Millstone should cooperate on Malloy study
G ov. Dannel P. Malloy took the right political and practical step in issuing an executive order Tuesday requiring the state to examine “the current and projected economic viability for the continued operation of the Millstone nuclear generating facilities.”
For two straight legislative sessions, Millstone Power Station owner Dominion has tried to make the case that current energy pricing policies in Connecticut’s deregulated market do not mesh with its nuclear model, built on long-term consistent power production.
The development of fracking technology has produced an abundance of natural gas and a growth in gas-powered electric generation plants. That has led to extreme volatility in the daily energy markets. Several nuclear plants, unable to operate profitably in those markets, have closed across the country.
Millstone has sought the security of locking up power sales in long-term energy contracts. Under legislation that failed to win enactment in the recent session, Dominion would have been able to sell half of Millstone’s energy through such extended deals.
But the reality is that not enough legislators are buying what Dominion is selling. Its efforts to change the rules has faced strong opposition, led by the natural gas industry, but also including the AARP, which fears it could lead to higher energy rates, and renewable energy groups, concerned special pricing for Millstone could crowd them out of the power market.
Malloy recognizes that an objective assessment of the situation is necessary to change the political dynamics. If that assessment affirms Dominion’s contention that the two Millstone reactors will not long be able to operate profitably without market pricing adjustments — and the closing of nuclear plants elsewhere suggests the threat is real — it could provide the political cover necessary to gain the necessary votes.
Dominion did not help its cause with its chilly response to the governor’s initiative, stating in a press release “the time for a study without action has passed.”
The energy company said it is willing to work with the legislature to find a solution in the special session, and threatening that, “Without action this year, the prospects for continued operation for Millstone diminish.”
“In Wisconsin, Dominion engaged with government leaders for 18 months about the viability of a nuclear power station in that state without coming to a solution,” continued the statement from Paul Koonce, CEO of the Dominion Energy Power Generation Group. “We then made a business decision to close the plant.”
The threatening approach will not work. There will be no action in the special session. Malloy recognizes that reality. Dominion needs to as well.
State Sen. Paul Formica, R-East Lyme, cochair of the General Assembly’s Energy and Technology Committee, could play a key role here. Formica has led the effort to pass legislation to improve Millstone’s competitive position and its long-term prospects. Formica is in the right position to convince Dominion that it is in the company’s best interest to cooperate with the coming review by the Department of Energy and Environmental Protection and the Public Utilities Regulatory Authority.
Dominion is conducting its own strategic assessment of Millstone. If that determines, as expected, that the plant cannot operate profitably for long without some change in the pricing rules — and that conclusion is bolstered by the state study — it could lead to legislative action in 2018.
On several levels, the premature closing of Millstone would be detrimental to the state, region and to Waterford, which is dependent on its property taxes.
A study commissioned by Dominion concluded Millstone generates $1.5 billion in annual economic impact, employing a workforce of 1,000-plus, not counting the jobs from companies that contract to provide services to the nuclear station. It meets about 55 percent of Connecticut’s electricity needs and it does so without producing greenhouse gases in its electric-generation process.
The only winner from Millstone closing would be the natural-gas powered electric plants, which would welcome the demise of their major competitor.
“Stop the Millstone Payout,” the coalition aligned in opposition to the legislation aimed at providing Millstone pricing relief, endorsed the review ordered by the governor, but in the same statement signaled how it will attack the results if the study backs Dominion’s contentions.
“It is essential that Dominion fully disclose the plant-level financials of Millstone, otherwise the investigation won’t be truly comprehensive or accurate,” read the Stop Millstone statement.
Opponents are betting Dominion will continue to refuse to open its books, giving them a chance to discredit the results of any state review. Dominion needs to figure out a way not to provide them that opportunity.