February 20. 2013 10:34PM

Manchester-based power supplier unplugged

New Hampshire Union Leader

Low natural gas prices gave rise to a competitive consumer market for electricity in New Hampshire, but increasing prices have claimed one of those competitors.

Manchester-based Power New England, known as PNE, was suspended from the regional power market on Feb. 14 by ISO-New England, the independent, nonprofit organization that manages the New England grid. ISO directed Public Service of New Hampshire to take on PNE's approximately 8,500 retail customers, according to a PSNH filing with the Public Utilities Commission Tuesday.

Power New England is one of 12 companies approved by the regulatory agency as a competitive power supplier in the PSNH service area. The ISO would not comment on the action taken against Power New England, which the company is not contesting.

"In general, all market participants who are active in the wholesale electricity markets in New England must maintain a minimum amount of collateral and comply with other financial assurance and billing requirements to participate in the markets," wrote an ISO spokesperson in an email.

Resident Power, which brokers power from PNE and other sources for its energy service customers, is not affected by the ISO action, according to Bart Fromouth, managing director. "Resident Power is completely unaffected as a company by what's going on with PNE," he said. "Not all of our customers are placed with PNE."

Fromouth said PNE got in over its head with low-priced offers to consumers as natural gas prices went up. "In January and February, prices have skyrocketed to around 15 cents per kwh, compared to 4 cents we were seeing last year," he said.

Some competitive power suppliers like Energy New Hampshire (ENH) lock in a wholesale price with a power generator before offering a price to consumers, but PNE apparently had more exposure to short-term contracts.

That major price spike meant PNE was locked into low-cost contracts with consumers while having to pay more for wholesale electricity.

The price volatility is due to a variety of factors, including a cold winter and an increasing demand for natural gas in New England, despite a pipeline system that can only accommodate so much, according to Martin Murray, manager of media relations for Public Service of New Hampshire.

"While PNE hasn't stated clearly what happened, it seems likely that it's linked to the extreme volatility in the energy market in New England because of our dangerous reliance on natural gas," he said.

PNE management was unavailable for comment.

Murray said PSNH has been working feverishly to accommodate the PNE customers.

"This is new territory, and it certainly will be interesting if it occurs with an even larger group of customers," he said.

To further complicate matters, PNE was sold to FairPoint Energy in a transaction announced just two days before the ISO action.

FairPoint Energy, an affiliate of FairPoint Communications, hopes to claim the 8,500 customers as its own, even though the ISO has assigned them to Public Service.

"We will take our direction from the PUC," Murray said. "There's still some uncertainty about exactly what will happen and when."

The situation has left many consumers confused.

"We're getting calls today from customers who are PNE customers, but they think they're Resident Power customers," said Murray, "so there is some understandable confusion because they were solicited and marketed by Resident Power."

A spokesman for FairPoint Energy said the company will honor the PNE rates customers had prior to their transfer to PSNH.

"Ultimately, we are happy to see energy deregulation working in the marketplace, particularly since the system ensures that the customer never loses their power, even while shopping for the most attractive rate options," he said.