding financial support for the company, particularly when all the external evidence suggests the plant is profitable and is obligated to serve the energy markets until at least 2022,” said Matt Fossen, a spokesman for the  group.

Connecticut, which long has had some of the highest electric rates in the continental U.S., largely deregulated electricity in 1998. The state’s major electric utilities, Eversource and United Illuminating, are responsible for the transmission and distribution of electricity, not generation.

Power is purchased as a commodity, and the glut of natural gas since the development of fracking methods capable of extracting gas and oil that previously were unavailable has disadvantaged Millstone.

Falling natural gas prices have driven down the daily auctions that currently set the wholesale price of electricity, leaving Dominion unable to sell long-term contracts to hedge funds, giving them price stability

The legislative changes sought by Dominion would  have allowed it to sell directly to consumers and to sign long-term contracts to lock in prices for up to half its output as a hedge against daily market volatility.