Another View -- Michael Harrington: Don't return to the bad old days on electric ratesBy MICHAEL HARRINGTON
May 07. 2017 11:13PM
Here they go again. Legislation now before the New Hampshire House risks returning us to the days when the state’s consumers paid much more for electricity than they should have.
Those extra costs were due to projections by experts that turned out to be very wrong and consumers paid the price. Senate Bill 128 would return us to the time when experts, rather than consumer needs and competitive markets, make decisions on electric infrastructure projects.
SB 128, pending before the House Science, Technology and Energy Committee, would pave the way for our state’s electric utility companies to have the financial risk borne by consumers, rather than the utility’s investors. Permitting long-term contracts to be undertaken by the state’s utilities would effectively advance the Northern Pass project, a 192-mile high-voltage transmission line proposed by Hydro-Québec and Eversource designed to bring electricity from Hydro-Québec’s hydroelectric plants through New Hampshire and to the rest of New England.
Eversource has garnered support for this legislative proposal by projecting consumer savings from a sole-source, confidential, 20-year purchase power agreement (PPA) between Hydro-Québec and Eversource. But the utility admitted in testimony before the Public Utilities Commission there is no guarantee the projected savings would materialize.
The legislation could upend the PUC’s recent order concluding that the Northern Pass PPA would run counter to the central tenet of the state’s electricity competition law.
If SB 128 becomes law, it would put at risk the current retail choices and cost-saving benefits enjoyed by New Hampshire’s industrial, commercial and residential consumers as a result of electricity market competition created by the Legislature in 1996.
Twenty years ago, New Hampshire lawmakers determined that monopoly regulation, where government officials determine the prices at which utilities sell electricity, would be replaced with competition and market forces, which they rightly concluded would produce better outcomes for consumers. SB 128 would once again allow utilities to make risk-free investments guaranteed by the pocketbooks of New Hampshire electricity consumers.
Currently, with competition, consumers are no longer limited to one monopoly supplier of electricity at a take-it-or-leave-it price. Alternative retail suppliers registered with the state have entered the marketplace and are actively competing on price and value. Consumers are now free to choose and benefit from an array of innovative products and services. They are no longer on the hook financially for electricity generating plants and related investments.
Now, all of this is at risk with the introduction of SB 128 that proposes to roll back these hard-won gains for consumers and our state’s economy. By once again allowing utilities to make electricity investments guaranteed by New Hampshire electricity ratepayers, it would undo a bedrock reform that has protected consumers from the financial risk of stranded cost investments.
Our state’s consumers have already paid a price for the transition to a competitive electricity market. Utilities such as Eversource were awarded billions in so-called “stranded costs” for their past investments. In New Hampshire consumers have paid some $3 billion in stranded costs they wouldn’t have had to pay if a competitive market had been in place requiring investors — rather than consumers — to bear the financial risk of utility investment.
When it comes to the Northern Pass PPA proposal, this is not the first time we’ve heard the siren song of promised lower costs to customers if only we’d turn our backs on the competitive market and require consumers to financially guarantee utility investment. In the past, those promises of cheap electricity never materialized, and consumers were stuck with unaccounted for and unanticipated costs.
Indeed, consumers paid a heavy price when we made this mistake. A law drafted and championed by Eversource determined that a pollution control “scrubber” should be installed on the 40-year-old Merrimack Station power plant in Bow and that the state’s electricity consumers would be financially responsible for the investment. What was projected to be a $125 million investment ballooned to more than $400 million and market projections suggesting consumer benefits never materialized. Consumers once again were saddled with hundreds of millions of dollars in stranded costs.
We must not go down this path once again. Let’s not create more utility stranded economic assets at the expense of consumers based on unsubstantiated claims of lower electricity costs.
Our reliance on the competitive market over the past two decades has paid strong dividends and has served our state well. We should continue to let the competitive market work and allow New Hampshire consumers and the state’s economy to prosper. We urge lawmakers to reject SB 128.
Rep. Michael Harrington, R-Strafford, is a former Public Utilities commissioner. Sen. Martha Fuller Clark, D-Portsmouth, represents Senate District 21.