Millstone nuclear plant is profitable, new Connecticut draft report says
Dominion Energy says it has provided Connecticut regulators with confidential financial information regarding its Millstone nuclear plant that the utility hopes will be incorporated in an upcoming Feb. 1 report.
Connecticut’s Department of Energy and Environmental Protection (DEEP) and Public Utilities Regulatory Authority (PURA) late last week released a draft report that found the Millstone plant will be profitable from 2021 through 2035. Dominion did not submit its confidential financial information in time to be incorporated into the draft report, according to government officials.
Connecticut on October passed a bill that authorizes incentives for nuclear power, partially in response to statements from Dominion saying that the plant would not be able to remain economic without subsidies. This report could prove otherwise, opponents of the bill told the Hartford Courant.
The report, conducted by Levitan & Associates for DEEP and PURA, was authorized by a July executive order by Gov. Dannel Malloy (D) and by the bill that passed in October. The law requires DEEP and PURA to assess the current and projected economic conditions of the nuclear plant, as well as impacts from retiring the nuclear facility on reliability and emissions in the state.
Depending on the findings of the final report, DEEP may issue one or more solicitations for zero carbon generation facilities, such as nuclear power, hydropower, Class I renewable energy sources and energy storage. And, depending on the responses received, DEEP may direct electric distribution companies to enter into long-term power purchase agreements with the selected winners.
In broad terms, the bill follows the Future Energy Jobs Act that Illinois passed in December 2016 that provides two Exelon nuclear plants zero emission credits. That bill was the subject of legal challenges but has so far survived them all.
The Connecticut bill, like the Illinois bill, was designed to avoid entanglement with wholesale power markets under federal jurisdiction. The Supreme Court, in Hughes v Talen Energy Marketing, found such entanglement a fatal flaw in programs in New Jersey and Maryland that aimed to encourage in-state generation.
If DEEP finds any proposals submitted in response to a solicitation are in the best interest of ratepayers, DEEP may direct the EDCs to enter into long-term agreements with those resources and submit any agreements to PURA for review and approval.
The report found that shutting Millstone could result in a 25% increase in carbon dioxide emissions. The closure of Millstone could also “greatly exacerbate” price volatility and jeopardize reliability during extreme winter weather, the report found.
But the report also found that Millstone will be profitable between 2021 and 2035 with profitability expected to amount to a net present value of $2.4 million in 2017. Even under the most unfavorable assumptions, the report found Millstone’s profitability falls to a net present value of $1.3 million in 2017.
Dominion has said in the past that it could be forced to close Millstone because of economic reasons unless it receives what it views as proper compensation for zero emission electric energy. Opponents of the incentives, including NRG Energy, told the Hartford Courant that the Connecticut report shows the plant is profitable without any subsidies, contrary to Dominion's position. But Dominon maintains its position over the Millstone plant.
“DEEP and PURA’s preliminary report is crystal clear that Millstone is essential for Connecticut to meet its energy, environmental and economic goals,” Dominion spokesman Ken Holt, told Utility Dive via email. But, he added, “the report misses the mark in one area: Millstone’s costs and revenues.”
Dominion has resisted requests to provide Connecticut officials with detailed financial data about Millstone, citing competitive concerns. Levitan produced a financial profile of Millstone using market data on the revenue side and data from the Nuclear Energy Institute to calculate costs.
“The report is based on industry assumptions premised on a comparison with nuclear plants very much unlike Millstone in terms of design, operating expenses and the local cost environment,” Holt said. “It is like deciding what to wear today in Hartford based on the weather forecast for Atlanta.”
Holt said Dominion provided DEEP and PURA with “confidential financial information about Millstone’s costs and revenues last month.”
DEEP, PURA and Levitan say they are “carefully reviewing” the information Dominion submitted on Nov. 30, but considering the tie constraints of a Feb. 1 deadline, the agencies determined “the prudent course of action” was to release the draft assessment and make it available for public review, as the assessment was nearly finalized at the time of Dominion’s submission.
The docket on the case is now open for stakeholder comments. And DEEP and PURA say they will have a final report ready for release on Feb. 1.
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