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September 30. 2012 1:19AM

PSNH predicts need for rate hike

MANCHESTER — Public Service of New Hampshire is predicting it will ask the Public Utilities Commission to increase what are already the state’s highest energy service rates.

“At this time, we may be higher than other utilities,” company spokesman Martin Murray said. “Most of the reason for that is government mandates that PSNH customers pay that other utilities do not.”

The company is not officially seeking that rate hike now, but is required to forecast as best it can what it will be asking for when the rate comes up for review at the end of the year, he said.

“The formal request would be made in December,” he said. “This is an early preview that we make every year. We tell the Public Utilities Commission, ‘This is what it’s looking like; we’ll get back to you in December.’ Based on what’s happened this year, and what it looks like will happen next year, we expect some changes, and that’s what we filed today.”

The numbers will be revised in December to reflect the actual situation in the fourth quarter; the PUC will then hold hearings and set the rates for Jan. 1 implementation. If the current predictions hold, Murray said, residential customers using 500 kilowatt hours a month would see their monthly electric bill of $86.35 go up $4.30, to $90.65.

“We’re forecasting a bit of an uptick in the regional cost of energy,” Murray said.

Electric service charges, which PSNH predicts it might have to increase, make up only part of a customer’s monthly bill. In addition, utilities assess taxes, delivery charges and baseline customer fees that vary among the four companies.

PSNH’s monthly bills to customers are higher than those of the state’s other three utilities: Liberty Utilities, Unitil and the New Hampshire Electric Cooperative, which, based on average monthly consumption of 500 kilowatt hours, respectively charge $60.31, $61.91 and $86.32 per month.

PSNH is forecasting an energy service rate of 8.97 cents per kilowatt hour, compared with the current charge of 7.11 cents per kwh. The rate was 9.92 cents in 2009.

The proposed energy service rate essentially reflects the anticipated market price for energy among regional providers plus the cost associated with government mandates.

The 8.97 cents per kwh proposal represents more than a 5 percent increase over current rates, but would be offset by an anticipated reduction in the portion of the electric bill dedicated to stranded-cost recovery charges.

The preliminary filing includes a reduction of 0.79 cents per kwh in the stranded-cost portion, which recovers above-market costs associated with mandated purchases from independent power producers, such as wood-fired plants and municipal waste facilities.

Murray blamed government mandates for the higher costs, saying the company’s rates 10 years ago were among the lowest in New England before mandates were introduced that other utilities do not pay for.

“A significant portion of the energy service rate is associated with state government mandates,” Murray said. “It includes about $67 million in annual costs associated with the state’s environmental initiatives, including the Regional Greenhouse Gas Initiative; the N.H. Renewable Portfolio Standard; and the mandated installation of a mercury reduction scrubber at the company’s largest power plant, Merrimack Station.

“Absent that, our charge would be quite a bit lower,” he said.

However, according to a chart compiled by Murray on PSNH’s website, the utility’s predicted rate without the mandates — 7.53 cents per kwh — would still be higher than the state’s three other electricity providers. Unitil charges 6.913 cents per kwh, though its charge is scheduled to increase to 7.178 cents per kwh in November. Liberty charges 5.884 cents per kwh, and the New Hampshire Electric Cooperative charges 6.75 cents per kwh.

Murray said the other three utilities purchase energy from a regional marketplace that he called “volatile” and that, right now, is at a lower point in its market rates.

Liberty Utilities’ rate of 5.884 cents per kwh was a sharp decrease from April, when its rate was 7.746 cents per kwh.

Murray said PSNH will purchase from the marketplace when it is cost-effective to do so, but also produces much of its own power, leading to less volatility.

“If one looks at our rates over the last 10 years, our rates tend to be stable,” Murray said. “Our rates do not change drastically.”

Murray said the proposed and controversial Northern Pass project, which would run electricity from Canada through New Hampshire, would decrease overall electric costs by providing cheaper electricity for the region as a whole. The project is opposed by those who object to electric towers being erected in the state’s scenic North Country.

“The energy produced would be economic and would reduce the energy price from what it otherwise would be,” he said.

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Tim Buckland may be reached at tbuckland@unionleader.com. Dave Solomon may be reached at dsolomon@unionleader.com.


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