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Dominion Energy : makes push to prove Millstone 'at risk' of closure

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06/07/2018 | 02:37am CEST

June 07--WATERFORD -- Dominion Energy claims it has opened its books in a recent filing seeking to prove to regulators that its Millstone Power Station faces closure unless the state fully considers the plant's environmental and electricity grid benefits.

Dominion on May 31 turned over audited financial statements, Millstone revenue and expense histories and forecasts, tax returns over the last several years and "proof of an unsustainable return on equity with a declining profile," the company said.

While competitors, environmental groups and consumer advocates say public data shows Millstone remains profitable, Dominion executives pointed to their 2012 decision to shutter the Kewaunee Power Station in Carlton, Wis., as an example of a "difficult decision based on operations but a prudent decision" for shareholders that could be replicated in Connecticut.

The confidential redacted documents are under a protective order and will be reviewed over the summer by the Public Utilities Regulatory Authority, the Office of the Consumer Counsel and the Department of Energy and Environmental Protection.

"We have opened our books," Millstone spokesman Ken Holt said. "The information we are providing Connecticut's energy regulators clearly shows that Millstone is an 'at risk' resource."

In February, regulators said nuclear plants can compete in an auction among new and existing solar, wind and hydropower energy producers for fixed-price contracts with state-regulated utilities.

But Millstone's bid will have an edge if PURA grants the plant "at-risk" status; only then can regulators weigh non-price benefits such as greenhouse gas avoidance, fuel diversity and grid reliability provided by the plant. Bids from energy producers that aren't considered in financial peril will be weighed on price alone, PURA says.

Dominion pushed for years to be included in a zero-emission auction along with wind, solar and hydropower, arguing Millstone's environmental and economic positives to the region essentially were being ignored in the existing wholesale market. Millstone faces stiff competition in the wholesale market from low-priced natural gas, much like other struggling nuclear plants in the U.S.

Regulators' review follows efforts in New York, Illinois and New Jersey to establish policies to compensate struggling nuclear plants for the economic and environmental benefits they provide.

It also comes as President Donald Trump is pushing the federal government to intervene in energy markets to prevent premature closure of unprofitable coal and nuclear plants.

DEEP spokesman Chris Collibee said Wednesday that the president's recent directive will have "no impact" on Connecticut's process.

Dominion executive: Can't invest given 'current New England public policy'

While Millstone has participated in ISO New England's Forward Capacity Market -- selling energy capacity in advance over the next several years -- Dominion says it only did so "in good faith while the process played out."

"We will not do that again without resolution," Dominion Executive Vice President Paul Koonce said in testimony submitted in the filing. Koonce urged DEEP and PURA to "entirely" complete their process by Feb. 1, 2019.

The decision facing Dominion is not whether Millstone remains "marginally profitable going forward," Koonce said, but whether or not "the needed investments in Millstone is the best use of our limited capital and operating resources. In the current New England public policy environment, I could not in good conscience recommend to our board that we continue to make these investments."

Dan Stoddard, Dominion's senior vice president and chief nuclear officer, said the company must invest $700 million into Millstone "now through 2025 to maintain excellent operations."

Costs also have risen, with Dominion saying it's invested more than $1.1 billion in capital into Millstone, a plant that has two dissimilar operating units requiring distinct staff, training and upkeep costs. Nuclear plants, Dominion wrote in its filing, require "safety, operational excellence and security, beyond what is expected of other generation sources."

"During the last few years, five nuclear units have retired, totaling almost 5 gigawatts of capacity," Dominion wrote. "The dim financial future for such facilities is further exacerbated by the increasing penetration of low- and no-carbon renewable facilities, which often benefit from state and federal incentives."

PURA to make at-risk decision in October

Environmental groups, utilities and competitors have challenged regulators' decision to include nuclear in Connecticut's zero-emission auction. They note that public data shows Millstone should remain substantially profitable for years.

But regulators, whose consultants found Millstone would be profitable through 2035, said premature Millstone closure risked too many jobs and would create burdens on the environment and regional grid that would hurt ratepayers. Millstone Unit 2 is licensed until 2035, while Unit 3 until 2045. Unit 1 shut down in 1995.

Power company NRG remains unconvinced that Millstone faces risk of closure, with spokesman David Gaier noting "a number of third-party studies show instead that Millstone is among the most profitable -- if not the most profitable nuclear plant -- in the United States."

"Offering an above-market contract to a clearly profitable plant on the pretext of poverty simply means even higher energy prices for Connecticut ratepayers, who are already paying among the highest prices in the nation," Gaier said Tuesday.

Eversource in April pushed for annual disclosures of financial data, along with disclosures of steps potential at-risk energy producers have taken to seek compensation from the federal government or ISO New England to mitigate impact on ratepayers.

"We look forward to PURA's careful review of the issue," Mitch Gross, Eversource spokesman, said Wednesday.

Lawmakers and Gov. Dannel Malloy prompted DEEP's review of whether to include nuclear in the zero-emission auction. Almost 60 General Assembly members wrote in support of Millstone in January.

PURA expects to issue at-risk determinations in October, and DEEP says it will select winning bidders in the auction in late 2018 or early 2019.



(c)2018 The Day (New London, Conn.)

Visit The Day (New London, Conn.) at www.theday.com

Distributed by Tribune Content Agency, LLC.

© Tribune Content Agency, source Regional News

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Financials ($)
Sales 2018 13 396 M
EBIT 2018 4 709 M
Net income 2018 2 722 M
Debt 2018 37 612 M
Yield 2018 4,79%
P/E ratio 2018 18,40
P/E ratio 2019 16,47
EV / Sales 2018 6,22x
EV / Sales 2019 5,91x
Capitalization 45 646 M
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