WATERFORD – The future of Millstone nuclear power station, once at the center of a political debate that included threats of closure because cheap natural gas posed a competitive threat, may be somewhat more certain even if gas prices rise sharply.
It’s an ironic twist as consumers and businesses grapple with the highest energy prices in decades. State Energy and Environment Commissioner Katie Dykes and Dominion Energy Inc., owner of Millstone Power Station in Waterford, say a 2019 deal looks better now than when it was announced. the agreement.
Connecticut’s deal with Dominion guaranteed nuclear power at a fixed price, helped meet greenhouse gas emissions goals, and kept the plant open at least until the end of the decade.
Millstone was “challenged in a low price environment”, and a stable price helped Richmond, Va.-based Dominion invest in the mill, said Kevin Hennessy, senior director of policy and media relations. at Dominions. He and Dykes say keeping Millstone in operation helps ensure the reliability of New England’s power grid.
“The fundamentals of the deal when we signed the contract in 2019 have only grown in importance going forward,” Dykes said.
With a fixed price agreed in the contract, consumers avoid fluctuations in commodity prices, she said.
Hennessy said fluctuating prices that hurt consumers can bring benefits, such as making alternative or competing products cheaper. “Volatility goes both ways,” he said.
State officials say that if Millstone had closed, greenhouse gas emissions would have increased by 25%, complicating efforts in Connecticut and New England to meet emissions reduction targets. Millstone accounts for 40% of Connecticut’s electricity and 90% of non-greenhouse gas emissions.
Opponents still say it was a bad deal. The Electric Power Supply Association, which represents companies in the wholesale electricity markets, said at the time that legislation passed by the General Assembly to benefit Millstone would reserve a significant share of the market for a company “on terms unlike anything we could have hoped for.”
Todd A. Snitchler, chairman of the industry group, said COVID-19 has reduced demand for electricity as offices closed and Russia’s invasion of Ukraine has upended energy markets around the world. in a way that could not have been envisioned when Connecticut and Millstone became partners.
“It’s very opportunistic to say how successful we have been,” he said in an interview.
Nuclear power plants that complain their bottom line has been hit hard by low natural gas prices “are doing very well as we see natural gas prices rising,” Snitchler said.
Nuclear plants in the United States have closed or, to stay open, received state subsidies because they could not compete with natural gas at a spot price in 2017 of around $3.10 per thousand feet cubes. It is expected to more than double this year, to $7.70 per thousand cubic feet, according to the US Department of Energy.
Michael Doyle, principal analyst at Edward Jones, said rising natural gas prices are making nuclear power producers more competitive in the short to medium term. But it won’t last.
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Futures markets point to lower natural gas prices, carbon-free energy such as wind and solar, which now account for a small portion of power generation, continue to be built and waste disposal nuclear power is unresolved, he said.
“They might be less competitive on the road,” Doyle said.
Millstone approached the legislature in 2017, asking to compete with other energy sources, such as natural gas and hydro purchased at power auctions. Dominion said it would be forced to close the plant as others had done in the United States. Utilities and power generators opposed state aid, saying Dominion would get a special benefit without having to prove it needed Hartford’s help.
The 2019 agreement between Governor Ned Lamont and Dominion, and approved by the state’s Utilities Regulatory Authority, requires Eversource Energy and United Illuminating to purchase approximately 50% of Millstone’s output for 10 years from a fixed price. State regulators and the Department of Energy and Environmental Protection said Millstone was at risk of early retirement based on its financials and energy market revenue projections.
Soaring natural gas prices have forced other changes to Connecticut’s energy policy: State utility regulators last month ended a nine-year state program expanding gas use natural as an alternative to heating oil. The Public Utilities Regulatory Authority cited higher gas prices that have erased cost advantages over oil-fired heating and policies favoring natural gas that no longer advance the state’s climate and energy-related goals. offshore wind farm.
“Markets can sometimes knock out the most willing politicians,” Doyle said.
Stephen Singer can be reached at email@example.com.