Our View: Energy policies need to consider the ?business? of energy production

Vermont Law School?s Institute of Energy and the Environment recently released a study listing Connecticut?s Millstone nuclear power plant as one of 12 at risk of being shutdown due to tax and economic conditions in the state, and one of 38 in the nation at risk of early retirement due to competition from other lower costs energy sources, such as natural gas, and increasing operating costs.
Industry officials, however, are quick to dismiss the findings as conjecture and note that nuclear power remains an effective and important contributor to maintaining a viable and diverse energy portfolio.
We agree. Having long supported the growth of nuclear power as a cost efficient and clean energy source, and as such, we found the report listing the Waterford plants being at risk of shutdown or early retirement as something to be taken quite seriously.
Millstone produces roughly 45 percent of the electricity in Connecticut and is the largest electric generator in New England. Losing that generation capacity would result in a dramatic increase in electric rates, not only for Connecticut electric users, but all consumers throughout the northeast.

Electric supply

There is already insufficient electric generators online today to adequately provide all the electricity needed throughout the region year-round. During high-demand, peek periods, ISO New England, the regional independent, nonprofit that oversees New England?s electric grid, has to purchase electricity from outside the region which can impact rates.
In order to maintain a sufficient electric supply, it is critical that every existing generating system in the grid remain operational, including the least efficient, costly fossil fuel burning facilities. Essentially, electric rates are based on insuring that, at a minimum, those ?dirty? plants are profitable and remain operational. The more efficient and cleaner generating plants, such as Millstone, greatly benefit financially as a result.
The push in recent years to encourage renewables and convert fossil fuel burning plants to less expensive natural gas operations is an effort to lower electric rates by lowering the dependency on those ?dirty? plants. But even if every New England state were to succeed in achieving ? or even exceeding ? renewable energy goals and converting plants to natural gas, it would not be enough to offset the loss of the 17 million megawatt hours per year that Millstone generates.

Generation tax

Connecticut is the only state that taxes power plants on the electricity they produced. That tax was implemented two years as part of the $1 billion ?shared sacrifice? tax increase implemented to offset a $3.6 billion state deficit. It was to be a limited tax, due to expire June 30, but extended through Sept. 30 because of continuing deficit issues.
Over the past two years, that tax raised roughly $70 million in revenue. Millstone, as the state?s largest electric generator, paid 60 percent of that. Millstone?s parent, Virginia-based Dominion Resources, did not pass that added cost on to consumers, thus cutting deeply into profits.
In that sense, the Vermont Law School?s institute study is accurate and credible. Taxes, the conversion of fossil fuel power plants to less expensive fuels and more renewables sources resulting in lower electric rates ? and lower profits ? along with an economic climate that increases operational costs, are all factors that could lead Connecticut?s major electric generator to one day be forced to make a business decision.
It?s an issue to be taken seriously.
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Source: http://www.norwichbulletin.com/Opinion/x1465124794/Our-View-Energy-policies-need-to-consider-the-business-of-energy-production?rssfeed=true

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