Dive Brief:

• Connecticut lawmakers, as anticipated, have introduced legislation that would establish a solicitation that would treat nuclear power as a renewable resource eligible for a five year power purchase agreement.

• The bill would make the state’s only nuclear power plant, Dominion Energy’s 2,110 MW Millstone plant in Waterford, eligible for a five-year power purchase agreement.

• The bill would also step up the share of Class I renewable resources in the state’s portfolio to 20% by 2020, 29% by 2029 and 40% by 2040.

• A companion bill would impose a fee on fossil fuels sold in the state at a rate of $15 per ton of carbon dioxide equivalent released by burning the fuel.

Dive Insight:

Nuclear power plants have been struggling to compete with low-cost natural gas generation in wholesale markets, leading a number of plants to retire in recent years. 

In some states nuclear plant operators have been fighting back by seeking special treatment for their zero-emission electricity.

A bill passed in Illinois late last year provides $325 million a year to two nuclear plants owned by Exelon. The company's plants in New York are also stand to benefit from zero emission credit (ZEC) scheme approved by the state’s Public Service Commission last year. And in Ohio, utility FirstEnergy is floating a similar ZEC proposal for its nuclear plants. 

The most recent addition to the spread of nuclear supports could be Connecticut. There, the nuclear subsidy would take a slightly different spin, creating a solicitation designed specifically for a nuclear power plant “fully licensed” to operate through 2029.The only such plant in Connecticut is Dominion’s Millstone nuke in Waterford.

The bill would also expand the share of Class I renewables, such as wind and solar power, and a companion bill would impose fees on CO2 emissions from fossil fuels.The bills offer several benefits to environmental interests, but it could face a stiff battle.

ISO-New England declined to comment on the pending legislation, saying they are merely monitoring the measure. In its “State of the Grid” briefing, which happened before the Connectitcut legislation was introduced, Gordon van Welie, CEO of ISO-NE, said maintaining competition in markets experiencing out-of-state financial initiatives to support clean energy presents a challenge to grid operators.  

"To accommodate the resources supported by the states and to maintain the integrity of New England’s wholesale markets, changes to the market rules will be required. Without these changes, price signals and revenues for both new and existing resources will be negatively impacted," Welie said. "As a consequence, resources could seek to return to a cost-of-service system. In the cost-of-service system before industry restructuring, all resources were allowed to recover their costs plus a rate of return. Such a system will undermine the benefits of competition and deter the investments needed to maintain resource adequacy.”

The Electric Power Supply Association, a trade group for independent generators, in February filed testimony against the bill, warning of the “irreversible consequences” of such special treatment.

Those concerns reflect a larger worry in the power sector that state nuclear subsidies and other "around market" policies to protect at-risk generation could undermine the functioning of wholesale power markets.

Last week, the PJM Market Monitor warned such policies could "threaten the foundation" of competitive markets, and FERC will hold a technical conference on generation supports in May.