Lawmakers eye Dominion as possible source of budget help

Stalemate prompts talk of monetizing bill on Millstone energy sales

One of the unconventional revenue-raising schemes considered by legislators in pursuit of an overdue budget would have Connecticut extract millions of dollars from Dominion Energy in return for legislation boosting the profitability of electricity generated by the company’s Millstone nuclear power plant.

Call it a mark of desperation or sign of creativity, the ill-defined Dominion proposal is one of the ideas floating around the state Capitol, where legislators on Tuesday marked the 39th day without a plan to close a $2.3 billion budget gap and pay for a government that costs about $20 billion a year. A bipartisan meeting of legislative leaders yielded nothing new.

The legislature’s struggle to match revenue and spending for the fiscal year that opened July 1 is complicated by the lack of a strong working majority in either chamber, a governor whose political capital is growing short, and the fact that various ideas for cutting spending or raising revenue come with complex policy implications.

Gov. Dannel P. Malloy, for example, still is pushing a plan to require municipalities to contribute $400 million to the underfunded teacher pension fund, now wholly a state obligation. He and some legislators also are eager to draw up a new education aid formula to direct money to the neediest systems, an undertaking certain to produce winners and losers in a year of tight money.

And then there is the future of Millstone.

Its two active nuclear reactors in Waterford generate electricity equiv-

alent to about half of Connecticut’s electric needs and nearly all its carbon-free power. Dominion says relatively cheap natural gas is depressing prices, potentially putting Millstone on the road to an early retirement.

Dominion has lobbied hard for legislative relief over two years, opposed by competitors that would benefit by the disappearance of Millstone, as well as skeptical consumer advocates. The issue seemed to die for the year with the end of the regular annual session on June 7.

It has come back to life — some legislators and lobbyists have branded it a zombie bill — in the ongoing special budget session as a potential piece of an unfinished fiscal puzzle.

“There are still ongoing conversations,” Senate Majority Leader Bob Duff, D-Norwalk, said Tuesday. “Nothing has been settled — or even remotely settled. Dominion continues to have conversations with various legislators.”

Senate Democrats met Monday night to consider a range of budget approaches. One of them was to explore whether Millstone could generate cash for the state.

No one is saying precisely how Connecticut would extract revenue off new energy procurement rules sought by Dominion, including the right to sell a portion of its Millstone output power directly to consumers in the state’s deregulated energy market. Legislators say they think a deal with Dominion might yield between $75 million and $125 million a year for a limited period.

Kevin R. Hennessy, Millstone’s director of state and federal governmental affairs, said Dominion has not proposed a funding scheme, but it is open to the possibility.

“We remain committed to working with anyone that wants to work with us to ensure the long-term viability of Millstone,” Hennessy said. “We’re willing to talk with anyone. Whether there is a viable solution remains to be seen.”

Hennessy said he believes Millstone is one of the “myriad issues” with budget and policy ramifications that legislators are juggling.

In 2016 and again this year, the Senate passed legislation aimed at stabilizing the profitability of Millstone. Each time, the House declined to take up the bill.

The 2016 bill would have allowed Millstone to partly bypass the daily auctions that set wholesale prices and sell up to half its power in a new market under long-term contracts — if the commissioner of DEEP deemed it in the public interest.

The 2017 bill would have authorized the commissioner to conduct an appraisal of the nuclear station and report in January if he would implement any one of several changes allowed by the legislation. The bill directed the commissioner to act in the best interest of consumers and the reliability of the electric grid.

Malloy signed an executive order on July 25 directing DEEP and the Public Utilities Regulatory Authority to assess the regional energy market, procurement rules and the economics of Millstone. He set a deadline of Feb. 1, shortly before the legislature’s 2018 session.

The administration is warily viewing the latest Millstone talks.

“We have not been party to those conversations, so it would be difficult to offer an opinion on any specific proposal the legislature might be discussing with Dominion,” said Meg Green, a spokeswoman. “With that said, we would caution rushing to a decision with incomplete information about the economic viability of the facility. Governor Malloy’s executive order is an effort to engage in a serious and deliberative study to surface the facts and understand the market conditions to ensure the right decision for ratepayers is made.”

House Speaker Joe Aresimowicz, D-Berlin, and House Majority Leader Matt Ritter, D-Hartford, said that they are generally aware that some legislators are exploring a Dominion deal, but they have not talked to representatives of the company since the last day of the regular session. “I don’t know what revenue they would offer, how they would offer it,” Aresimowicz said.

Ritter said, “I think the executive order the governor did was more in line with what our caucus felt, which was, ‘Let’s let professionals look at this.’”

AARP, one of the consumer groups opposed to the Millstone bills in 2016 and 2017, has the same position as Ritter and the House Democrats.

“The bottom line is any assistance for Millstone before regulators do an examination of Millstone’s fiscal heath, which would include an examination of their books, is premature,” said John Erlingheuser, who represents AARP at the Capitol. “There is not a reason for the legislature to act before Feb. 1, PURA and DEEP will complete their analysis.”

Even supporters of Millstone question the optics of the legislature acting to enhance Millstone’s profitability in return for what could be seen as a kickback.

“That, to me, is bad precedent,” said Senate Republican leader Len Fasano of North Haven. It gives the appearance that the state is willing “to hold a hostage,” he said.