March 17. 2014 11:00PM

PSNH agrees to cut administrative charges to competing power vendors

New Hampshire Union Leader

CONCORD — Public Service of New Hampshire has agreed to lower or eliminate administrative charges to competitive energy suppliers, in a move that could save consumers money on their electric bills if the savings get passed along.

PSNH delivers the electricity and bills all consumers, regardless of who sells the power. A large number of consumers in the state now buy their electricity from unregulated suppliers like ENH or North American Power. Those companies pay PSNH fees for billing, collections, meter reading, and when a customer switches from one company to another.

Power New England, an independent supplier, appealed those fees to the PUC last year, claiming they could not be supported by the new expense or “incremental costs” incurred by PSNH for the services. Other unregulated suppliers jumped in as interveners.

Regulators in December ordered PSNH to prepare a cost-of-service study to help determine what the charges should be. The results surprised even some PSNH competitors.

In a letter to the PUC on March 12, PSNH acknowledged that there was no basis in actual cost for two of the largest fees and reduced them to zero, pending further review by regulators.

“That letter is our notification to the PUC that we have conducted a study of incremental costs associated with these services, and it is our proposal for temporary rates that will be in place until the commission makes a decision on permanent rates,” PSNH spokesperson Martin Murray said.

Murray said PSNH does not agree that the fees should be based on incremental costs, suggesting that they ought to be based in part on what similar services would cost unregulated suppliers in the open market.

He compared the argument of PNE to a commuter who tells a bus driver, “You have to operate this bus on this route anyway, so you might as well let me on for free.”

The reduced charges will apply until and unless PSNH prevails in a process that starts with a hearing on permanent rates that is scheduled for June.

Some charges eliminated

The fees at issue are the selection charge, collection charge, and the billing and payment charge.

When a customer switched from one unregulated supplier to another, PSNH was charging each $5 to process the switch. PSNH determined that there are no incremental costs associated with customers switching from (PSNH) service to a supplier, or from supplier to supplier, and is proposing to eliminate the charge.

That charge alone was generating more than $1 million in 2013 for PSNH.

The collection service charge was essentially a bad-debt fee of 0.25 percent on all collections by PSNH on behalf of unregulated suppliers.

That charge has also been eliminated, for now.

“PSNH found that taking into consideration only the incremental costs associated with supplier services, collections would not meet the requirements of the cost of service study, and thus the company is proposing to remove the collection services charge from its tariff,” stated the letter to the PUC from PSNH attorney Matthew Fossum.

The utility was able to demonstrate that billing on behalf of unregulated suppliers does have costs, but could only document enough cost to justify a charge of 0.07 cents per bill, compared to the previous charge of 50 cents per bill.

Savings for customers?

Gus Fromuth, managing partner at PNE, described the results of the PSNH cost-of-service study as “a complete and total victory for PNE in its case against PSNH for overcharging the residential customer switching charges.”

Murray said the utility simply played by the rules, and continues to do so. PSNH is seeking approval of a $5 charge per customer when customers have to be switched from an unregulated supplier because of a default, as occurred with PNE and People’s Power and Gas last year.

“A claim that we overcharged suppliers is simply inaccurate,” Murray said. “The charges in place until February had been in our tariff for 15 years, and upheld by the PUC. Just because the PUC believes the charges should changed in the future does not mean that anything inappropriate had occurred in the past.”

Interveners in the PNE case included ENH Power and North American, all of whom promised on Monday to turn any savings in PSNH charges over to their customers in reduced rates.

“We are pleased to see the recommended service charge reduced by more than 70 percent and that PSNH has finally acknowledged that there are not incremental costs associated with customers switching from default service to supply companies such as ENH Power,” said Emile Clavet, ENH co-owner. “Should this decision hold, this spring when setting our rates we hope to pass along even greater savings to new customers as well as to our current customers upon renewal.”

The tide of consumers switching from PSNH to unregulated suppliers has slowed down this winter, as the high price of natural gas left many paying higher rates in the competitive market than the PSNH default offer.