Millstone fires back over claims of winter 'windfall revenues'
Waterford — Millstone Power Station owner Dominion recently urged regulators to disregard an electricity distributor's claims that the facility stands to earn "windfall revenues" during harsh winter months when energy prices spike.
Dominion on Friday told the Department of Energy and Environmental Protection and the Public Utilities Regulatory Authority that United Illuminating's calculations showing the plant may have earned more than $68 million "in just eight days" during the recent cold snap were "not grounded in reality and are a reckless attempt to support its arguments with false information."
Dominion argues UI misunderstands the energy market, saying "Millstone's energy revenues do not significantly increase when the region experiences severe price spikes" because the plant sells almost all its future electricity output far in advance of day-ahead or real-time energy markets that are impacted by swings in the weather.
UI made the comments on Millstone's profit potential as part of DEEP's and PURA's review of the plant's economic viability. UI did not immediately respond to messages seeking comment.
Dominion has hinted that Millstone's future is threatened, much like other U.S. nuclear plants, by high operational costs and competition from low-cost natural gas. DEEP and PURA, whose analysis thus far has shown the plant remains substantially profitable, will issue recommendations to state officials in February on whether to support Millstone by letting it sell electricity in a state bid along with higher-priced renewables.
Along with Eversource and some power generation companies last week, UI argued Dominion has not demonstrated the need for state support or energy market changes.
"A facility like Millstone that runs at full output at all times is uniquely positioned to earn robust revenues during stressed conditions, and the actual numbers from the first five days of this year provide further evidence that intervention is not needed at this time," UI wrote.
But Dominion emphasized that because Millstone sells its future output in advance, it's the "financial institutions and other suppliers acting as middlemen in the wholesale energy markets" who are the beneficiaries of seasonal price spikes.
"As a zero-carbon baseload unit employing over 1,000 workers and deploying millions of dollars annually on equipment upgrades, the revenue uncertainty of the day-ahead (and real-time) markets is simply too risky regardless of the perceived upside," Lillian Cuoco, Dominion senior counsel, wrote to DEEP and PURA.
Dominion says if Millstone's output was purchased "via long-term contracts by Connecticut customers, they would be the beneficiary of supply stability" and "would avoid the price spikes during extreme weather."
Some power companies, though, have suggested Dominion's potential pricing in state bids would end up hiking rates for consumers.
"The likelihood is minuscule that Dominion would submit a bid for a price that is merely sufficient to recover its costs and a fair rate of return," UI argued last week, adding that fears of a Millstone closure were unfounded.
Dominion maintains the continued operation of Millstone is "ultimately a management decision."
DEEP and PURA say they will review all comments from a variety of stakeholders over the last several months and release a final report Thursday, Feb. 1.
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