(Reuters) - Dominion Energy Inc said on Friday that it reached a 10-year agreement with Connecticut utilities that will keep the state’s only nuclear power station in service.
Dominion had until Friday to tell the regional power grid operator, ISO New England, if it would retire the two reactors at the 2,088-megawatt Millstone station. One megawatt can power about 1,000 U.S. homes.
Millstone produces about half of the electricity in Connecticut and around 98 percent of its carbon-free energy, making the plant key to meeting the state’s aggressive carbon reduction goals.
“This is a huge win for Connecticut, the region, and our colleagues at Millstone,” Paul Koonce, president and chief executive of Dominion’s Power Generation Group, said in a statement.
“Not only does this preserve the vast majority of Connecticut’s carbon-free electricity, it preserves good jobs for the 1,500 women and men who work at Millstone and keeps 4,000 other residents employed,” Koonce said.
Dominion, of Richmond, Virginia, has been saying for years that Millstone’s reactors, which began operating in 1975 and 1986, are not economically viable in the current low power price environment.
Power prices in New England over the past five years have been the lowest ever, according to Reuters data going back to 2000, due to increasing use of generators fired with cheap natural gas from shale formations and renewables like wind and solar.
That makes it tough for facilities using other sources of energy like coal and nuclear to compete.
After three years of working with politicians and regulators on a plan to keep the plant in service, the state in December selected Millstone for a contract to purchase a little over half of its output for 10 years.
The price of that contract, however, was not firm, so Dominion said it was negotiating with the state and two local utilities, which are units of Eversource Energy and Avangrid Inc.
Dominion said this agreement marks another milestone in its multi-year progression towards a more regulated and long-term contracted earnings profile and the resulting reduction in business risk.
The contract represents a “modest financial uplift,” which results in expected operating earnings per share levels that are within its existing guidance for 2019 and beyond, the company said.
Reporting by Scott DiSavino; Editing by Marguerita Choy