Malloy’s Policy Will Force Millstone To Pull The Plug

After two years of delays, Gov. Dannel P. Malloy and his administration have now concluded what we all know to be true – the Millstone Nuclear plant’s viability in the energy marketplace must be addressed quickly.  Sadly, this “study” is another move in Gov. Malloy’s gamesmanship on this issue – an issue that is vitally important to Connecticut’s economy, electric reliability and environmental quality for all of Connecticut consumers and businesses.

The Department of Energy & Environmental Protection (DEEP) and the Public Utility Regulation Agency (PURA) took public testimony this week on the facility’s future but listed a series of impossible demands on Millstone, owned and operated by Dominion Energy, that any reasonable person would conclude is a set up for failure.  Part of this procedure would require Millstone to show its proprietary financial information to justify any state subsidy without guaranteeing that benefit as with other regulated generators of power.

With over 1,000 skilled and high-paying jobs at stake – it seems counterintuitive to set unreasonable and illogical requirements for a facility that generates 50 percent of the electric power in Connecticut and not make the same demands on other power generators that do not fall under PURA regulation. Millstone provides reliable, clean electricity with zero admissions but its future is in doubt because of conflicting signals in Gov. Malloy’s energy strategy.

The underlying issue is whether current environmental policies are in conflict with pricing structure of the regional wholesale electric market. This market glitch has contributed to a significant disparity among the prices various energy plants receive for their energy, including Millstone. It is no secret that many existing power plants that do not receive state subsidies, such as Millstone are struggling financially in wholesale markets while many new resources enjoy either extra payments from the ratepayers (wind and solar) or enjoy low operating costs (natural gas).

The contradiction between environmental policy and wholesale pricing is not limited to Connecticut. ISO-New England – the regional entity in charge of the wholesale electric markets, has been working on a remedy to address these problems in the market. In addition, the Federal Energy Regulatory Commission (FERC) is currently considering this environmental pricing issue across various regional electric markets in the Country.

Until the wholesale markets can become stable and competitive, it is up to the state to ensure that critical power generating plants receive sufficient revenues or risk the loss of those plants like Millstone

In addition, the Gov. Malloy and DEEP understand that low market prices threaten the viability of trash plants. House Bill 7036, An Act Promoting the Use of Fuel Cells for Electric Distribution System Benefits and Reliability – an administration energy bill – included a provision that increases the value of Class II RPS credits for trash to energy plants – thereby increasing the cost of electricity to ratepayers rather than increase the disposal tipping fees to municipalities.

Regulated utilities, such as Eversource, must open their books to full view. In exchange for such close inspection, regulated utilities areguaranteed to earn a profit on their assets.  Unregulated, “merchant” power plants, like Millstone, carry the risk of investment through shareholders, to whom they have a fiduciary responsibility. Commissioner Klee specifically oversees the state’s energy regulatory body and has conducted multiple solicitations over his tenure for wind, solar and other energy plants. None of those solicitations required a bidder to open its books for DEEP inspection.

If the administration is open to guaranteeing Millstone a profit, then I’m confident the Dominion shareholders would be pleased to oblige and show all the financial information necessary.

The Malloy administration’s decision to target Millstone as some means to an end without realizing it may end a vital component of our energy infrastructure is careless and short-sighted at best.