A generic bill that says the state wants to “provide a mechanism for zero-carbon generating facilities to sell power to electric utilities,” is causing a lot of commotion.
The bill, which is similar to one introduced at the last-minute and passed by the state Senate last year without a public hearing process, would presumably give Dominion Energy the ability to compete for long-term energy contracts. Dominion owns the Millstone Nuclear Power Plant in Waterford.
How the bill would accomplish that has yet to be spelled out, but it’s likely to be similar to the bill that was never taken up by the House last year.
That bill would have allowed Millstone to compete for energy contracts. As a result, their competitors in that marketplace were not happy about it then, and they aren’t happy about it now.
Calpine Corporation, Dynegy, NRG Energy, and the Electric Power Supply Association, which own mostly natural gas-fired power plants, say it would give nuclear an unfair advantage.
“Tipping the scales for one company that is doing quite well in the current market is just wrong,” Matt Fossen, a spokesman for the group, said. “The Connecticut consumer will be better served if we’re all on a level playing field.”
AARP, which pointed out the windfall profits Millstone was making just a few years ago, doesn’t believe it’s a good deal either.
John Erlingheuser, advocacy director at AARP Connecticut, said the proposal will most certainly increase electric rates for residents. With among the highest electricity rates in the country, Connecticut cannot afford to adopt a special deal or subsidy that will further increase the rates, especially without a full vetting of the impact on ratepayers, Erlingheuser said.
But Kevin Hennessy, director of government affairs for Dominion Energy, said it’s good for ratepayers and he bristled at the notion that some are calling it a subsidy.
“It gives us the opportunity to compete,” Hennessy said. “And the more competition, the better the costs.”
Dominion wants nuclear energy to be in the same class of renewable energy sources such as wind, solar, hydropower, and natural gas, according to Hennessy.
“Last year’s proposed legislation would have allowed Millstone the opportunity to compete to sell its power directly to Connecticut consumers via their utilities,” Hennessy said. “The legislation explicitly states that a winning bid would only be selected if it was in the ratepayers’ best interest.”
Dan Weekley, vice president of Dominion’s corporate affairs, scoffed at the notion they would have to open their books in order to prove or disprove their profitability. He said if they did that then their competitors would be trying to take a look.
Department of Energy and Environmental Protection Commissioner Robert Klee said last week that the 2014 energy resources plan developed by his department identified the risk of Millstone shutting down. He said if one or both of the nuclear units were to retire, that could cause “significant resource adequacy concerns.” He said “it would likely be replaced with natural gas generation if it were to retire.”
He said that could increase New England greenhouse gas emissions by 8 million tons per year — a 27 percent increase in annual emissions.
“There’s a whole lot of different ways to go about this,” Klee said.
He said some states use contracting and some use competitive processes or a trigger that might let you open the books and each has a different mechanism that may or may not have any impact on the state’s Renewable Portfolio Standard.
Millstone officials, like other nuclear plant operators, have made comments about the plant’s financial viability. Low natural gas prices have made recovery of costs for nuclear generators more difficult over the past few years, but Dominion officials scoff at the prospect of having to open up their books for public inspection.
“If Senate Bill 106 is modeled along the lines of last year’s proposal, it would in fact, be anti-competitive, by re-regulating up to half of Millstone’s energy output,” Dan Henderick, director of external affairs for NRG, said in his testimony to the Energy and Technology Committee last week. “And by having a fixed contract, this bill would allow Dominion to bid lower than its competitors, particularly in the capacity market, and artificially drag down revenues that could then put resources that are currently economic at risk.”
The bidding process would be overseen by DEEP, the Attorney General’s Office, the Office of Consumer Counsel and the Public Utility Regulatory Authority. Hennessy pointed out that regulators are not limiting the number of winners, so there could be more than one.
“If Millstone was one of the successful bidders, Connecticut would have essentially cut out the middleman,” Hennessy said. “… That’s a good way to drive down retail electric rates.”
Sen. Gary Winfield, D-New Haven, who is co-chair of the Energy and Technology Committee, said he hasn’t decided what to make of Dominion’s request.
He said he’s met with executives and has heard concerns about their financial viability, but none of what he’s heard really tells him anything. However, from a philosophical standpoint Winfield said he’s on the side of the consumer and will do whatever is in their best interest.
“I will do whatever is in the best interest of the consumer,” Winfield said Monday.
Rep. Lonnie Reed, D-Branford, and Sen. Paul Formica, R-Waterford, the other two co-chairs, are in favor of making sure Dominion gets a chance to compete.