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PUC report faults 'status quo' of PSNH plant ownership

New Hampshire Union Leader

June 08. 2013 10:23PM

A state Public Utilities Commission report has recommended that the "status quo" of the ownership of generation plants by the state's largest utility company cannot continue.

The report recommends that the PUC open a proceeding to answer questions about Public Service of New Hampshire's ownership of generation plants and the utility's rates, which are consistently higher than competitors, the report said.

With natural gas prices at historic lows, competitive energy suppliers have been undercutting the PSNH energy charge for months, causing a large number of PSNH customers to switch to new suppliers. The PUC opened an investigation in January "to review market conditions affecting the default service rates of PSNH in the near term and how PSNH proposes to maintain safe and reliable service to its default service customers at just and reasonable rates," according to the report, which was released Friday.

In a response, PSNH spokesman Martin Murray said in a statement that the power company hasn't yet fully reviewed the report, but: "At first glance, however, the scope of the report appears to ignore consideration of how to protect customers from the significant energy challenges facing New Hampshire and the region, namely its growing over-reliance on a single fuel source, natural gas, for generating electricity."

The PSNH statement said the company's energy plants provide customers with protection against volatility in the energy market and an alternative fuel source other than natural gas.

"In fact, PSNH's generating plants have provided more than $700 million in savings to its customers over the past decade. The plants ran during the first quarter of this year during periods of high demand and were called upon as recently as last week to provide much-needed electricity supply during a multi-day heat spell," the PSNH statement said.

However, the PUC report seemed to disagree:

"The default service rates of PSNH have been above the default service prices of New Hampshire's other electric utilities for the last four years, and that disparity has grown to over 2 cents per kWh recently. The belief that the PSNH 'physical hedge' may someday be 'in the money' again as it was in the early years after electric restructuring is not supported by our analysis and PSNH provided no analysis or forecasts that would allow one to reach that conclusion.

"In summary, the situation looks to worsen, as continuing migration from PSNH's default service by customers causes an upward rate trend. We find no supportable basis for optimism that future market conditions will reverse this unsustainable trend, especially in the near term," the report says. "To the contrary, the PSNH fossil units face uncertainties that combine to create a risk of further, potentially substantial increases in costs."

In his statement, Murray said PSNH will continue to review the report and "will respond to this report in the manner directed by our regulators, and look forward to demonstrating the significant benefits PSNH's generation fleet provides to customers."

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