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Most support PSNH selling its plants

New Hampshire Union Leader

June 10. 2013 7:11PM

The investigation by state regulators into the Public Service of New Hampshire electric supply rates brought together a strong alliance in support of change, with environmental groups, consumer groups, wholesale electricity providers and competitive retail suppliers urging the PUC to find a way for PSNH to sell its power plants.

The cost of operating power plants is built into the PSNH energy supply rate, which has gone up in the past two years as the regulated utility begins to recoup costs associated with pollution controls at Merrimack Station in Bow.

Those higher prices have given competitors an opportunity to come into the market and take away PSNH customers for energy supply, even though PSNH still delivers the electricity.

Rather than endorse a system that has made their entry into the market possible, the competitive suppliers, by and large, support the kind of changes the PUC is recommending.

"We found competitive retail suppliers far less interested in the 'headroom' created by the significant gap between market and PSNH's default prices, as compared with supporting a market that is conducive to competition over the longer term," the PUC staff wrote.

The Retail Energy Supply Association, representing companies that sell energy to large users, urged PSNH to embrace the recommendations.

"The report got it right," said Dan Allegretti, RESA's New England chair. "It points out that on the one hand the current situation provides an opportunity for retail suppliers to offer substantial savings to customers, as compared to the default price from PSNH, but it also points out, and we would agree, that longer term a much more stable and durable restructuring is needed in which PSNH is out of the electric commodity business, and becomes a delivery company."

The two companies that have succeeded in attracting the largest number of customers away from PSNH endorsed the PUC report, even though it may lead to changes that make their pricing less competitive.

"ENH Power believes the forced divestiture of PSNH generation assets is long overdue," said Kevin Dean, a co-owner of the company that has signed up 58,000 former PSNH customers. "We believe that this is consistent with the intent of the deregulation in New Hampshire and is in the best interest of the consumers."

Taff Tschamler, senior vice president of business development at North American Power, which has 35,000 electric supply customers in the state, echoed that sentiment.

"We support changing the current policy of guaranteeing profits and cost recovery for PSNH power plants, regardless of whether the plants operate or not," he said. "There are a range of better alternatives to the current policy, one of which is divestiture."

The New England Power Generators Association, representing power plant owners, called on PSNH to take up the challenge, and create an unregulated subsidiary to take over the power plants and compete on an equal footing with NEPGA members.

"We agree with the PUC staff report that if PSNH feels so strongly that the assets represent a value, that they should put their money where their mouth is and place them in a non-utility subsidiary," said NEPGA President Dan Dolan.

Bart Fromuth, managing director of Resident Power, with 8,000 customers, said the retail suppliers are not of one mind on the subject.

"We're going to be spending a lot of money here in New Hampshire to solve a problem the competitive market could solve on its own," he said. "I find it somewhat dubious for the report to claim that it's got the support of all competitive suppliers. If you look at the suppliers supporting (forced divestiture), it's those who have wholesale assets that would be able to compete for PSNH business as default provider."

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