Nuclear option: Millstone says bill pushes electric prices lower; opponents skeptical | Crain's Connecticut

Nuclear option: Millstone says bill pushes electric prices lower; opponents skeptical

Representatives of Millstone Nuclear Power Station say Connecticut electricity prices are likely to drop if it's allowed to compete in a state-run procurement process as outlined in Senate Bill 106. Opponents, including AARP, say the opposite will happen. | Photo by James Mosher for Crain's Connecticut 

Millstone Nuclear Power Station, New England’s largest electricity generating facility, expects Connecticut residents and businesses to pay less for power if a bill allowing it to compete for power purchase agreements becomes law. Opponents don’t see it that way.

Senate Bill 106 was recently assigned to the General Assembly’s Energy and Technology Committee, meaning a vote could occur in the near future. The bill would allow nuclear power to compete for the first time in solicitations managed by the Connecticut Department of Energy and Environmental Protection, according to department spokesman Dennis Schain. It’s similar to a bill that was put forward late in last year’s session and passed the State Senate but was not voted on by the House of Representatives.

 “It’s well-constructed legislation,” said Ken Holt, Millstone’s communications manager. “We’re not guaranteed anything. We still have to compete. We see it as a way for the state to meet its clean-energy goals and lower costs.”

With its two functioning nuclear reactors, Millstone creates quantities of electricity equal to about half of Connecticut’s needs, although the Waterford plant’s output is distributed throughout New England. That high production could drive down prices under the right market conditions, Holt said.

As nuclear plants nationwide struggle to compete against plants that run on lower-cost natural gas and with fewer employees, nuclear advocates tout their plants’ pollution appeal as “carbon-free electricity.” Opponents of Senate Bill 106, however, say it’s “unfair” to allow an already functioning nuclear plant to compete in the carbon-free category with solar and wind facilities that are still ramping up.

AARP, formerly known as the American Association of Retired Persons, opposed last year’s Millstone legislation and is doing the same this year. Including Millstone in the state’s power-purchase process is simply “the appearance of a competition,” said John Erlingheuser, who is AARP Connecticut’s energy expert.

 “The nuclear industry has been trying to get special deals all over the country and now they’re looking for a clever way in Connecticut,” he said.

Being a corporation means that Virginia-based Dominion’s first duty is to shareholders, Erlingheuser said. For that reason, he questioned why the company would support something that would make prices go down.

 “If their aim was direct sales that would make prices drop then I’d support that in a New York minute,” he said. “But that’s not what they want to do. Their obligation is to make more money.”

AARP is not new to energy issues. Erlingheuser said the agency has been involved in matters that impact electricity bills for the nearly 15 years he has been working for AARP in Connecticut. He also said the AARP is not affiliated with a group of Connecticut power-plant operators that also opposes Senate Bill 106.

Eversource Energy Inc., whose Northeast Utilities unit owned Millstone prior to the so-called deregulation of Connecticut’s electricity market in the early 2000s, has the same concerns about Millstone competing against budding solar and wind facilities and also opposes Senate Bill 106. Today, Berlin-based Eversource is Connecticut’s largest electricity transmission company, serving 149 of the state’s 169 towns. It also operates in Massachusetts and New Hampshire.

“Millstone is not a renewable resource, and it is not a new or an incremental resource,” James Daly, Eversource’s vice president of energy supply, testified before the Energy and Technology Committee on Feb. 7. “Therefore, it is not appropriate to treat it as a new renewable resource.”

Both AARP and Eversource say Millstone has not demonstrated a “financial need” to change from current policy. Both say if Millstone provided information about plant profits and losses then a regulatory scheme might be created that would benefit all parties.

 “If they can demonstrate need by opening up their books then I’m open to working out a deal,” AARP’s Erlingheuser said.

Millstone’s parent, Dominion, is a publicly traded company that makes regular filings with the U.S. Securities and Exchange Commission and other government agencies. It reports profits and losses in its generation segment that includes two Virginia nuclear plants as well as natural gas-fired plants, but doesn’t break out financials for Millstone specifically.

Operating earnings in the Dominion Generation division rose by $277 million during 2016 to reach $1.4 billion from $1.1 billion in the prior year, the company said in a Feb. 1 press release.

Nuclear plants nationwide are under financial pressures that have resulted in decisions to close facilities in the Northeast including Pilgrim in Massachusetts, Vermont Yankee in Vermont, and Indian Point in New York, Holt said.

 “We are not immune to those same financial pressures,” he said.

Saying that other power providers are not required to demonstrate financial need or disclose its books to participate in the state’s process, Holt called the issue a “red herring.”

 “What matters is what consumers pay for electricity,” he said.

Millstone’s bids and those made by others are all subject to review by the Department of Energy and Environmental Protection commissioner, the attorney general and Office of Consumer Counsel, Holt noted.

Connecticut power-plant owners including Calpine Corp., Dynegy, and NRG Energy have created a website and ad campaign opposing Senate Bill 106. Like AARP, the group talks about opposing “subsidies” for Millstone although, under the bill, the state government won’t be paying Millstone anything as traditional government subsidy programs do.

March 15, 2017 - 12:45pm