January 15, 2018

Millstone challenges UI on cold weather earnings

The parent company of Millstone Power Station says United Illuminating's recent claim that the nuclear plant earned a profit windfall during an eight-day cold snap earlier this month is misleading.

Dominion Energy wrote to the Public Utilities Regulatory Authority and the Department of Energy and Environmental Protection on Friday that UI's claims to regulators last week that Millstone had netted over $68 million because of a spike in power demand and prices "are not grounded in reality and are a reckless attempt to support its arguments with false information."

UI had said: "For the period January 1 – January 8, 2018, if Millstone has sold its output into the ISO New England day-ahead energy market, it has earned over $68 million."

(UI opposes Dominion's attempts to win state-mandated supply contracts with it and Eversource, arguing that the plant is not losing money and that the contracts would increase ratepayer bills.)

Dominion said that during periods of extreme weather, Millstone's profits don't spike because the nuke plant sells most of its future output in advance to financial institutions and other suppliers. That provides revenue certainty to the plant but means that the middlemen reap the profits in periods of high demand, it said. It did not say how much the middlemen made in the recent cold weather.

Millstone sees the day-ahead markets as too risky, even if it means forgoing "perceived upside," Dominion wrote.

"UI's comments are even more egregious in light of the fact that Dominion Energy has repeatedly stated publicly that this is its business practice and has published its merchant hedge positions in its quarterly earnings releases," Dominion said.

In a telephone interview, UI President Tony Marone called Dominion's response "grandstanding."

Marone contends that UI was not saying that Dominion definitely sold Millstone's output to the day-ahead markets during the cold snap. UI doesn't have that information.

"What we said, simply as a point of example, is that if they had provided their output into the markets then those revenues would be earned," Marone said.

Though Millstone says it sells "almost all" its output in longer-term contracts, Marone said it would be common practice for a power plant to reserve at least some output during colder months to sell into the short-term markets.

Without full financial information about the plant, regulators would not be able to adequately account for its gains in the short-term market, UI has argued.

Editor's note: This story has been updated to include comments from UI's Tony Marone, who spoke to HBJ on Tuesday afternoon.

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