Connecticut says Dominion should show why nuclear plant needs subsidy

(Reuters) - Connecticut state regulators said Dominion Energy Inc should offer evidence that its Millstone nuclear power plant is in danger of closing before participating in a state power procurement process that could boost its profits.

The regulators said in a report Thursday that the company has not yet shown Millstone is in need of financial help, but noted the plant is critical to the state and the New England region in terms of fuel security and meeting greenhouse gas reduction targets.

“Dominion has not yet released verifiable data related to the fiscal health of Millstone,” Robert Klee, commissioner of the state’s Department of Energy and Environmental Protection, said, noting the report concluded the plant would remain profitable through 2035.

In handing the report to the state legislature, the Department of Energy and Environmental Protection and the Public Utilities Regulatory Authority concluded the procurement process for zero-carbon emissions resources, like Millstone, should go forward.

The regulators, however, recommended an additional step to the procurement process that would allow interested resources to demonstrate they are at risk of retirement.

Dominion has not said it wants to retire Millstone, but has warned it was “assessing” its investment in the plant.

“The final appraisal is clear. Millstone is vital for Connecticut to meet its cheaper, cleaner and more reliable energy goals and aggressive carbon goals,” Paul Koonce, chief executive officer of Dominion Energy Power Generation Group, said in a statement.

The Connecticut General Assembly will review the report for possible action by March 1. If the legislature does nothing, Dominion said the state will proceed to a procurement that will need to begin by May 1.

The U.S. nuclear industry has been suffering for years as cheap and abundant natural gas from shale formations has depressed power prices, making it uneconomic for many reactors to continue operating.

Connecticut is one of several states exploring rules to keep reactors in service to preserve carbon-free energy, jobs, taxes and a diverse resource mix. Other states looking at similar rules are Ohio, Pennsylvania and New Jersey.

New York and Illinois adopted rules to subsidize some reactors in 2016.

Opponents of state support for Millstone said the plant does not need any help.

“Giving an extremely profitable nuclear plant the same status as true renewables makes Dominion a winner and everyone else, especially ratepayers, losers,” said Dave Gaier, a spokesman at NRG Energy Inc, which owns gas-fired and other plants that could earn less revenue if the state subsidizes the reactors.

Reporting by Scott DiSavino; Editing by Leslie Adler