Dominion expects edge for Millstone in DEEP zero carbon auction

Dominion's Millstone Power Station is seen from the air on July 9, 2011, in Waterford. In its request for proposals for zero carbon energy released Tuesday evening, the state Department of Energy and Environmental Protection said it would let energy producers try to convince regulators they're 'at risk' of closure before 2022. That could boost the proposals of Millstone, which has been arguing that it's in danger of premature closure, as they'll be scored on environmental and grid benefits along with price. (Sean D. Elliot/The Day)
Dominion's Millstone Power Station is seen from the air on July 9, 2011, in Waterford. In its request for proposals for zero carbon energy released Tuesday evening, the state Department of Energy and Environmental Protection said it would let energy producers try to convince regulators they're "at risk" of closure before 2022. That could boost the proposals of Millstone, which has been arguing that it's in danger of premature closure, as they'll be scored on environmental and grid benefits along with price. (Sean D. Elliot/The Day)

Waterford — Regulators on Tuesday paved a way for Millstone Power Station to gain an edge in a state-run electricity auction after months of debate over whether the plant is at risk of early closure.

In its request for proposals for zero carbon energy released Tuesday evening, the Department of Energy and Environmental Protection said it would let energy producers try to convince regulators they're "at risk" of closure before 2022. That could boost Millstone's proposals, as they'll be scored on environmental and grid benefits along with price.

DEEP's decision means as early as 2019, Millstone could potentially gain an advantage over facilities competing in the RFP, which is open to hydropower, solar and wind producers. Just a few weeks ago, DEEP said it wouldn't consider facilities "at risk" until 2023, igniting outcry from lawmakers and warnings from plant owner Dominion Energy that without full consideration of Millstone's benefits in the zero carbon market next year, the plant could face premature closure in a wholesale market dominated by natural gas.

"We are pleased that DEEP modified the 'at risk time period,'" Dominion said in a statement released by Millstone spokesman Ken Holt. "By doing so, DEEP acknowledges that an existing resource that is determined to be 'at risk' should have all its attributes valued now."

Regulators created the "at risk" designation and let Millstone compete in the zero carbon RFP after state-hired consultants said premature Millstone closure would spark heavy job losses, grid unreliability and spikes in greenhouse gas emissions from replacement power sources. Millstone's two operating units are licensed until 2035 and 2045.

Because public data shows Millstone should be profitable for many years and because the plant already has sold substantial energy capacity to the regional grid for the next several years, some Dominion critics blasted the RFP process as a handout.

"Millstone's decision to take on obligations and not signal any intent to retire suggests that Dominion, contradictory to its rhetoric, views Millstone as economically solvent and not an Existing Resource at Risk, at least prior to the second half of 2023," energy company NRG recently said in a letter to DEEP.

Dominion in May submitted a petition for "at risk" treatment with the Public Utilities Regulatory Authority, "which included a full accounting of Millstone's audited financials," the company said. PURA is the agency that regulates the rates and services of utilities and telecommunications companies in the state. 

"We expect Millstone to be granted 'at risk' status," Dominion said Tuesday, noting fuel security and economic impact were also among the factors weighed by regulators evaluating proposals from "at risk" facilities.

PURA signaled in July that Millstone could be "at risk" earlier than DEEP believed. PURA urged DEEP to "consider permitting more flexibility in its bidding and evaluation requirements" and to evaluate "on a case-by-case basis ... whether and when a resource is 'at risk.'"

Before DEEP released the final RFP, Dominion warned that it might not even submit a proposal if it was barred from potential "at risk" consideration when DEEP selects winning energy producers next spring. Dominion pointed to its shuttered Kewaunee Power Station in Wisconsin as an example of a plant that could not compete with natural gas and wasn't worth continued investment among Dominion's facilities.

DEEP, which does not comment on ongoing RFPs, said in a statement that it "carefully reviewed" about 70 comments on its draft RFP before making several changes.

In an apparent nod to energy sources other than nuclear power after many comments from energy companies and renewable advocates, DEEP said it "reserved the right to select an increment of an at risk bid plus a portfolio of other zero carbon resources."

DEEP did not abandon a so-called "at risk time period," noting it wouldn't consider facilities "at risk" until June 1, 2022, a year earlier than its draft RFP proposed. DEEP based that time frame on energy capacity obligations that could cost Millstone hundreds of millions of dollars to shed before 2022.

But DEEP left the door open for energy producers to "rebut this presumption by providing evidence" to PURA "that it should be considered at risk prior to 2022."

"DEEP is at least still giving Dominion that opportunity to prove that they're at risk," said state Rep. Kathleen McCarty, R-Waterford. "It's positive but there's still work to be done."

"I appreciate the consideration DEEP put into modifying this RFP to take into account the concerns raised by lawmakers and act in the best interest of Connecticut ratepayers," said state Sen. Paul Formica, R-East Lyme. "I also appreciate that the RFP allows other resources to be selected as diverse portfolio measures which will further help our state build a bridge to a renewable energy future."

By October, PURA must determine whether confidential financial data turned over by Dominion proves Millstone is in financial peril.

DEEP says it will pick winners among zero carbon companies by late 2018 or early 2019. PURA will approve final contracts between energy producers and utilities by spring of 2019.

DEEP said it will hold a bidders' conference on Monday, Aug. 13, in New Britain. Proposals are due to DEEP by Sept. 14.

b.kail@theday.com

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