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March 5, 2019

With no contract in place, Millstone threatens closure

HBJ File Photo Millstone Power Station in Waterford.

The operator of Connecticut’s largest power plant, Millstone Power Station, has failed to negotiate a long-term contract  with the state’s two utilities, and is now threatening to retire the nuclear facility if a deal is not struck by the end of next week.

The development throws a wrinkle in a plan that seemed nearly done back in December, when the Department of Energy and Environmental Protection (DEEP) announced it had selected the nuclear plant for a long-term contract with utilities -- a 10-year deal that was the result of roughly three years of lobbying by plant owner Dominion.

Dominion spokesman Kenneth Holt confirmed Tuesday morning to the Hartford Business Journal, that his company intends to file a retirement notice with grid operator ISO New England if it cannot finalize a contract with Eversource and Avangrid by March 15.

The Boston Globe was the first to report the development.

That date is ISO NE’s deadline for generators to notify it if they don’t intend to bid in its next auction for future generation commitments, a process known as the forward capacity market (FCM) auction.

Millstone is obligated through the FCM to operate until the end of May 2023, and ISO NE is paying the plant for those pledges. However, if Dominion notifies ISO NE this month that Millstone won’t be participating in the next FCM auction -- which takes place less than a year from now --  it could be eligible to retire the plant in about four years, Holt said.

Eversource spokesman Mitch Gross said negotiations are continuing but declined to comment any further.

"UI and Eversource were directed by DEEP to negotiate in the best interest of Connecticut ratepayers and to submit contracts, if we are able to reach agreements with Dominion, for review and approval by [the Public Utilities Regulatory Authority] by March 31. We are proceeding as directed," said UI spokesman Edward Crowder.

"DEEP is working closely with the utilities and Millstone to come to a fair and equitable solution that protects ratepayers, while ensuring Connecticut meets its carbon reduction targets," DEEP spokesman Chris Collibee said Wednesday.

Dominion lobbied Connecticut lawmakers for approximately three years to help prop up Millstone with a long-term contract to sell a portion of its massive electricity output to Eversource and United Illuminating.

The effort was successful last year, as lawmakers authorized DEEP to select a large amount of electricity generated by “zero-carbon” resources, including nuclear and renewables, for utility contracts.

It was the first such state electricity procurement to include nuclear. The state has in the past used the long-term contracts to spur renewables growth.

While DEEP announced its Millstone selection in December, that didn’t entirely seal the deal.

The first three years of Millstone's contract are based on the bid price it submitted to the state to sell its energy output, which was not disclosed. But DEEP said it wasn't satisfied with the rate of return Dominion wanted for the final seven years of the deal, calling it "not in the best interest of ratepayers."

DEEP ordered Eversource and UI to negotiate lower pricing for the later years of the contract, something that hasn’t yet happened, though Holt confirmed the parties will meet in person later this week in Connecticut.

Editor's note: This story has been updated to include comment from Avangrid's United Illuminating and the Department of Energy and Environmental Protection.

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