State energy officials recommended Thursday that the Millstone nuclear power station be allowed to offer further evidence of financial distress as part of a new procurement process that could enhance the profitability of Connecticut’s biggest source of zero-carbon electricity.
In a report to legislators, the Department of Energy and Environmental Protection and the Public Utilities Regulatory Authority essentially said Dominion Energy, Millstone’s owner, had yet to prove it needs more favorable rules for selling its power — but that there are troublesome signs it does.
“Dominion has not yet released verifiable data related to the fiscal health of Millstone,” said Robert Klee, the commissioner of the Department of Energy and Environmental Protection. “But Connecticut and the region continue to need Millstone for its critical contributions to fuel security, as demonstrated in the recent ISO New England fuel security study, as well as to meeting our greenhouse gas reduction goals. We believe this procurement path holds the potential to meet those needs.”
Unless they are stopped by the General Assembly, which has until March 1 to review the report, DEEP and PURA will allow existing zero-carbon sources of electricity to demonstrate they are at financial risk, allowing them to sell power through a procurement process that would consider factors other than price.
“It is critical to ensure that the state’s ratepayers are protected from paying above-market costs for resources that are not verified to be at risk of retirement,” said Katie Dykes, the chair of PURA.
The report is nearly identical to a draft released Jan. 22 that recommended DEEP conduct a procurement for new and existing sources of carbon-free electricity, but warned that Millstone’s bid would be judged solely on price unless Dominion proves the plant is at risk. If deemed at risk, Millstone’s bid could be judged on a broader criteria, presumably generating a higher return for Dominion.
The state requires zero-carbon sources of electricity to compete in one of three pools: new sources, existing sources, and existing sources deemed to be at risk.
“Ultimately, we will be able to bid, which is a good thing,” said Kevin R. Hennessy, the director of governmental affairs for Dominion in New England. “Be it as an existing or at-risk source, we will bid. We’ll see how we are judged.”
Based on available public information, Millstone will be profitable until 2035, the agencies said. But they also acknowledged being less than confident in the assessment.
Public comments made to the agencies after the draft report was released ran heavily against Millstone, with more than 570 commenters saying the plant is profitable, and the state should focus on other sources of renewable energy. But the agencies noted that 569 were uniform in language.
“The DEEP/PURA final report shows that the public still overwhelmingly opposes giving Millstone a handout, one for which it just can’t show the need,” said David Gaier, a spokesman for NRG, a competitor. “Giving an extremely profitable nuclear plant the same status as true renewables makes Dominion a winner and everyone else — especially ratepayers — losers.”
Connecticut’s electricity market is deregulated, though the state still exercises control by setting parameters for how that electricity is bought and sold in three markets that offer a mix of short- and long-term prices: a “Day-Ahead Energy Market,” a so-called balancing market in which prices can change in minutes, and longer-term transactions between buyers and sellers.
Volatile natural-gas prices have made it difficult for Dominion to sell its power on the long-term commodity markets.
The state’s two major utilities, Eversource and United Illuminating, no longer generate power; they buy electricity in a commodity market and then deliver it over a transmission system that is still regulated, its rates set based on what PURA finds is the cost of service and a reasonable rate of return.
A law passed in October allows the commissioner of DEEP to direct Eversource and United Illuminating to purchase zero-carbon energy from Millstone and other sources if their bids are deemed to be in the best interests of ratepayers.