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Why Dominion is Expanding in Virginia, Not Waterford

A look at the many reasons Dominion picked Virginia to build a new nuclear power plant instead of Waterford, and why company officials have said they will not put another reactor in Waterford.

Earlier this month, there was an article on a Fredericksburg news site about the delays associated with Dominion’s effort to build another nuclear reactor at its North Anna Nuclear Power Station in Virginia.

What might be newsworthy, at least to local residents, is that Dominion isn’t building another reactor at Millstone Power Station, despite the fact that the site can hold six reactors and only has three. State Rep. Betsy Ritter, D-Waterford told Patch that Dominion has no plans to build another reactor at Millstone.

A new reactor would mean around 500 to 700 new jobs, would provide millions in tax revenue to the town and the state annually and it would produce enough electricity to power a quarter of Connecticut, Millstone spokesman Ken Holt said. Yet, Ritter said, Dominion has told her and other state officials that they would not build another reactor in Connecticut unless something changes because of the “very demanding regulatory environment” in Connecticut.

Holt said there are many decisions involved in building a new reactor, which can take more than a decade to permit and build and can cost more than $5 billion to construct. The demand for electricity in a certain area is important, but so is the regulatory environment of the state, he said.

Virginia's government passed legislation to make it easier for Dominion to build a new reactor, Holt said. Connecticut has done the opposite.

Virginia Compared to Connecticut

Perhaps the biggest difference between the two states is that Connecticut has a nonregulated energy market and Virginia’s is regulated. That makes a big difference in building a new nuclear reactor, as it requires a “massive upfront capital expenditure,” Ritter said.

In a regulated market, Dominion can begin to charge customers the cost of construction for the reactor while the company is building it, Holt said. That means in Virginia, Dominion doesn’t have to assume all the cost upfront but can passi it on to ratepayers instead, he said.

In Connecticut, the opposite is true. Dominion would have to pay all of the cost upfront of building the plant and then hope to recoup those costs by selling electricity once the reactor is built.

But there are other differences as well. Connecticut has the highest tax burden of any of the states in which Dominion has a nuclear power plant, Holt said. Property taxes and state taxes are both higher on Millstone than at the North Anna site, he said.

The best example is a $42 million annual production tax levied against the plant over the past two years. Holt said the company has never dealt with a production tax based on the amount of electricity a plant produces regardless of how much they sell it for, or if they sell it at all.

That tax is expected to sunset this July, Ritter said. Although the state is facing another tough budget year, Ritter said that ensuring that particular tax would sunset would be a high priority for her this upcoming budget year.

Additionally, Ritter said, the regulatory climate of Connecticut is high on all businesses in Connecticut, including nuclear power plants. Ritter said there's a strong push in this state for such regulations because lawmakers perceive there's a benefit to that. 

Mark Owen January 21, 2013 at 03:24 PM
An example of the the tail wagging the dog -- no action at all to "sunset" the production tax should be engaged in until a commitment by Dominion is made to the state of Connecticut that they indeed will work with the state and local municipalities to 1) lower rates charged; 2) build generation facilities (these don't have to be nuclear but can be); and 3) seek to immediately plan and engage in the decommissioning of Millstone Unit 1, while continuing to operate Units 2 and 3 -- thus providing immediate revenue generation to both the state and locally through decommissioning activities.
Michael Joseph January 21, 2013 at 07:30 PM
Let us citizens pay for the building costs up front as they are incurred, but share rate reduction for electricity sold from within our state to elsewhere like New York. Negotiate the local taxes to depend on demand. Since the governor will give away our tax money to create the Longshot Jackson Labs employment we could see this partnership as a much better deal. Further, use fusion salt and Terrapower technology fro small scale safe reactors but Nancy should put the pedal to mettle.

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