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PSNH ordered to drop $5 fee charged for switching electric providers

December 25. 2013 10:40PM

CONCORD - If you are among the thousands of electricity customers who switched to a competitive supplier in the past year, you probably didn't know that every time you switched from one company to another, Public Service of New Hampshire was charging both your old and new supplier $5 for administrative costs associated with the change in billing.

The Public Utilities Commission has ruled that amounts to double-dipping, and on Dec. 13 ordered PSNH to stop charging $5 to the company that's losing a customer.

Why should you care? Because it affects the price you pay for electricity.

The Dec. 13 ruling amounted to a win for companies like Power New England, which filed the complaint in an effort to force PSNH to reduce or at least justify administrative charges to competitive suppliers.

PSNH continues to deliver the electricity and bills the consumer, no matter who provides the power. More than 50,000 residential consumers have turned to competitive suppliers since 2012. The money collected from the "energy service charge" on their bills is forwarded to the competitive supplier by PSNH, after the utility deducts its administrative fees.

Those fees were developed more than a decade ago, at the advent of deregulation, when there was little actual experience upon which to argue their validity one way or another.

The competitive suppliers, led by PNE, want PSNH to justify the existing charges based on the actual cost in employee hours and materials. In its Dec. 13 ruling, the PUC agreed, ordering PSNH to complete a study of costs associated with the competitive supplier charges by Jan. 13.

"The average consumer should care about this because PSNH has piled on some charges in this market that don't exist in other markets in New England, thus raising the cost of service to residential customers," said Gus Fromuth, managing partner at PNE. "If these charges went down, competition would suggest that consumer power bills would drop by an equal amount."

Hitting the bottom line

A reduction in "competitive supplier charges" could lower rates for customers who sign up with companies like PNE, North American or ENH, but it would hit PSNH on the bottom line.

In 2013, PSNH is projecting gross income from the $5 "selection charge" at $1 million. "In 2008, it was only worth $50,000," said Fromuth. "That's a huge growth in revenue with absolutely no overhead associated with it."

In addition to the selection charge, PSNH also charges competitive energy suppliers 50 cents per meter each billing cycle as a "billing and payment service charge," and a "collection services charge" of 0.25 percent on all payments remitted to a competitive supplier through the PSNH billing system.

"For every dollar that hits the PSNH bank account on behalf of a competitive supplier, PSNH gets to keep 0.25 percent of that as a collection fee," said Bart Fromuth of Resident Power, a PNE broker.

He said the collection charge is especially frustrating to competitive energy suppliers.

"Even for customers who are extraordinarily late, PSNH does not put any additional effort into collecting for the competitive supplier," he said.

PSNH spokesperson Martin Murray said the cost-of-service study ordered by the PSNH is under way, and that while it is ongoing, PSNH will continue to bill the suppliers based on the tariff that was approved by the PUC when PSNH was first deregulated more than a decade ago, with the exception of the selection charge.

"The PUC did say that the language regarding the selection charge is unclear, and ordered PSNH to discontinue billing more than one supplier when a customer switches from one competitive supplier to another, until the cost of service study is complete," he said. "No other adjustments to our charges have been ordered at this time."

Murray noted that the PUC denied a request by suppliers that PSNH be forced to refund charges it has collected over the years.

"We have maintained that a fair method of providing these services and establishing a cost would be to require the suppliers to go to the market and purchase the services themselves," said Murray. "This would ensure that no PSNH customer is forced to pay to subsidize services for independent suppliers. I'm sure there are local New Hampshire businesses that would be pleased to provide these services."

Intervenors in support of the PNE petition include North American Power and Gas, the Retail Energy Supply Association and ENH Power.

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