Closure of PSNH coal-fired plants could be costly
"We feel very confident from a legal perspective that the investments that we've made in the generation business in New Hampshire have served customers extremely well over the last decades and we feel highly confident that cost recovery there is unlikely to be an issue should the state decide to pursue divestiture, which is one of the options that they're considering," said James J. Judge, chief financial officer and executive vice president of Northeast Utilities, the PSNH parent company.
Dumoulin-Smith asked NU executives about the coal-fired plants, and the proceedings that are under way in the state regarding their possible closure. "Could you perhaps help us think about the recovery on those investments ultimately depending on how this all hashes out in the state?" he asked.
The last time PSNH was forced to divest power-producing assets was in 2000, when it agreed to sell the Seabrook Station nuclear power plant. The company floated bonds to cover much of those losses and the payment on those bonds was reflected in the "stranded cost" portion of the consumer's electric bill for the next 12 years.
"The (analyst's) question and NU's response strongly suggest that the company was knowingly squandering ratepayer money by continuing to invest hundreds of millions in uneconomic and dying coal plants, with an expectation that they would recover both the investment and a profit," said Christophe G. Courchesne, a staff attorney with the Conservation Law Foundation in New Hampshire.
The committee is chaired by State Rep. David Borden, D-New Castle, chairman of the House Committee on Science, Technology and Energy. He said the recent report by the Public Utilities staff on the need for PSNH to get rid of the coal-fired plants served as a clear call to action.
Keeping an open mind
Borden outlined a process by which the committee will first reach a decision on divestiture, and then on allocating the costs. "We'll try to keep our minds open until the end of the month," he said. "The tentative plan calls for a recommendation by the end of August."
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