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Millstone Owner Argues Costs Are Driven Up By Being In Connecticut

by | Dec 18, 2017 11:30am
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Posted to: The Economy, Energy Sector, Energy, Environment, Waterford

U.S. Department of Energy photo

Millstone Nuclear Plant

HARTFORD, CT — A preliminary report that concludes that the Millstone nuclear power station can operate at a profit until 2035 doesn’t represent the additional cost of doing business in Connecticut, an official with the plant’s corporate owner said.

“There is a totally different cost structure in Connecticut than there is where we and others operate power plants in other parts of the country,” Kevin Hennessy, who oversees governmental affairs for Dominion Energy, Millstone’s owner, said.

The Department of Energy and Environmental Protection and the Public Utilities Regulatory Authority issued its study of the state’s deregulated energy state last Thursday.

Hennessy, last Friday, said in that report “placeholders” were used to estimate the cost of operating the Millstone plant. He said it was done so to meet the ambitious timeline the state has set out to meet its final report deadline — which is February of next year.

While making it clear that he felt the preliminary report “was very well done,” Hennessy said that when the real numbers of operating the Millstone plant are factored in, the profitability assessment will change.

He said there are two main reasons why operating Millstone costs much more than other power plants run by Dominion in states in the southeastern part of the country.

“The design and layout of Millstone when it was done was more complicated than other, newer plants that are easier, more efficient to operate,” Hennessy said.

“Secondly, and this is really no secret, the cost of labor in Connecticut is incredibly high compared to other parts of the country,” Hennessy said.

Hennessy did reiterate that the preliminary report represented an excellent effort by the multiple stakeholders involved, “and it shows that Millstone is vital for Connecticut.”

“The study correctly lays out the consequences that Connecticut would face without Millstone: chronic reliability issues, up to and including blackouts, failing to meet the state’s carbon reduction goals, loss of substantial jobs and economic benefits, and higher costs for customers,” Hennessy said.

Hennessy said Dominion provided DEEP and PURA actual confidential financial information about Millstone’s costs and revenues in November.

“We are committed to working with them (DEEP and PURA) so that Millstone-specific information is incorporated in the final report due Feb. 1, 2018,” Hennessy said.

Under a law passed earlier this year, DEEP and PURA could allow Millstone to sell up to three-quarters of its output in competition with other zero-carbon sources of electricity, a more favorable market because solar, wind, and hydro power generally command higher prices.

The assessment was hurt by Dominion’s refusal to share detailed financials, the agencies said.

“Despite DEEP and PURA’s specific data requests, Dominion only very recently provided a limited, two-page, high-level document with forward-looking financial projections,” they said. “The document lacked the standard documentation supporting the projections concerning its actual financial condition.”

They added: “As with any assessment based on market projections, determining viability cannot be conclusively determined. Even the most careful analysis is fraught with uncertainty, since revenues and/or costs in the future will not precisely follow modeled projections.”

Those who are pushing Connecticut’s alternative energy initiatives insist that the preliminary report doesn’t hurt their agenda even though that report concludes that the Millstone nuclear power station can operate as is, at a profit, for the next two decades.

Proponents of clean energy sources seized on that as an endorsement of pushing Connecticut energy policy in a different direction.

“We’re still digging into the modeling behind PURA and DEEP’s study, but we are initially pleased to see long-term replacement scenarios for Millstone that look to energy efficiency and renewables, like offshore wind and solar, as carbon-free power solutions,” Emily Lewis O’Brien, policy analyst for the Acadia Center, said.

“These scenarios help give important insight into how we must start preparing today for when Millstone’s licenses expire,” O’Brien said. “We recommend that as PURA and DEEP refine the draft report they make sure to assess the full benefits of energy efficiency and renewables, and not just their costs.”

O’Brien added that the best policy decision will occur when all the information is available.

“As local resources, energy efficiency and renewables offer significant benefits for Connecticut beyond carbon reductions; they also create thousands of in-state jobs, grow our economy, improve our energy security and resilience, and lessen the local pollution harms of fossil fuels,” she said.

The agencies won’t make a recommendation on whether DEEP and PURA should open a new competitive solicitation process that would benefit Millstone by allowing it to compete with more expensive sources of clean energy until the conclusion of a public-comment period Jan. 8.

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