One of the non-fiscal elements of the tentative budget deal calls for the House Democratic leadership to allow a vote on a bill designed to improve the profitability of Connecticut’s last nuclear power plant, Millstone, the subject of an epic lobbying campaign by its owner, Dominion Energy.
Over two years, the state Senate has voted three times for measures to change the rules for how Dominion sells electricity from Millstone, whose profits have eroded as prices in the largely deregulated energy markets have been depressed by competition from electricity generated by relatively cheap and plentiful natural gas.
The House Democratic leadership killed the Senate’s first two Millstone bills in the 2016 and 2017 regular sessions by refusing to call votes on measures opposed by Dominion’s competitors and some environmental and consumer groups, such as the Connecticut Citizen Action Group and AARP.
The Senate voted 23-8 for a new version in special session five weeks ago. House Speaker Joe Aresimowicz, D-Berlin, whose focus has been ending the state’s budget impasse, has held the bill on the House calendar, saying only it would come to a vote at the right time.
Legislators involved in the budget negotiations say that time is fast approaching — so long as the bipartisan budget agreement in principle announced last week blossoms into a line-by-line document capable of winning passage.
The Millstone bill would remain a separate measure, not an amendment tucked into the budget. And it would not involve any schemes to use Millstone as a revenue-raisier to help balance the budget, an offbeat idea floated two months ago.
The bill would authorize two state agencies, the Department of Energy and Environmental Protection and the Public Utilities Regulatory Authority, to enhance Millstone’s position in the energy markets with new procurement rules, but only if the agencies conclude the change would be in the best interest of consumers and necessary for the nuclear station’s economic survival.
The bill could open the door to Millstone selling power in a market limited to other sources of carbon-free electricity, such as hydro, wind and solar. It is a secondary market in which Millstone presumably could command higher prices than it now gets competing against natural-gas plants.
“Our bill is ripe and pending. If they do meet, we really hope they take it up. It’s critical for Connecticut. It’s critical for the 1,500 jobs” at Millstone, said Kevin Hennessy, the director of governmental affairs for Dominion in New England.
If the bill comes before the House, it will carry a lengthy and complex back story.
Dominion has broadly hinted that without the changes it would prematurely retire the two reactors at the plant, which produces most of Connecticut’s carbon-free power and is the largest power plant in New England. Its output, which is the equivalent of about half the state’s needs, is sold throughout the region.
In general, the economic pressures on nuclear plans are not disputed: The industry has been prematurely retiring plants, which have many years of life left under their operating licenses, saying they are not sufficiently profitable. But industry analysts, while conceding Millstone’s profits are falling, have questioned whether relief is needed now.
Gov. Dannel P. Malloy signed an executive order in July directing 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. But Dominion continued to lobby for a bill that would authorize DEEP and PURA to act on their conclusions.
Lillian Cuoco, the senior counsel for Dominion, informed the state last week that the company was reluctant to provide proprietary financial documents sought by DEEP and PURA, promising an in-person briefing instead.
“While we appreciate the assurances from DEEP and PURA that it can protect competitively sensitive material throughout this process, Dominion Energy still has reservations regarding aspects of Connecticut’s Freedom of Information Act that are outside your control,” Cuoco wrote. “As a result, the company has offered to review certain confidential information with you in person to alleviate Dominion Energy’s concerns and accommodate DEEP and PURA’s desire for additional data.”
Cuoco also suggested that before being briefed on Millstone’s financials the state officials should meet with Susan Tierney, an energy and economics consultant hired by Dominion to reinforce its position that the closure of Millstone would be disastrous to the economy and environment.
“Dr. Sue Tierney, our consultant, is available to meet with your team and your consultant in this proceeding to discuss the relevant policy issues and the effect of losing Millstone on Connecticut’s economy, environment, and grid reliability,” Cuoco said. “Meeting with Dr. Tierney would, in our view, be prudent prior to scheduling the oral discussion of confidential information.”
Opponents of the bill say if Millstone needs financial help, it should come on a regional basis, since its power is used throughout ISO New England, the operator of the grid in the six-state region. They also say the federal government already is looking at ways to tilt the markets to the benefit of nuclear and coal plants.
“I can’t believe that Connecticut policy makers are stupid enough to stick it to Connecticut ratepayers,” said Tom Swan, the executive director of the Connecticut Citizen Action Group. “It’s already being addressed at the federal level.”
Rick Perry, the U.S. secretary of energy, wrote a letter on Sept. 28 directing the Federal Energy Regulatory Commission to develop rules that would credit nuclear- and coal-fired plants for contributing to the reliability and resiliency of the nation’s electric grid. He quoted a study by IHS Markit that concluded “some wholesale market price formation rules do not fully compensate generating resources for provided the desired power system supply resiliency.”
But it’s far from certain that push will result in market changes. A bipartisan group of former FERC commissioners wrote a letter opposing Perry’s proposal, calling it a pretext to prop up a failing coal industry.
“His focus is clearly coal and there are a lot of dirty coal plants that are not competitive in today’s energy markets,” Elizabeth Moler, a former FERC chairwoman and industry executive, told the Washington Post. “To me he’s effectively proposing to subsidize them and put a tax on consumers in doing so. It’s a tax in different clothing. It’s going to cost customers more money to run dirty old coal plants.”
Whatever the politics in Washington, Swan said the fight is not over in Hartford.
The House leaders, Swan said, have only promised to call the Millstone bill for a vote, not to deliver passage. That leaves lawmakers free to oppose passage. “We have allies ready to light that up like a Christmas tree with amendments,” Swan said.
But first, the lawmakers have to deliver a budget that’s still a work in progress. If that doesn’t happen, Millstone probably will continue waiting for a debate in the House. The company also faces another hurdle: a governor less than enamored about how the legislature is looking to take money from an energy program to balance the budget.
“The governor anticipated signing the Millstone bill that passed the Senate at the end of the legislative session,” said Kelly Donnelly, a spokesman for Malloy. “However, in the light of reports that the General Assembly intends to steal from energy funds, thereby increasing rates for families and businesses, he is unlikely to support this measure in the context of such a budget.
“We’ll wait until we have seen a complete budget and a complete draft of any legislation pertaining to Millstone to make a final judgement.”