Hartford Business Journal

www.HartfordBusiness.com April 10, 2017 • Hartford Business Journal 15 announced they would close, including two in New England. Nuclear plants in other states have sought subsidies or other favorable contract arrange- ments, but there have been legal challenges over some of those deals. Dominion doesn't disclose Millstone's earn- ings, but the two-reactor plant is profitable and doesn't have plans to close (it has already promised to provide power to New England grid operator ISO-England into mid-2022). In recent years, Millstone has sold most or all of its energy via long-term contracts to financial institutions like hedge funds, simi- lar to the way other commodities like grain, cattle or even crude oil are traded. That busi- ness model helps producers reduce the risk of daily price volatility. It also transfers risk to financial institutions, which can profit or lose money based on the difference between what they pay for the energy and future wholesale market prices. Last year, Millstone sold all of its out- put for nearly $52 per megawatt hour. That turned out to be a good deal for Dominion as electricity prices on the wholesale market in Connecticut averaged a record low $29.73 per megawatt hour for the year. If Senate Bill 106 passes, some worry it would be the utilities and their ratepayers taking the financial risk, instead of hedge funds or other financial institutions. Kenneth Holt, Dominon's manager of nucle- ar communications, acknowledged that there could be some risk for ratepayers, but he said the bill would also give Eversource, which will ultimately purchase the power through the pro- posed bidding process, price certainty over a large chunk of its power for the next five years. "As far as Eversource taking that elec- tricity and putting it through the wholesale market and having some risk for consumers, I think you also have the potential for reward for consumers," Holt said. But Eversource also has concerns about the bill and its potential impact on rates. "There's no way it can be a savings to cus- tomers under any construct other than if the power plant was to shut down," James Daly, Eversource's vice president of energy supply, said in an interview. Hennessy thinks Eversource has expressed concern about the nuke bill because Millstone's future success could hurt several of the utility's own proposed projects, such as natural gas pipeline and transmission line expansions. 'Crazy' estimate While Millstone may be seeking to sow doubts about its financial future, a report released last week and commissioned by the Electric Power Supply Association contends that Millstone will continue to profit, though at a lower level than in recent years, even if New England's wholesale prices remain suppressed. Energyzt used a series of estimates and publicly available data to calculate that Mill- stone earned $150 million in after-tax income last year and has been profitable since Dominion bought it in 2001 from Eversource. The report also claimed that the nuke bill, if passed, could generate $1.2 billion from ratepay- ers over five years, a calculation Dominion called "crazy" because it assumed the nuclear plant would sell its energy for $85 per megawatt hour. Hennessy said ratepayers should trust in state regulators to make sure any nuclear power purchase is in the best interest of ratepayers. "They're going to be looking at us to give them a deal," Hennessy said. "If we bid in at $80, they will laugh us out of that room." Dennis Schain, a spokesman for the Depart- ment of Energy and Environmental Protection, said Millstone is important, but that DEEP's current position is Dominion should have to prove a financial need for the bill to pass. n Since their beginnings, Simscroft-Echo Farms has been committed to helping their customers grow and expand in the Farmington Valley and beyond. For over 20 years, Simsbury Bank has been with them in the trenches, providing short-term working capital and long-term equipment financing. With the support of Simsbury Bank's commercial banking professionals behind them, Simscroft can stay focused on delivering top quality residential, commercial and industrial site development services to their customers. That's the way banking should be. to a greater tomorrow Digging the "Simsbury Bank gives us the support and tools we need to grow our business and serve our customers." Mike Girard SimsburyBank.com 860.658.2265 Wall Street agency warns CT budgets will be bleak for years A major Wall Street credit rating agency warned investors that Connecticut's weak economy and surging retirement benefit costs are likely to plague state budgets and test the state's fiscal management for sev- eral years to come. The latest issue paper from Moody's Investors Service — part of a growing trend of Wall Street commentary on Connecticut's troubled finances — also warns that while proposals to shift costs from the state to municipalities could help the state's credit rating, it could hinder that of the cities and towns that would share in these expenses. "Connecticut's fixed costs command roughly 30 percent of the state's $18.9 billion non-federal governmental revenues (next fiscal year,) which is the highest percentage of all 50 states," said Moody's vice president and senior credit officer Marcia Van Wagner. Those costs, led by some of the most poor- ly funded public-sector pension and retiree healthcare programs in the nation, are expect- ed to consume nearly 35 percent of General Fund revenues by 2018-19, the report states. And while Moody's describes Connecti- cut's high wealth as a "paramount credit strength," the state's economy "has entered a 'new normal' with employment still below pre-financial crisis levels and income growth lagging the nation's." Connecticut's financial services sector has lost 11 percent of its jobs since 2007, while manufacturing is in decline and the service-sector has experienced lackluster growth, Van Wagner said. The lackluster economic growth has been hampered further by population loss, Moody's wrote. Connecticut is one of just four states to lose population every year since 2013. The state's poorly funded pension for munic- ipal teachers and pension and retiree health care programs for state employees reflect insuf- ficient savings patterns that date back to 1939. The required annual contribution to the teachers' pension fund alone, which already represents $1 billion in a nearly $18 billion General Fund, will grow an average of more than 16 percent per year during the next biennial budget. – Keith M. Phaneuf | CT Mirror

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