Draft report: Millstone profitable; closure would hurt economy, ratepayers
Waterford — In a report released Thursday, state regulators said the Millstone Power Station would remain profitable for years, but they also forecast stark economic and environmental impacts if the nuclear plant shuttered prematurely as hinted at by owner Dominion Energy.
The draft report from the Department of Energy and Environmental Protection and the Public Utilities Regulatory Authority follows months of review and Dominion's recent sharing of confidential Millstone financial records. The analysis was sparked by a July executive order from Gov. Dannel P. Malloy and a bill signed in October that could eventually help Millstone by allowing it to sell electricity in a state-sponsored bidding process along with renewables and low-emitting energy sources.
"All we've asked for is an opportunity to sell our power to the state," Millstone spokesman Ken Holt said Thursday evening. "If the price is good, they buy it. If they don't like the price, they don't buy it."
In a conference call with reporters, DEEP and PURA leadership noted the release of the draft report, along with a consultant's review of Millstone, came in the interest of transparency. The agencies said they would take written comments from the public on DEEP's website or submitted to DEEP.EnergyBureau@ct.gov until 4 p.m. Monday, Jan. 8. A public hearing on their analysis is set for Tuesday, Dec. 19 at 6 p.m. at Waterford High School.
DEEP and PURA will release a final report Feb. 1 with recommendations on whether to create a statewide or even interstate energy market or subsidy that would likely benefit Millstone.
Dominion says the facility suffers from the same economic challenges that have threatened or shut down nuclear plants across the country, namely high operations costs and competition from cheaper natural gas.
But in a 141-page assessment of Millstone's economic viability released along with regulators' draft report, Boston-based consultants Levitan & Associates said even in a worst-case scenario of lower-than-expected energy prices and higher-than-expected operations and maintenance costs, Millstone would see $100 million-plus in profits annually until 2035.
Dominion disputes the consultant's findings.
The company says the firm miscalculated Millstone's financial status by comparing Millstone — which has two dissimilar operating units requiring separate training, staffing and other costs — with Dominion's North Anna Nuclear Generating Station and Surry Nuclear Power Plant, both in the lower-cost state of Virginia.
"It's really not a fair comparison to Millstone," Holt said.
Despite Dominion's Nov. 30 confidential release of "high-level financial projections of costs and revenues for Millstone," regulators said the confidential data "did not contain the standard documentation necessary to confirm the financial projections presented, nor did it provide the specific data or documentation sought in the data requests in this proceeding regarding verifiable projected costs and expected revenues of Millstone." The confidential data was not included in the report.
Asked about the confidential data, Holt said, "We provided DEEP and PURA with information they would need to make an informed decision. It's really in their court."
Dave Gaier, spokesman for NRG, one of several energy companies pushing back against proposed energy market changes, said the report made clear Millstone would remain profitable for the foreseeable future, "with no demonstrated financial need and no danger of the plant closing — and generous after-tax cash flows estimated between $1.5 billion and $2.4 billion (through 2035)."
"The best way to ensure grid reliability as well as fair and reasonable electricity prices for ratepayers is to continue working within the framework of New England's existing capacity and energy markets, rather than destroy those markets that have functioned very well," Gaier said.
Millstone provides about half of Connecticut's electricity while employing up to 1,500 workers. The facility produces at least $1.3 billion in economic benefits to the state and roughly $30 million annually to Waterford in property tax payments, the report notes.
The Nuclear Energy Institute estimates the power generated by Millstone prevents the release of 8.3 million metric tons of carbon dioxide annually, helping the state reach its emissions reduction goals.
Millstone Unit 2's operating license with the U.S. Nuclear Regulatory Commission expires in 2035. Unit 3's expires in 2045. Unit 1 is already decommissioned.
The draft report laid out varying scenarios involving Millstone's premature closure, all of which could prove costly to ratepayers, DEEP and PURA said. Regulators said in the void left by a Millstone closure, hundreds of millions if not billions of dollars would be spent replacing Millstone's power generation, with many costs potentially passed on to ratepayers.
Closure could also prompt a stark rise in carbon emissions, regulators said, because deficiencies in New England's natural gas pipeline infrastructure capacity could lead to oil or coal units replacing some of Millstone's power.
A Millstone retirement "would greatly exacerbate" adverse market conditions such as price volatility, especially in the winter, created by the wholesale energy market's dependence on natural gas, combined with lack of pipeline infrastructure and a "dwindling supply of non-gas generation resources," per the report.
It remains unclear, DEEP and PURA officials acknowledged, how much potential energy market changes or subsidy systems implemented in states like New York and Illinois would directly impact Connecticut ratepayers one way or another.
PURA Chairwoman Katie Dykes said policy options mentioned in the report would provide revenue stability to Millstone and renewable energy sources "either through a fixed-price contract or through the fixed value of the purchase of an environmental attribute (a zero-emission credit)."
"The question is, 'How good is your crystal ball?' in terms of what the energy market will be doing over time," Dykes said.
Dykes noted if a fixed-price contract system is implemented by the state as allowed by the October bill and desired by Dominion, when energy prices are higher than the contract price, the profit is returned as a bill credit to ratepayers.
If energy prices go down, ratepayers would pay the difference between the actual cost and the contract price, she said.
When New York's zero-emission credit system was implemented in 2016, state officials there estimated the subsidies that helped Exelon's three upstate nuclear plants remain operational would cost ratepayers an average of $2 on their monthly electricity bills.
New York's program helped maintain hundreds of jobs and hundreds of millions of dollars in economic activity, but rankled downstate lawmakers who questioned whether their constituents should pay to keep upstate plants open.
Holt maintained that Dominion has not sought such a zero-emission credit system, and he added that the October bill didn't authorize such a subsidy.
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