Auction pushes forward for zero-carbon resources, including Millstone

Dominion's Millstone Nuclear Power Station is seen from the air May 11, 2005, in Waterford.  (Sean D. Elliot/The Day)
Dominion's Millstone Nuclear Power Station is seen from the air May 11, 2005, in Waterford. (Sean D. Elliot/The Day)

Waterford — State regulators are set to issue a request for proposals from zero-carbon energy producers for an auction by May 1, and for the first time Millstone Power Station will be allowed to compete.

This week, regulators asked for feedback on their proposed review that will determine whether an energy producer is considered at risk of shutting down, a designation that could give bidders like Millstone an edge over other power generators in the state-sponsored auction.

Regulators concluded in February that nuclear plants could directly compete among new and existing zero-carbon energy producers for fixed-price contracts with state-regulated utilities like Eversource and United Illuminating.

Millstone-owner Dominion had long sought to bid in the auction against solar, wind and hydropower energy producers, hinting that being excluded from the zero-carbon auction could jeopardize the plant's continued operation in the wake of higher-than-normal costs and competition from natural gas in the wholesale market.

But the jury is still out, from regulators' point of view, on whether Millstone is financially imperiled.

Regulators say if an energy producer such as Millstone convinces them it's at risk of shutting down, its bid will be evaluated based on price and benefits such as fuel diversity, grid reliability and greenhouse gas avoidance. Without a determination by the Public Utilities Regulatory Authority that an energy producer is "confirmed at risk," the Department of Energy and Environmental Protection only will factor bid price during the auction.

However, bids from new zero-carbon energy producers will be scored based on price and non-price criteria, regulators have said.

Bids are due to DEEP by September after it issues a request for proposals by May 1. Energy producers seeking "at risk" status must petition PURA by May 18 and submit financial data backing up their claims. Only existing nuclear and hydropower facilities that have delivered electricity to the region's energy grid can petition PURA for an "at risk" determination.

Interested parties can submit comments to DEEP on its website or by emailing DEEP.EnergyBureau@ct.gov, and to PURA on its website, www.ct.gov/pura, regarding the “at risk” review process until 4 p.m. Wednesday, April 11.

In a public notice this week, regulators said they want any comments on the proposed procedure to determine whether a producer is financially at risk, including what information DEEP and PURA should seek to make that determination.

"We are pleased that DEEP and PURA continue to drive this process to be in the best interest of Connecticut's electricity customers," Millstone spokesman Ken Holt said. "We look forward to submitting a bid when the RFP is issued."

State's assessment of Millstone's viability 'uncertain'

As Millstone did with previous data releases, energy producers can seek protection and file a sworn affidavit attesting to the confidential nature and potential harm if the sensitive financial data were released to the public. Regulators said where possible, submissions should include a public redacted version of the data.

While PURA will make the final call on designating at-risk energy producers, DEEP "will independently evaluate the information submitted" and offer PURA its own recommendation on the matter, regulators said. The Office of Consumer Counsel, an independent state agency representing the ratepayers, also will have access to the data.

Regulators say all publicly revealed data thus far — and a review by consultants hired by DEEP and PURA — show Millstone's two units should be profitable under expected market revenues through 2035. Millstone Unit 2 is licensed until 2035, and its Unit 3 until 2045; Unit 1 shut down in 1995.

"Millstone can't — or won't — demonstrate in a verifiable way that it needs a bailout from ratepayers, and there's no evidence that the plant is 'at risk,'" said David Gaier, a spokesman for energy company NRG, a Dominion competitor. The company was one of several opposing Millstone's request to compete in the auction.

Saying regulators had come to inaccurate assumptions about its finances, including comparing Millstone to its other plants in lower-cost Virginia, Dominion turned over confidential financial data to show that.

But regulators this week described that information as "incomplete responses to data requests" with a "lack of audited operational data and costs," rendering the state's assessment of Millstone's financial viability "uncertain."

Still, regulators said DEEP should conduct the auction "in recognition of the significant value the Millstone nuclear units and other existing or new zero-emission generating resources provide to Connecticut and the region." The plant produces about 50 percent of the power used daily in the state.

Regulators and area lawmakers have argued Millstone provides substantial economic and environmental benefits, including more than 1,000 jobs and reliable electricity that, if lost, would be replaced with greenhouse gas-emitting resources. Almost 60 General Assembly members wrote in support of Millstone in January.

Lawmakers paved the way for the auction in a bill signed by Gov. Dannel Malloy last October.

The auction could see contracts established between utilities and nuclear or hydropower generators lasting between three and 10 years; other renewable resources may receive contracts up to 20 years in length, regulators said.

PURA will decide on "at risk" resources by October. DEEP plans to select winning bidders by late 2018 or early 2019.

b.kail@theday.com

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