Millstone’s controversial guarantees pay dividends to customers with lower electricity rates

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Just two years after a state contract to buy power from Millstone nuclear power station in Waterford led to soaring electricity prices in the summer, that same contract is a major factor behind a significant reduction in tariffs which should come into effect in September.

The adjusted rates that PURA approved last week should save the average Eversource residential electric customer about $9.78 per month and $7.72 per month for United Illuminating customers.

These cost savings are due to the millions of dollars that power companies have saved by purchasing power from Millstone and the Seabrook Nuclear Generating Station at rates now below the New England market average.

From January to June, Eversource benefited from $210 million, while the United Illuminating benefit totaled $46.3 million, thanks to state contracts with Millstone and Seabrook, the companies said. at PURA.

Two years ago, when natural gas prices were at historic lows, the guaranteed price of $49.99 per MWh for nuclear energy led to a sharp increase in rates in July 2020. Forced to cancel Quickly 2020 rate hike in the face of public outrage, Eversource said customers were undercharged by $189 million that year, and customers of both utilities have been paying higher rates since then. to make up the balance.

Two years later, with the price of gas at historic highs, that rate is a relative boon for New England’s gas-dominated power grid. And the 2021 and 2022 surcharges will pay off the balance customers were undercharged in 2020 and allow utilities to lower rates — although Eversource said it expects customers to see another substantial increase in the rate of supply in January as the price of gas increases in the winter.

The price swing from 2020 to 2022 shows how volatile the Millstone contract can be for Connecticut electric customer rates, but two new federal tax credits for nuclear generation could offset the higher costs of purchasing power. electricity from Millstone in the future when market rates are low.

The $1 trillion infrastructure bill approved by Congress last fall and the Cut Inflation Act passed this month include new tax credits to support nuclear power plant revenues , which were increasingly closed in the face of low market prices.

DEEP Commissioner Katie Dykes said when Connecticut negotiated its 10-year contract to buy power from Millstone to prevent Dominion from shutting down the plant in 2017, it included a provision that any new source of revenue would accrue to Connecticut electric customers, including tax credits.

Dykes said it was important that those credits be directed to electric customers and that the state not miss out on the benefits of the new programs just because it acted sooner to keep Millstone open.

“It’s encouraging that the federal government is now mirroring the same policies that Connecticut adopted in 2017, recognizing that it will be very, very difficult for us to achieve our decarbonization goals in an affordable and reliable way without retaining units. basic nuclear power plants that produce emissions-free energy,” Dykes said.

United Illuminating told PURA that Dominion would apply for the civilian nuclear credit in 2023, so any revenue that accrued to the Millstone plant would offset the potential costs the utilities would incur from their contract with the plant if market prices were falling.

Dominion’s chief financial officer, Jim Chapman, told analysts on a quarterly earnings call this month that while details of the nuclear production tax credit in the inflation had yet to be worked out, the new credits were ‘user friendly’ as the benefits to Millstone would be passed on to utilities and their customers.

“Long term, [it’s] good for the industry, good for the future of Millstone, whatever happens after these 10 years [power purchasing contract]“, said Chapman.

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