Waterford — When an industry analyst on a February conference call asked if Millstone Power Station still faced closure, Dominion Energy President and CEO Thomas Farrell replied that executives were "not here to do any saber-rattling."

But this past week, after warning for years that high operational costs and competition from cheap natural gas threatened Millstone's future, Dominion pressed utility companies and state leaders for a sweeter deal to keep the nuclear plant operational. If the parties can't find common ground by March 15, Millstone, which generates 2,100 megawatts, employs 1,500 workers and is Waterford's largest taxpayer, could notify the regional grid operator that it intends to shutter in four years.

Officials with Dominion say they sat down face-to-face with utilities for the first time this past week, less than two weeks before power generators must notify ISO New England if they want to retire. The talks come more than two months after regulators told utilities to negotiate cheaper prices for a 10-year agreement with Millstone announced by former Gov. Dannel Malloy in December. Pricing has not yet been released to the public.

Despite the state's push for lower prices out of Dominion, the Virginia company in December welcomed news of the agreement, which came after years of lobbying and fierce pushes from lawmakers to let nuclear power facilities compete with higher-priced solar, wind and hydropower in the state's zero-carbon auction.

But by the February conference call, Farrell was telling analysts the first three years of the contract would amount to the New England wholesale power price, "not an acceptable result for the company." Executives banked on working with Gov. Ned Lamont's office, DEEP and utilities to forge a more palatable deal, with the goal, Farrell said, of providing "long-term financial assurance required for Millstone's continued operation."

Still, negotiations didn't advance in February, with Dominion faulting utilities. The parties had conducted only "short meetings" over the phone, according to spokesman Ken Holt, who said Dominion had been "ready and willing to meet face-to-face" with Eversource and United Illuminating for a month.

The utilities declined to comment on how Dominion characterized the talks.

"The negotiations continue," Eversource spokesman Mitch Gross said Tuesday.

"UI and Eversource were directed by the Department of Energy and Environmental Protection to negotiate in the best interest of Connecticut ratepayers," said Ed Crowder, spokesman for UI. "We are proceeding as directed. We have nothing to gain or lose in this process, and we take our obligation to Connecticut ratepayers seriously."

Holt noted Dominion is "fully engaged with Connecticut's utilities and the Lamont administration to finalize" a deal before March 15.

"There is no question that Millstone is vital to Connecticut's economy, and the region as a whole, to control energy costs, achieve ambitious carbon reduction goals, and provide employment to over 1,500 women and men," Holt said.

As for the state, DEEP spokesman Chris Collibee said the agency was "working closely with the utilities and Millstone to come to a fair and equitable solution that protects ratepayers, while ensuring Connecticut meets its carbon reduction targets."

A message left with a spokesperson for Lamont's office was not immediately returned.

Nicholas Neeley, spokesman for the Public Utilities Regulatory Authority, which must approve any contracts between Millstone and utilities, declined to comment on negotiations, other than to say, "We're not going to get involved at any point until, and if, they file something with us."

'Almost home-free'

Waterford last year re-established a Long Range Fiscal Planning Committee partly to consider ways to eventually replace Millstone's 35 percent portion of the town's tax base, almost $30 million. First Selectman Dan Steward said this past week that he hoped utilities "get to the table and sign a deal."

"The legislature worked on this for so long," he said. "It should have been resolved before this. It's important to Waterford. It's important to the state."

Sen. Paul Formica, R-East Lyme, one of several local lawmakers pushing to support Millstone the last few years, said he was hopeful and expected a timely resolution.

"Preserving our power baseload is priority number one to establish a bridge to renewable energy," Formica said, highlighting the growing opportunity for offshore wind power and renewables to eventually replace retiring sources of electricity.

Rep. Kathleen McCarty said she was frustrated that negotiations were not completed.

"I thought we were almost home-free and this was resolved," she said, arguing that keeping Millstone open is in the best interests of ratepayers, workers and the state. "Now here we are in a holdup with the contracts."

Dominion last year turned over to regulators confidential financial data in an attempt to prove Millstone was at risk of early retirement.

When DEEP in December approved Millstone's 10-year proposal in the zero-carbon auction, it split the deal in two. In the last seven years of the agreement, DEEP said Millstone would receive better prices, with contracts valuing the plant's environmental, economic and fuel security benefits. DEEP directed utilities to negotiate the price in those seven years "downwards to better reflect a reasonable rate of return. Dominion has sought a rate of return that is not in the best interests of ratepayers."

In the first three years of the agreement — a period when the state believes Millstone is not at risk of closing because it's already committed to providing electricity to the regional grid — DEEP said Millstone would receive compensation based on energy-only pricing.

Farrell said the overall agreement as it stands isn't good enough to keep the plant running, telling analysts "we must have pricing that recognizes (Millstone's) energy security, environmental and economic benefits."

Holt noted that last March, before state regulators selected Millstone's 10-year deal, Dominion chose to compete in ISO New England's forward capacity auction, which secures future electricity for the grid, instead of initiating retirement.

"We participated in the auction last year without a clear path forward and aren't willing to do that again at this point," Holt said.

Regulators have said Millstone would remain profitable for years, but they also forecast stark economic and environmental impacts if the nuclear plant were to shutter prematurely.

ISO New England spokesman Matthew Kakley said the grid operator is not part of any negotiations.

When a power generator wants to close, ISO New England studies the impact to power system reliability and "can seek to retain a resource we determine is needed for either fuel or transmission security," Kakley said. But "we ultimately cannot prevent a resource from retiring if they wish to do so," he added.

Millstone Unit 2's operating license with the U.S. Nuclear Regulatory Commission expires in 2035. Unit 3's expires in 2045. Unit 1 was decommissioned in 1998.

b.kail@theday.com