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Higher PSNH rates OK'd

New Hampshire Union Leader

December 28. 2012 9:28PM

CONCORD - The Public Utilities Commission approved new rates for Public Service of New Hampshire on Friday afternoon, amid warnings from the Office of Consumer Advocate, PUC staff and the commission itself that PSNH energy charges are rising at a rate that will cause more customers to leave the regulated utility for competitors, in a spiral that will push PSNH rates even higher in the future.

The orders approving an energy service charge of 9.54 cents per kilowatt hour and a stranded cost recovery charge of 0.737 cents per kwh came with expressions of concern by the PUC over the steady migration of customers away from PSNH and the growing burden left on those who remain.

The commission estimated that a residential customer using 500 kwh per month would see the energy service part of their bill go up by $12.15 per month, from $33.55 to $47.70.

The 9.54 cent energy charge was predicted in the PSNH forecast filed with the PUC in mid-December, while the stranded cost recovery charge is higher than predicted. The stranded cost recovery, designed to compensate PSNH for costs brought about by deregulation of the energy industry in the state, was projected by PSNH to be 0.67 in a filing dated Dec. 12, but on Dec. 18, PSNH revised the request upward.

The PUC didn't take issue with the higher-than-predicted increase in stranded cost charges, but sounded the alarm on the energy charge, which is higher than the current PSNH energy charge of 7.11 cents per kwh, and much higher than competitors offering rates as low as 6.99 cents.

According to PSNH, the increase in the electric service rate is primarily due to the company's forecast of higher prices for power and an increase in the estimated rate of customer migration to other companies. In addition, PSNH predicted that its energy services sales would be four percent lower than estimated, primarily due to customer migration.

The trend is setting off alarms among regulators.

The Office of Consumer Advocate, in its portion of the order, warned that "PSNH's operation model causes the fixed price of generation to be borne by a shrinking customer rate base, consisting primarily of residential customers, and the result is unfair to those customers."

Most of PSNH's large commercial customers have gone over to alternative energy suppliers.

The OCA stated that "as PSNH's energy service rates move higher than the market price, more customer migration will result. It is unfair that large customers are not supporting the fixed cost of generation."

While agreeing that the filing is "reasonable," the Consumer Affairs Office warned that "the overall structure of PSNH's energy service rates cannot continue."

Those concerns were echoed by the commission staff report, which said the company's proposed rate is over-market, and cautioned that the rate "may cause more customer migration which would continue to push PSNH rates higher going forward."

The commission order pointed out that there is no technical deficiency in the filing, but added, "the fact that the proposed rates are increasing by such a significant percentage impacts PSNH energy service customers and could exacerbate customer migration."

The PUC order comes a month after several environmental groups held a press conference in front of the Merrimack Station coal-fired plant in Bow, at which they warned that "PSNH's coal-fired business model is in free fall."

Representatives of PSNH were unavailable for comment Friday afternoon, but have said before that they are under legislative mandates regarding renewable energy sources and other requirements that do not burden independent energy suppliers.

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