Comment

Comment by Willem Post on September 3, 2022 at 9:06am

Nuclear is having a worldwide upsurge, because it is zero-CO2, base-loaded power, not dependent on the sun and wind.

Such plants last at least 60 years and are operated at nameplate capacity, 24/7/365, stopping only to refuel every 500 days.

China, Russia, and South Korea build plants at $6000/kW, turnkey, in about 6 years, anywhere in the world, except the US, Europe, where costs/kW are much higher, and the plants take at least 10 years to build

Comment by Dan McKay on September 3, 2022 at 7:35am

Formica, Marx, Debate Energy Prices, Millstone Deal, in Southeast Connecticut Race

— Brendan Crowley, 9.14.2020

After a steep rate hike on July 1 by Eversource Energy was met with outrage from customers across Connecticut, the company – New England’s largest energy provider – responded by blaming the Connecticut legislature for forcing it into a long-term contract subsidizing Millstone Nuclear Power Plant in Waterford.

A bipartisan group of state and elected officials, including southeastern Connecticut lawmakers, passed legislation in 2017 that paved the way for Millstone owner Dominion Energy to bid for a long-term preferential contract usually reserved for new renewable sources like wind and solar power.

Dominion said at the time that it would close Millstone without the contract, leaving Connecticut customers  — where the plant provides about 40 percent of the state’s energy production – almost wholly dependent on fossil fuels, vulnerable to price swings and added reliability concerns. 

Dominion won its contract last year, and the deal was roundly praised by Gov. Ned Lamont. According to an April 15, 2019 press release by the Office of the Governor, the closure of Millstone “would have exposed the New England region to a nearly 25 percent increase in carbon emissions, increased risk of rolling blackouts, billions of dollars in power replacement costs, and the loss of more than 1,500 well-paying jobs right here in Connecticut.”

Most of those jobs would have been in the district of State Sen. Paul Formica, R- East Lyme, ranking member on the legislature’s Energy and Technology Committee, who championed the bill that made way for the agreement. The Millstone plant also directly and indirectly provides about a third of Waterford’s tax revenue.

According to an April 15, 2019 press release by the Office of the Governor, the closure of Millstone “would have exposed the New England region to a nearly 25 percent increase in carbon emissions, increased risk of rolling blackouts, billions of dollars in power replacement costs, and the loss of more than 1,500 well-paying jobs right here in Connecticut.”

After Eversource came under fire for the July rate hikes, Formica’s Democratic opponent in the race for State Senate, Martha Marx, took to Facebook to criticize him for opening the door to the deal. Marx said lawmakers didn’t weigh the impact it would have on ratepayers, and didn’t push hard enough to spread the cost of subsidizing Millstone across all the New England states that use its power.

“We need jobs, and I appreciate business and corporations, but we have to look at the consumer first,” Marx said. “There was no study done on the ratepayer impact, and it was putting all of the trust into Eversource that they would protect the ratepayer.”

Meanwhile, Katie Dykes, commissioner of Connecticut’s Department of Energy and Environmental Protection, seized on the controversy to claim that the regional grid operator, Independent System Operator New England, runs markets that favor natural gas, hurting renewable energy goals, reliability and price stability, forcing Connecticut ratepayers to subsidize its shortcomings.

Shutdown or subsidize

Dominion Energy told Connecticut legislators in 2016 that low wholesale energy prices would drive it to shut down the Millstone Nuclear Power Plant in Waterford. Abundant natural gas was selling at low prices on the wholesale energy market, driving down the price of other energy sources. 

Three years earlier, in 2013, Dominion shut down its nuclear power station in Kewaunee, Wis., claiming similar market pressures.

“Based on the information that we had of other plants that had closed down that were in a similar position, I do believe Millstone would have shut down without the power procurement agreement with Dominion,” said State Sen. Cathy Osten, D-Sprague, another proponent of letting Dominion enter the procurement process. 

An analysis at the time by consultants Levitan and Associates for the state found that the Millstone units would be profitable through at least 2035, but Dominion argued its duty was to shareholders, and that it had an obligation to shut down the plant if it could get a better return on its investment elsewhere.

“Based on the information that we had of other plants that had closed down that were in a similar position, I do believe Millstone would have shut down without the power procurement agreement with Dominion,” said State Sen. Cathy Osten

“This is a Connecticut asset — $1.5 billion in economic activity to the state of Connecticut,” Formica said. “We have 1,500 well-paying jobs, mostly in East Lyme, Waterford, Montville, New London, Old Lyme, Saybrook… imagine what happens to the economy without that?”

ISO-New England, which manages the regional grid, determined the closure of Millstone would put the region at risk of rolling blackouts, and carbon dioxide emissions from New England electric production would increase 25 percent. It would cost $1.8 billion to replace just a quarter of the zero carbon energy Millstone produces and $5.5 billion to replace all of it, according to PURA.

“It seems a small price to pay to be able to have energy available when we turn on the lights or plug in the vacuum,” Formica said.

“This is a Connecticut asset — $1.5 billion in economic activity to the state of Connecticut,” Formica said. “We have 1,500 well-paying jobs, mostly in East Lyme, Waterford, Montville, New London, Old Lyme, Saybrook. Imagine what happens to the economy without that?”

Contacted by phone, Marx agreed that those 1,500 jobs needed to be saved, and that Millstone is necessary until there are other sources of power available. What she has a hard time getting past, she said, is the fact that Dominion refused to open its books to lawmakers or regulators, especially given the estimates that Millstone was profitable, she said..

“I probably would have called their bluff that they were gonna close down,” Marx said. “And that’s a big thing to say years after it got passed and when I wasn’t sitting at any of the tables, but I have a hard time with the corporation saying, ‘I’m going to close down if you don’t get this for me.’”

Companies that own nuclear generators have made similar threats in Illinois, Ohio, New York and New Jersey in order to secure some version of zero emission credits – another form of ratepayer subsidy, said Todd Snitchler, President and CEO of the Electric Power Supply Association. 

“I probably would have called their bluff that they were gonna close down,” Marx said. “And that’s a big thing to say years after it got passed and when I wasn’t sitting at any of the tables, but I have a hard time with the corporation saying, ‘I’m going to close down if you don’t get this for me.’”

Most recently, Exelon announced in late August that it plans to close two nuclear plants in Illinois well before their licenses expire, after Illinois Gov. J.B. Pritzker rejected a plan to subsidize the plants, which Exelon says are not profitable. 

Exelon has made the same threat over two other Illinois nuclear plants, and secured a $235 million annual credit from the Illinois legislature in 2016. Those plants remain in operation with the annual subsidy. Like power purchase agreements, those credits are passed on to ratepayers, Snitchler said.

Subsidizing New England

Marx said she doesn’t think it’s a bad thing that Millstone got the subsidy, but she’s concerned with how it played out in the legislature. According to Marx, lawmakers voted without understanding what the effect would be on ratepayers, and the power purchase agreement left Connecticut ratepayers to support Millstone for the benefit of the entire region.

“What I would have done differently is insisted that we know how it would have impacted the ratepayers, and I would have tried to negotiate a better deal where it would have been the region and not just Connecticut paying for it,” Marx said.

While all of New England benefits from the plant, the power purchase agreements with Eversource and United Illuminating leave Connecticut ratepayers to cover the cost of subsidizing it on their own.

“Even though Millstone is located in Connecticut, no power plant in Connecticut is [just] a Connecticut asset. It’s a regional asset,” said State Sen. Norm Needleman, D-Essex, who wasn’t in the legislature when it paved the way for the Millstone deal, but now chairs the energy committee. “The 2,100 megawatts of power in eastern Connecticut doesn’t only serve the ratepayers of Connecticut, it serves the ratepayers of ISO New England.” 

Dykes argued to lawmakers during an Aug. 27 hearing of the Energy and Technology Committee the Millstone deal was a result of deregulation and ISO-New England policies that favor cheap natural gas, then force ratepayers to subsidize special contracts needed to ensure reliability. 

During the late 1990s, Connecticut directed United Illuminating and Connecticut Power and Light to sell off their power generating facilities and instead purchase power through a regional wholesale market run by ISO-New England.

Dykes said the reason New England would be at risk of rolling winter blackouts without Millstone is that the regional grid is too reliant on natural gas, which is a result of the market favoring natural gas, and ISO-New England blocking state-supported renewables from participating in the forward capacity market unless they coordinated the exit of an existing resource.

The issue of Connecticut ratepayers subsidizing Millstone for the benefit of the region came up repeatedly in discussions, said Dykes, who was the PURA chair at the time.

DEEP and PURA pushed ISO-New England to come up with a framework to spread those costs out, but the best they could come up with was a two year contract that would have Millstone shut down at the end, Dykes said.

“If ISO had done that as opposed to just Connecticut, then all the ratepayers in the region would be helping to keep that plant open, not just the ratepayers of Connecticut,” Needleman said. “But ISO will tell you they weren’t asked.” 

Osten said it was risky to ask the ISO to intervene at the time because Dominion could have stopped the negotiations and shut down Millstone. She said lawmakers understood ISO was not interested in negotiating with Dominion.

Marx said lawmakers and regulators needed to get ISO to the table to negotiate. She pointed to her experience negotiating union contracts, but admitted she didn’t know how different the process would be to negotiate for a nuclear power plant to remain open.

“The ratepayers weren’t protected. We weren’t protected from the impacts of the purchase agreements, and we were not protected in that only Connecticut was affected,” Marx said. “If those other people didn’t want to play ball, you have to make them play ball.”

Comment by Dan McKay on September 3, 2022 at 6:41am

Dive Brief:

• Connecticut officials on Friday moved to secure the future of Dominion Energy’s Millstone nuclear plant, selecting a 10-year bid for power from the facility as part of a solicitation for carbon-free generation resources. 
• Millstone was selected alongside 165 MW of solar energy, 300 MW of offshore wind and contributions from New Hampshire’s Seabrook nuclear plant as part of a request for proposals (RFP) issued in May by the state Department of Energy and Environmental Protection (DEEP). All together, the accepted bids represent about 45% of Connecticut’s electric load.
• State regulators determined in a November draft decision that Millstone, Connecticut’s only nuclear power plant, was at risk of early retirement — a status which allowed the plant to bid into the state’s carbon-free RFP. The projects must be approved by state utility regulators. 

Dive Insight:

Connecticut statute Public Act 17-3, signed by Democratic Gov. Daniel Malloy in June, 2017, required state regulators to study the economic viability of the Millstone plant, which Dominion warned could close if it did not receive financial support.

State regulators ruled in November to allow Millstone to bid into the carbon-free procurement auction, after determining its “at risk” status in a draft decision. Previously, the company did not have an arrangement with the state. 

The DEEP decision, announced last Friday, selected a 10-year bid for almost 50% of Millstone’s output. After the first three years, Connecticut’s utilities are directed to negotiate for a price that reflects Dominion’s costs and risks to keep the plant during the at-risk period of the bid, from 2022 to 2029.

DEEP requested negotiations to conclude on March 31.

The state also selected a bid from the New Hampshire-based Seabrook nuclear station, owned by NextEra Energy Resources, which had a levelized cost of $0.03/kWh. That deal begins in 2022 and is for 1900 GWh of energy.

“Connecticut sees the value that nuclear provides as carbon-free, baseload power and as such, have included it in their long-term plans for achieving their carbon goals,” Ken Holt, Millstone’s communications manager, told Utility Dive via e-mail.

The 10-year deal for Millstone’s output represents about 75% of the amount of energy allowed from any source under the Connecticut law that governs its zero-carbon RFP, Holt said.

Some green groups say that’s too much. The Connecticut Fund for the Environment told the Hartford Courant the Malloy administration “doubled down on the energy sources of the past” in selecting the nuclear facilities instead of more renewable energy. 

DEEP in June the state’s first acquisition of offshore wind energy, tapping Deepwater Wind to provide 200 MW to the state as part of a larger project, Revolution Wind, which will also provide 400 MW to Rhode Island. The project, which is now owned by Danish developer Ørsted, secured an additional 100 MW of offshore wind capacity through the carbon-free auction.

The state also selected nine solar projects that have an average levelized cost of about $0.049/kWh. Three of those projects are in Connecticut, and the rest are in Maine and New Hampshire. Two of the projects, including the Black Hill Point Energy Center in Connecticut, will pair solar with energy storage.

Other renewable energy projects, including hydropower and land-based wind participated in the RFP. The projects are subject to Public Utilities Regulatory Authority approval.

Comment by Dan McKay on September 3, 2022 at 6:14am

Just two years after a state contract to buy power from the Millstone Nuclear Power Station in Waterford led to a surge in summer electric rates, that same contract is a major factor behind a significant drop in rates slated to take effect in September.

Adjusted rates that PURA approved last week are expected to save the average residential Eversource electric customer about $9.78 per month, and $7.72 a month for United Illuminating customers. 

That cost savings is driven by the millions of dollars the electric companies saved by buying power from Millstone and the Seabrook Nuclear Power Plant at rates that are now below the market average in New England.

From January through June, Eversource benefited to the tune of $210 million, while the United Illuminating benefit totaled $46.3 million, from state’s contracts with Millstone and Seabrook, the companies told PURA.

Two years ago, with natural gas prices at historic lows, the $49.99 MWh price guaranteed for nuclear power led to a steep July 2020 rate hike. Forced to quickly rescind the 2020 rate hike in the face of public outrage, Eversource said customers were undercharged by $189 million that year, and customers of both utilities have been paying higher rates since to make up the balance.

Two years later, with the price of gas at historic highs, that rate is a relative bargain for the gas-dominated New England electric grid. And overcharges from 2021 and 2022 will pay off the balance customers were undercharged in 2020, and allow the utilities to lower rates – though Eversource said it expects customers will see another substantial increase to the supply rate in January as the price of gas spikes in the winter.

The see-saw in prices from 2020 to 2022 show how volatile the Millstone contract can be for Connecticut electric customer rates, but two new federal tax credits for nuclear production could offset the higher costs of buying power from Millstone in the future when market rates are low.

Both the $1 trillion infrastructure bill Congress approved last fall and the Inflation Reduction Act passed this month include new tax credits designed to backstop revenues for nuclear power plants, which have increasingly been shut down in the face of low market prices.

DEEP Commissioner Katie Dykes said that when Connecticut negotiated its 10-year contract to buy power from Millstone to prevent Dominion from closing the plant in 2017, it included a provision that any new revenue source would flow back to Connecticut electric customers – including tax credits.

Dykes said it was important that those credits would be directed toward electric customers and that the state wouldn’t miss out on the benefits of the new programs just because it acted earlier to keep Millstone open.

“It’s heartening that the federal government now is reflecting the same policies that Connecticut embraced in 2017, in recognizing that it’s going to be very, very difficult for us to meet our decarbonization goals affordably and reliably without retaining the baseload nuclear units that are providing emission-free power,” Dykes said.

United Illuminating told PURA that Dominion would apply for the Civil Nuclear Credit in 2023, so any revenues that would bring to the Millstone plant would offset potential costs the utilities take on from their contract with the plant if market prices fell.

Dominion CFO Jim Chapman told analysts on a quarterly earnings call this month that, while the details of the Nuclear Production Tax Credit in the Inflation Reduction Act still needed to be worked out, the new credits were “customer-friendly” as the benefits to Millstone would be passed on to the utilities and their customers. 

“Long term, [it’s] good for the industry, good for the future of Millstone, whatever happens after that 10-year [power purchasing contract],” Chapman said.