Dominion critiques Millstone report
Owner of power station says analysis failed to consider several costs
Waterford — Millstone Power Station owner Dominion Energy on Thursday critiqued a regulator-hired consultant’s initial report on the Waterford site’s financial strength and made another push for officials to take action the company claims is essential to keep Millstone operational.
In a letter to state regulators filed Thursday, Dominion reiterated points made by a Millstone spokesman in an interview with The Day earlier this week, namely that analysis by Levitan & Associates Inc. — which in October forecasted “deep-in-the-black” cashflows for Millstone between 2021 and 2035 — failed to account for Millstone’s dissimilar unit types in analyzing the site’s total operating costs.
“Each (unit) is a different design requiring separate control rooms, spare parts inventory, distinct operator training and two separate teams of licensed operators,” producing higher than typical operating costs, the letter states.
Dominion also claimed the consultants didn’t factor Connecticut’s labor costs being higher than Virginia’s. The company operates two Virginia nuclear stations that Dominion said serve as “inappropriate” proxies for Millstone, producing “an incorrect result” in the consultant’s Oct. 30 initial progress report.
Dominion’s letter comes as the company works to convince regulators to open new ways for Millstone to sell some of its electricity to combat unprofitability faced by many U.S. nuclear plants competing with low-cost natural gas. But industry analysts repeatedly have said that Millstone, which produces about half the electricity used in Connecticut, remains profitable.
For the last several months, Levitan & Associates has assessed public-
“It’s clear globally the industry is facing challenges and Millstone is in that same boat. We’ve presented our case to DEEP through the information we’ve provided. It’s going to come down to if we’ve provided a credible story.” KENNETH HOLT, MILLSTONE SPOKESMAN
ly available data on Millstone for the Department of Energy and Environmental Protection and the Public Utilities Regulatory Authority. The analysis is part of DEEP’s and PURA’s ongoing review of the state’s energy market at large, Millstone’s economic viability and the best ways to progress toward emission-reduction goals at the least cost and greatest benefit to ratepayers, per a July executive order by Gov. Dannel Malloy.
On Friday, Levitan & Associates deferred to DEEP when given the opportunity to respond to Dominion’s critiques. Earlier this week, Richard Levitan, the firm’s president, said, “These analyses are super detailed and require a lot of research. We’ve been working on it for many months and we’re about done.”
In an email Friday, DEEP spokesman Chris Collibee said, “We are carefully reviewing all information and materials submitted by Dominion related to Executive Order 59. While this matter remains under review it would not be appropriate to comment further.”
Levitan & Associates’ preliminary report painted a bright picture of Millstone’s financial prospects over more than a decade. Even in conditions with lower than anticipated natural gas prices and higher than expected operational costs in the current New England wholesale market, the station would remain profitable for years, the firm said.
“Levitan & Associates preliminarily concludes that under all reasonable market conditions there is no ‘missing money’ required to ensure Millstone’s financial viability through the existing term of Millstone’s Unit 2 operating license (until 2035),” the report states. “Absent any information being provided by Dominion, it is unlikely that Levitan & Associates’ analysis will change prior to finalization of the study.”
The firm noted at the time that Dominion had declined to provide “proprietary cost data associated with Millstone’s fuel costs, operations and maintenance costs and capital expenditures.”
On Oct. 31, after months of lawmakers hashing out legislation with market shifts Dominion claimed were necessary to sustain Millstone, Malloy signed a bill that eventually could see regulators let Millstone sell electricity directly to utilities in a state-sponsored competitive bidding process currently open to renewables and other low-emitting energy sources like wind, solar and hydropower.
Following the bill’s passage and pressure to release more financial details backing up Dominion’s hints of Millstone’s potential closure without market shifts, Dominion shared confidential data with DEEP and PURA in face-to-face meetings in mid-November and in sealed letters to DEEP and PURA leadership last week.
In a letter filed Thursday afternoon, DEEP and PURA officially acknowledged receiving “certain commercial and financial information” on Millstone and granted Dominion’s motion to protect the data from being released publicly.
“DEEP and PURA find that the two-page document contains high-level, financially sensitive data and calculations relating to cost and revenue projections of the Millstone Power Station,” the letter said, noting the financials provided were not required by statute. “It is reasonable under the circumstances to maintain its secrecy.”
Earlier this week, David Gaier, spokesman for NRG, one of several energy companies opposing the market overhauls Dominion and local officials are calling for, said it is vital that the data Dominion recently shared be “independently audited.”
NRG, Gaier noted, is fighting in federal appeals court over legislative and state-driven energy market shifts that helped keep nuclear plants operational in Illinois and New York.
“We have said publicly we will fight these handouts to the nuclear industry,” Gaier said, noting litigation would be likely if Connecticut pushes forward with implementing market changes.
Kenneth Holt, spokesman for Millstone, has said the market proposals in Connecticut cut out hedge funds and middlemen who buy electricity and sell it to utilities that pass on the costs to ratepayers.
The market overhauls in Connecticut are far different from the “straight subsidy” given to nuclear plants in New York and Illinois, he argues.
On Friday, Holt said in an interview that, “It’s clear globally the industry is facing challenges and Millstone is in that same boat. We’ve presented our case to DEEP through the information we’ve provided. It’s going to come down to if we’ve provided a credible story.”
DEEP and PURA are set to release a draft report based on their analysis of Millstone and the energy market next week.
Public hearings on their review are set for Waterford High School at 6 p.m. Tuesday, Dec. 19, and at DEEP headquarters in Hartford at 9:30 a.m. Wednesday, Dec. 20.