Sen. Formica: “Move CT energy policy forward in the best interests of the ratepayers.”

May 6, 2016

Bill that would have protected Millstone from energy market dips dies in House
May 05. 2016
By Judy Benson
The Day of New London

After passing the state Senate unanimously, a bill crafted to help stabilize revenues for Millstone Power Station owner Dominion Resources failed to be taken up for a vote in the state House of Representatives before the close of the session Wednesday.

The bill, co-sponsored by state Sen. Paul Formica, R-East Lyme, would have given the state Department of Energy and Environmental Protection a larger role in regulating energy markets, allowing DEEP to permit Dominion to sell the power generated by Millstone under long-term contracts through a new market.

The nuclear power plant in Waterford generates about 55 percent of the electricity used in Connecticut daily, and supplies about 35 percent of the daily power needs of New England, Formica said.

The new mechanism would allow Dominion to offset the volatility of the daily auctions that set wholesale prices for power.

During a March forum with the legislature’s Energy and Technology Committee before the legislation was written, Dominion officials testified that cheap and abundant supplies of natural gas have led to a drop in prices Dominion receives for the energy generated at Millstone, significantly cutting into profits.

The company received $44 per megawatt in 2015, compared to about $79 per megawatt in 2005, Dominion officials said.

The company did not say Millstone is at risk of closing but did emphasize the need for greater stability in energy markets.

Recent and pending closures of at least a half dozen nuclear power plants across the country, including two in New England, raised the committee’s concerns about Millstone’s future.

Formica said the bill was a bipartisan effort crafted with input from Gov. Dannel P. Malloy’s office and energy experts.
It would have allowed Millstone to compete for contracts against electricity generated by other sources that don’t produce carbon dioxide emissions, including hydroelectric, wind, solar and trash-to-energy facilities.

“In no way would this have provided a subsidy,” Formica said. “It would have allowed for Millstone to compete in a way that would help them with their overhead, and move Connecticut energy policy forward in a way that would be in the best interests of the ratepayers.”

The bill faltered in the House, he said, over concerns that the measure would negatively affect other power generators in the long term.
The pressures facing Millstone from the energy market are not going away, however, Formica said, adding that he expects a similar bill will be introduced in the 2017 session of the Legislature.

Environmental groups, including the Connecticut Fund for the Environment, opposed the bill, arguing that it would have pitted renewable energy against nuclear power plants, and set up conflicts of interest between energy distributors and producers.

“The bill was negotiated behind closed doors and never received a proper public hearing,” the group said in a news release. “Environmental advocates, clean energy businesses, and even the electrical companies opposed it.”

It also alleged that the bill would have given Dominion an unfair business advantage.

“We’re grateful to the House for stopping the Millstone bill, but it is extremely disconcerting that a proposal of this magnitude made it as far as it did, especially given the language was negotiated under a cloak of darkness with no public input,” said Leah Schmalz, program director for the organization.

“Connecticut’s future lies in clean, safe, locally produced renewable energy like wind and solar, not massive energy plants that cause more problems than they solve,” Schmalz said.

Ken Holt, spokesman for Millstone, thanked the leaders of the Energy and Technology Committee.

They “recognized the volatility of the New England markets and provided a competitive process which would have allowed Connecticut ratepayers to save money through long-term bilateral contracts from carbon-free facilities like Millstone,” Holt said in an email message.

“Although the bill passed unanimously in the Senate, it, unfortunately, fell victim to time in the House and they adjourned without taking it up,” Holt said.

“We hope this issue will be revisited in the future as lawmakers have recognized the importance of low-cost, around-the-clock generators of carbon-free electricity,” he said.

Keith Brothers, president of the Norwich-New London Building and Construction Trades Council, also hopes the bill is reintroduced next year.
Ensuring Millstone’s long-term viability is crucial to preserving the jobs of the 1,080 full-time workers and hundreds of contractors who work at the plant, he said.

“The building trades council sends hundreds of people to work there during outages,” he said. “We should do anything we can do to protect their place in the industry and on the grid. It was a good bill.”

The issue of the “historic pressures” being faced by Millstone will be addressed as the state updates its energy strategy, said Katie Dykes, DEEP’s deputy commissioner for energy.

The process will begin later this month.

Dykes said that, while it is impossible to assess the full impact of falling energy prices on Millstone without access to Dominion’s proprietary financial information, “we can’t deny the significant role they play.”

“It really is unique in size and scope, and if it were to retire, the carbon emissions across New England would increase by close to one-third,” she said.

“I applaud the legislature for taking the initiative to address this issue in real time, as the market dynamics are unfolding around us,” she said.

The bill, Dykes said, had provisions to ensure ratepayers would be protected.

The energy strategy document, she said, will make recommendations for different ways the goals of the bill can be achieved. The recommendations, she said, could be used by the legislature in writing a new bill next session.