As state leaders reach the home stretch around the negotiating table, several ideas are in the mix to help Connecticut bridge its budget gap. One proposal stands out not only as bad policy but also as a direct hit to residents and businesses.
That option is a “procurement fee” proposed by the Senate and House Republicans, to be collected from the Millstone Nuclear Plant. The idea was put forth on Tuesday, and might seem harmless at first glimpse. But what consumers should know is that in exchange for a $85 million “fee,” Millstone would get access to a lucrative long-term, non-competitive contract that it’s been vying for over the last two legislative sessions.
Why is Millstone willing to pay $85 million? Is it out of good will for the state’s financial situation? No. They’re doing it because it’s a good investment. According to a study by Energyzt, the contract at hand would earn Millstone $1.65 BILLION in additional ratepayer dollars over five years. One can just imagine the smiles on the faces of Millstone’s bean counters: A $1.65 billion payback on an $85 million investment. That is a nearly 20-to-1 return on investment that will go straight to Millstone’s shareholders.
Millstone’s move is hardly surprising. Pundits had long been waiting to see if lawmakers would try to strike up a special bargain like this one with the plant and its owner, Virginia based, Fortune 500 firm Dominion Energy. Reports surfaced last month showing that Millstone was willing to give the state up to $125 million for access to the contract (which is historically reserved for wind and solar energy). This is after failing to convince legislators that the plant actually needs financial assistance while obstinately refusing to disclose any details along that line.
Millstone is an extremely profitable plant that isn’t shutting down (it has a capacity obligation to the ISO-New England wholesale market through at least 2022), and is simply trying to pad its bottom line by any means necessary. Given all of Millstone’s rhetoric, Gov. Dannel P. Malloy rightly ordered a joint study by the Department of Energy and Environmental Protection (DEEP) and the Public Utilities Regulatory Authority (PURA) into the plant’s financial situation to determine if assistance is actually necessary. That inquiry began over the summer, and while Millstone has provided limited publicly available information to the state, it has so far refused to reveal any financial details, even with promises of confidentiality.
Ratepayers should memorize a few numbers when they hear about Millstone’s pleas. One is $330 million, which is annual additional cost to ratepayers of giving the plant what it wants. That translates to a 15 percent to 20 percent increase in supply costs for every consumer in the state. The Energyzt study shows that the plant has earned an estimated $3 billion in profits since 2001, made $150 million in after-tax income last year, and is slated to make $400 million in such income over the next five years. What’s more, a study by MIT found that Millstone will be the most profitable nuclear plant in the United States through 2019, while a New England States Committee on Electricity report showed that “Under every hypothetical scenario,” New England’s nuclear units, including Millstone, will remain profitable through 2030.
Giving Millstone a deal isn’t about helping a struggling energy producer. It’s enabling corporate welfare, and handing a multi-hundred million dollar check each year to an already profitable company at the expense of consumers. If Millstone ever faced uncertainty, mechanisms are in place to ensure the plant’s survival. Enabling a major corporate windfall should not be one of them. Lawmakers owe it to their constituents and to Connecticut’s future to get the facts and allow the state’s inquiry to finish before acceding to Millstone’s payout demands.
Matt Fossen is the spokesperson for the Stop the Millstone Payout Coalition, which is included among the sponsors of this website.
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