Why Dominion is Expanding in Virginia, Not Southeastern Connecticut

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 Eastern Connecticut 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, said Dominion told her it has no plans to build another reactor at Millstone.

A new reactor would create about 500 to 700 more jobs, add millions in tax revenue to the town and state annually and produce enough electricity to power a quarter of Connecticut, according to Millstone spokesman Ken Holt.

Yet Ritter said Dominion told her and other state officials it would not build another reactor in Connecticut unless something changes because of the “very demanding regulatory environment.”

Holt said there are many decisions behind 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 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. Meanwhile, Connecticut has done the opposite.

Virginia Compared to Connecticut

Perhaps the biggest difference between the two states is that Connecticut has a non-regulated 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 they are building it, Holt said. That means in Virginia, Dominion doesn’t have to take on all the cost upfront, but instead it is put on the ratepayers, he said.

In Connecticut, it is the opposite. Dominion would have to pay for 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 that Dominion has a nuclear power plant in, 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 the past two years. Holt said the company has never dealt with a production tax based off 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. The state is facing another tough budget year though, but Ritter said ensuring that tax would indeed 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 that is because there is a strong push in this state for those regulations and there is a benefit of having them.