Dominion, critics weigh in as DEEP decision on Millstone looms
Waterford — State regulators on Tuesday will open the door to proposals from zero carbon energy producers, a competition that for the first time could include electricity generated at Millstone Power Station.
But many questions loom over the request for proposals the Department of Energy and Environmental Protection plans to issue, including whether Millstone owner Dominion Energy will bother submitting an offer. After years of lobbying and debate among lawmakers, environmentalists, power companies and utilities, Dominion claims DEEP's draft RFP released in June is unworkable at a time when Millstone's future is in jeopardy.
The same groups entered the fray the last few weeks by sending DEEP almost six dozen letters and emails in advance of the final RFP. DEEP says it will pick winners among nuclear, hydropower, solar and wind companies by late 2018 or early 2019. The Public Utilities Regulatory Authority will approve final contracts between energy producers and utilities by spring of 2019.
But PURA and many commenters are at odds with DEEP on how soon to let Millstone gain an edge in the auction. PURA and more than 50 lawmakers led by state Rep. Kathleen McCarty, R-Waterford, and state Sen. Paul Formica, R-East Lyme, criticized DEEP's preliminary decision to delay treating Millstone as an "at risk" facility until 2023.
When DEEP in February decided to include nuclear in the RFP, the agency said it would grade proposals from "at risk" energy producers on factors such as price, environmental benefits, grid reliability and fuel diversity. Bids from new zero carbon projects will also be scored on price and non-price criteria, but proposals from existing facilities not "at risk" of closure will be evaluated on price alone.
Regulators created the "at risk" designation 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.
Public data shows Millstone should remain profitable for more than a decade. But to justify investing hundreds of millions of dollars in continued operation, Dominion says Millstone requires greater financial security than what's provided in a wholesale energy market currently dominated by cheap natural gas.
To critics arguing the state might be succumbing to corporate blackmail, Dominion counters that instead of direct subsidies, it's seeking to enter a separate, higher-priced zero carbon market while getting credit for the consistent, clean power Millstone provides.
"Consideration of its zero carbon environmental and other attributes must be considered from the start of any proposed contract," not in 2023, wrote Dominion. "These benefits exist now, and should be valued accordingly."
Lawmakers cite the bipartisan bill signed by Gov. Dannel Malloy last fall, which let regulators include nuclear in the RFP but did not mention waiting until 2023 to consider Millstone "at risk."
Delaying "would be a major blow to Connecticut's careful efforts to protect ratepayers and keep energy costs down while the state works to grow the economy and develop a renewable energy future," Formica and state Rep. Lonnie Reed, D-Branford, wrote Thursday.
The Connecticut Business and Industry Association, Nuclear Energy Institute, several residents and town officials in Waterford, Ledyard, Groton, Lisbon and Stonington pushed DEEP to consider Millstone "at risk" as soon as possible.
"How is DEEP going to explain energy shortages and significant job and tax revenue losses to the residents of Connecticut if Dominion follows through on its threat to close Millstone?" Stonington resident Jeffrey Callahan asked DEEP in an email.
'The public isn't stupid — no preferential treatment' for Millstone
DEEP and Dominion's detractors point to Millstone's substantial electricity commitments to the New England grid over the next few years as evidence that closure is not imminent.
Millstone has already sold some of its power to the grid through 2023, and some analysts say Dominion could incur more than half a billion dollars trying to shed the obligations or paying fines for not meeting them.
"By committing Millstone to those capacity obligations ... it is clear that Dominion believes Millstone will generate sufficient revenues to meet the company's own revenue requirements through May 2023," energy company NRG wrote to DEEP.
Claire Coleman, an attorney for the Connecticut Fund for the Environment, argued delaying the "at risk" designation based on Millstone's capacity obligations was "sensible and consistent" with lawmakers' intent "to only proceed with solicitations and contracts that are in the best interest of ratepayers."
"It would be far from in the best interest of ratepayers to force new resources like wind and solar to compete against Millstone as an 'at risk' resource — giving it credit for 'environmental attributes' — when it is not," she added. "Ratepayers would end up footing the bill to support an existing resource that would have stayed online anyway, rather than putting ... investments toward new renewable generation."
Dominion says it's only sold energy in ISO New England's Forward Capacity Market in a "good faith" effort while the regulatory process plays out.
Dominion says it earns between 10 and 20 percent of its annual revenue from the capacity market. The company warned that it likely wouldn't participate in that market again — signaling a willingness to close prematurely — unless regulators designate Millstone "at risk" and wrap up contract approvals by Feb. 1, 2019.
Dominion said if it decides not to enter the next Forward Capacity Market, it would have to submit a retirement de-list bid to ISO New England between March 8 and March 22, 2019.
PURA, meanwhile, noted Dominion could buy out of its obligations or participate in a newly created ISO New England auction that might make it cheaper to shed Millstone's capacity obligations and close the plant before 2023.
Other commenters, including a few renewable energy advocates, maligned DEEP for including nuclear power in the zero carbon RFP to begin with.
"The public isn't stupid," said North Stonington resident Scott Stephenson in an email to DEEP. "Keep Connecticut green — meaning no preferential treatment for an obsolete and dangerous nuclear facility that is actively generating waste and is highly profitable."
As for utilities, which must hash out contracts with DEEP's selected winners, Eversource and United Illuminating argued they should gain full access to the confidential financial data Dominion turned over to regulators in its effort to show Millstone is "at risk" of closure.
"The scale of the potential imposition on customers and (UI's) balance sheet is massive and unprecedented in the state," UI wrote to DEEP. "It is critical that the company not be directed to enter into such a contract blind to the full facts and circumstances of the transaction."
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