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Hearing focuses on whether PSNH should close its generating facilities

State House Bureau

August 07. 2013 10:42PM

CONCORD — The state’s largest electric utility is at a tipping point as high rates driven by a $425 million emissions reduction project has customers fleeing to other suppliers, a legislative committee was told Wednesday.

Public Service of New Hampshire’s competitors told the Electric Utility Restructuring Oversight Committee the only way to end the company’s death spiral is to force it to sell its generating assets as every other New England electric utility has done.

But former PSNH President Gary Long argued the utility’s fossil-fuel generating facilities have saved customers hundreds of millions of dollars, provided a safety net for residential customers and offer a buffer against future spikes in electric costs if natural gas prices go up.

He told the committee the state’s current industry model has put New Hampshire ahead of other New England states in energy policies and positioned it to reap future economic benefits.

“Rather than beat up on PSNH and take money away, why not work together to put New Hampshire in the best position right now,” Long said. “Let’s build something, not destroy it.”

The committee is trying to determine if lawmakers should require the company to sell its generating facilities, something the company had begun doing in the early 1990s after the electric industry was opened to competition for power suppliers, but halted after the California energy crisis brought on by market manipulation by Enron and other large electric suppliers.

Low natural gas prices have reduced the cost of electricity below what PSNH can produce it for, which has allowed competitive suppliers to enter the residential market. Large electric users have had a competitive market for some time and most buy their power from competitive suppliers.

Today about 55 percent of the electricity used by PSNH’s customers is supplied by its competitors.

PSNH is recovering the cost of a $425 million scrubber that removes emissions from Merrimack Station in Bow. Mostly residential customers pay for the scrubber, driving up the rates for those who buy electricity from PSNH.

“It is the death spiral you are all familiar with,” said attorney Doug Patch of Transcanada, a competitive electric supplier.

Sen. Jeb Bradley, R-Wolfeboro, one the architects of the state’s deregulation law, noted everyone would probably agree now that the scrubber was clearly a mistake and argued the safety net for residential customers is fraying.

The Public Utilities Commission is studying whether the company should be able to collect the entire cost of the project. The company maintains the state passed legislation mandating the scrubber, and it should be able to collect 100 percent of the costs. Others argue the project should have been stopped when estimates rose from $250 million to $450 million.

Bradley noted if the PUC decides less than 100 percent could be recovered, PSNH will go to court, and if the company receives 100 percent for the project, more and more customers will go to competitive suppliers.

Long disagreed and said policies approved by lawmakers and state regulators are responsible for the highest regional rates in New England.

He said the costs of the scrubber should be spread across all its 450,000 customers, not just those buying power from the company. And he also targeted a provision in the restructuring law that requires PSNH to absorb competitors’ billing costs. Changes in those two instances could lower the cost of electricity for PSNH customers by 2 cents a kilowatt hour, which would be as low or lower than its competitors, Long said.

But Bradley shot back the company was a willing participant in the legislation requiring the scrubber and never raised the issue of charging only default customers for it. “You embraced it,” he said.

Long said the law is clear; the scrubber was a mandate and the company could recover all the cost. He noted lawmakers could do something about the rates, but do not appear to be interested.

The committee meets Aug. 28 to discuss what it wants to

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