Dominion nuclear plant's closing reflects state of competition in industry

While there are significant differences between the Millstone Power Station and the Wisconsin nuclear plant slated to shut down on Tuesday, the reasons behind the decision nonetheless are being noted by those interested in ensuring Millstone has a strong future.

Dominion, the company that owns both Millstone and the Kewaunee plant in Carlton Township, Wis., announced in October that it would close the 556-megawatt plant, which employs 655 workers, after trying for 18 months to find a buyer. Dominion has owned the Kewaunee plant since 2005.

"It's being closed for economic reasons - Dominion's pretty cut-throat in that area," Bill Sheehan, chairman of the Nuclear Energy Advisory Council, said Wednesday. "It's a business decision."

Mark Kanz, local affairs manager for the Kewaunee Power Station, said Dominion's contracts to sell electricity from the plant are set to expire in December, and it was unable to negotiate new favorable contracts with power purchasers that were competitive with the prices being offered from natural gas-fueled power plants. Due to the boom in domestic natural gas production from hydraulic fracturing, or fracking, gas prices have dropped substantially in recent years.

"Utilities are now shifting to gas plants for their base load," Kanz said. "It's dramatically impacted the price."

The Kewaunee plant supplies about 6 percent of Wisconsin's power, Kanz said. Utility regulators in that state approved the shutdown after determining that there was sufficient additional capacity to make up for the loss.

The shutdown of the Kewaunee is the first time a nuclear power plant has shut down in this country since Millstone 1 stopped producing power in 1995, noted Steve Kerekes, senior director of media relations for the Nuclear Energy Institute.

"There are all kinds of ripple effects," he said. "It's a big economic engine they're going to lose up there."

As a smaller, single plant, Kewaunee was not able to operate as efficiently as the two operating Millstone plants, which together produce 2,100 megawatts of power.

"There are a lot of infrastructure costs, and not the production benefits," said David Lochbaum, director of the nuclear safety project with the Union of Concerned Scientists. "The Millstone plants are also newer and in better condition."

Sheehan noted that both the Millstone and Kewaunee plants operate in states where utility prices are deregulated, so a company's profit levels are not guaranteed. Dominion's two other nuclear plants are in Virginia, where prices are regulated.

An additional issue that may have deterred potential buyers from Kewaunee is the uncertainty about whether the Environmental Protection Agency will ultimately require nuclear plants to build cooling towers instead of cooling plants by drawing water directly from waterways where the plants are located. Kewaunee draws water from Lake Michigan, while Millstone's cooling water comes from Long Island Sound.

"It is an issue," Lochbaum said, adding that a cooling tower can cost as much as $100 million.

State Sen. Andrea Stillman, D-Waterford, said Dominion's decision to shut Kewaunee "was a factor" in her efforts in the legislature to ensure that the 2-year-old energy generation tax on Millstone is allowed to expire June 30 as originally planned.

"But the greater factor for me was that the tax was going to start being passed on to consumers," Stillman said.

Dominion has been absorbing the $43 million annual tax for the first two years but has said it would not continue to do that if the tax is extended, as Gov. Dannel P. Malloy proposed in his budget. The current budget proposal in the legislature, however, does not include the tax.

Stillman said she is confident that Dominion remains committed to Millstone and investing in Connecticut, noting the company's fuel cell energy generation plant under construction in Bridgeport. She added, however, that she will continue to work to make sure the utility tax stays out of the budget that is eventually adopted.

"I'm going to stay vigilant," she said.

As the Kewaunee plant prepares for the shutdown Tuesday, Dominion received word from the Nuclear Regulatory Commission on Wednesday that it is proposing to fine the plant $70,000 for not running fire drills properly and for falsifying fire drill records.

Kanz said Dominion is not planning to contest the NRC's proposed penalty.

j.benson@theday.com

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