By Michael Kuser

HARTFORD, Conn. — Connecticut regulators got an earful at a public comment session Thursday on the future of Dominion Energy’s Millstone nuclear plant, with multiple speakers opposing a state subsidy such as those adopted by New York and Illinois.

Instead, the speakers urged that any efforts to preserve the plant be part of a regional initiative that also includes other emission-free generation. Others questioned whether Millstone needed financial support in addition to its revenue from ISO-NE’s energy and capacity markets.

The Aug. 17 hearing was in response to Gov. Dannel Malloy’s executive order requiring state officials to assess the economic viability of Millstone and determine whether the state should provide it financial support. The governor also directed the Department of Energy and Environmental Protection and the Public Utilities Regulatory Authority to assess the viability of all forms of renewable energy and to report their findings by Feb. 1. (See CT Gov Orders Financial Analysis of Millstone Plant.)

Free to Solicit

PURA Chair Katie Dykes, who led the public meeting, reminded participants that they were not only to look at nuclear, but also at “large-scale hydropower, demand reduction, energy efficiency measures, energy storage and emissions-free renewable energy — all those different resources together — and how they could help Connecticut meet interim and long-term carbon and other emission targets. So there is a larger scope here.”

The Connecticut General Assembly in June failed to pass a bill that would have allowed the 2,111-MW nuclear plant in Waterford to bid into the state procurement process (S.B. 106). Dominion had sought the legislation to boost the plant’s revenues, which have suffered from low-priced natural gas, which often sets LMPs in New England.

Dominion has until Aug. 29 to respond to PURA’s request for the company’s financial records on Millstone, which supplies approximately 45% of Connecticut’s electricity.

Tom Swan, executive director of the Connecticut Citizen Action Group, characterized Dominion’s pleas of economic hardship as “BS” and said the regulators should also look at additional legislative remedies if the company wants to leave the business. While the state may need Millstone to meet its emissions reduction goals, “that doesn’t say it has to be Dominion,” he said.

State regulators have been given leeway to act by a 2nd U.S. Circuit Court of Appeals ruling in June that rejected claims that Connecticut’s renewable energy procurement law intruded on FERC’s authority. The court on Aug. 17 declined to revisit its decision.

The ruling affirmed a lower court decision on the law, which requires the state to solicit proposals for renewable energy projects and for utilities to sign contracts with the winners. Renewable energy developer Allco Finance challenged the law’s implementation as discriminatory (16-2946, 16-2949). (See Second Circuit Upholds Conn. Renewable Procurement Law.)

Despite the court’s support for state’s rights, Peter Fuller, vice president of market and regulatory policy for NRG Energy, said, “We need to keep everything in the context of the regional context, the regional structure. ISO-NE and the New England markets are specifically tasked with maintaining reliability of the grid, are structured to achieve those reliability goals at lowest cost.”

Connecticut’s agencies need not “start from whole cloth” and worry about those issues, Fuller said. “We have those structures in place. Hopefully ISO-NE will be involved in assessing the various scenarios and so forth and assuring the various agencies on what is reliable.”

Hydro on the Table

Michael Cuzzi, senior director of government relations for Brookfield Renewable, recommended that the study consider all hydropower resources in ISO-NE and adjacent control areas, not simply large-scale hydropower as stated in the governor’s order and as currently defined under Connecticut statutes.

“The existing statutory definition — which contains both size and geographic limitations — prevents Connecticut from accessing existing, interconnected hydropower resources from both Canada and New York that can help Connecticut meet its energy needs and that are not currently accounted for in the state’s greenhouse gas emissions inventory,” Cuzzi said.

If the “hydro resources in New York and Canada aren’t currently counted toward their renewable goals, are they currently counted towards other jurisdictions’ goals?” Dykes asked him.

“It depends,” Cuzzi replied. “As you know, in New York, the initial Clean Energy Standard did not incorporate existing clean energy resources, so I think there’s a bit of a first-mover opportunity here to frankly claim those attributes and lock them into one jurisdiction or another.”

Pricing Carbon

Fuller said that any targeted subsidy will distort markets, produce less-efficient outcomes and potentially increase risk to consumers.

He urged the regulators to “think about the multistate issues, think about the legislative proposal from a few months ago to place a broad, economy-wide carbon tax — those are the kinds of solutions either within the IMAPP [Integrating Markets and Public Policy] or within the broader economy we feel are going to be far more effective at getting the right answer.”

The New England States Committee on Electricity (NESCOE) told the New England Power Pool in April that the states opposed “a FERC-jurisdictional tariff reflecting carbon pricing.” (See ISO-NE Two-Tier Auction Proposal Gets FERC Airing.)

Cuzzi similarly recommended that the study “examine a uniform ISO-NE-wide carbon price.”

On Aug. 11, NYISO and the New York Department of Public Service released a report that said a $40/ton carbon charge in the state would have “a relatively small impact” on customer costs, with bills dropping by 1% or rising no more than 2%. The analysis from the Brattle Group was prompted by the Public Service Commission’s decision to subsidize upstate nuclear plants through zero-emission credits (ZECs) and penalize fossil fuel generators based on their level of carbon emissions. (See NYISO Study Sees Little Cost Impact from Carbon Charge.)

“The question of carbon pricing has come up a lot in the IMAPP context,” Dykes said. “The executive order does highlight that we should consider best mechanisms, including potentially collaborating with other states, but we also have to consider how they would work [and] what the impact would be if Connecticut could not entice other New England states to participate with us: so as a one-state option versus how it would work if there was a multistate option.”

Dykes added that “in an IMAPP context, the New England states’ comments provided to NESCOE were not supportive of carbon adders, but I just wanted to highlight that this is one of the variables we’ll be looking at as we assess mechanisms, one state versus regional implementation.”

Regional, not Local Solutions

James Shuckerow, director of electric supply for Eversource Energy, said any recommended remedy should be least-cost and for the shortest duration possible.

“Because Millstone is a regional resource, if somehow there could be a regional remedy, I think that would be preferred by all,” Shuckerow said. “I recognize the problem in New England. We have six different states versus the situation we have in New York.”

In its written comments, Eversource said that Millstone is not a Class I, II or III renewable resource and “cannot simultaneously be a competitive merchant generator and receive state-sponsored financial support.”

The company said that “any financial remedy that is developed to address a legitimate economic need should be based on cost-of-service principles with correspondingly limited returns on equity to reflect the reduction in risk resulting from Millstone’s receipt of state financial support that is unavailable to other non-renewable merchant generators.”

“Look at the costs affecting all customers and the overall impact not only on standard service customers or large customers, but all customers throughout Connecticut,” Shuckerow said.

The cost-of-service approach would allow all types of customers through an appropriate charge to share the benefits, Shuckerow said. “Essentially, we’d sell the energy into the market, get credit for that energy and credit that against the cost of service.”

Kerry Schlichting of the Acadia Center said that because the study results could influence Connecticut’s long-term energy strategy, her organization asked DEEP and PURA to “issue a draft methodology and base case scenario sometime this fall for stakeholder review and comment” before the release of the draft report in early December. If the agencies wait too long it will be difficult to incorporate stakeholder feedback on modeling issues, she said.

Nancy Burton, director of the Connecticut Coalition Against Millstone, said “Millstone is hardly a zero-emissions facility. … Every year they pile [DEEP] up with documents about their emissions, their continuous radioactive emissions into the air and the water, as well as their toxic discharges to the Long Island Sound.”

John Erlingheuser, representing AARP, said: “How do we know what the problem is if Millstone doesn’t release actual data? … We’re not opposed to nuclear or opposed to Dominion or to keeping the plant open. What we object to is devising solutions without proper information and without determination that there’s an actual need.”

Local construction worker John Thomson spoke as a consumer on the potential economic impact of losing Millstone. “I’m concerned about the economic impact of that area of the state,” he said. “We’ve lost a lot of businesses already, so what’s that going to look like going forward for taxpayers, not just ratepayers?”

Lynne Bonnet, a member of the New Haven Energy Task Force but speaking on her own behalf, said the Cross-Sound Cable was built as a two-way conduit but that so far the energy has only flowed from Connecticut to Long Island. “Why don’t we ask Long Island now to generate power to help us to shut down Millstone?” Bonnet said. “And Long Island could also generate power to supply their own needs so they won’t have to buy power on a contracted Cross-Sound Cable.”

Bonnet also asked the regulators to be wary of the assumption that the state has already been penetrated with solar energy and energy efficiency. “If you pay attention to these situations where energy efficiency has decreased the load from residential use, New Haven is an untapped resource. It’s not saturated and not even been penetrated,” she said.