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November 12. 2013 8:08PM

Future of coal-fired plants in NH to get review by PUC

CONCORD — A House-Senate committee studying the fate of coal-fired power plants in New Hampshire has put the issue back in the hands of the Public Utilities Commission.

In its final report, released on Nov. 8, the Electric Utility Restructuring Oversight Committee concluded that it may be time to force Public Service of New Hampshire to sell all of its generation assets, including coal-fired plants in Portsmouth and Bow, and provided some guidelines to the PUC in making a final determination.

The committee of five representatives and two senators has been taking testimony for months on the state's electricity market, which has seen a significant portion of PSNH customers switch to competitors for their power supply. PSNH continues to deliver the electricity no matter who supplies it.

Customers who continue to use PSNH as the "default" power supplier are bearing costs associated with the installation of environmental controls or "scrubbers" at the Merrimack Station coal-fired plant in Bow, forcing many to consider alternatives. The latest statistics filed with the New Hampshire Public Utilities Commission show that more than 22 percent of PSNH's residential customers, or 96,000 households, have left PSNH for a competitive service provider.

"The very real prospect of an upward spiral in the default (PSNH) service rate with fewer and fewer customers taking such service is indicative of a system that is broken and in need of repair," the report states.

The report notes that New Hampshire is unique among the New England states in having a regulated utility (PSNH) that still owns and operates power plants. All of the other utilities in the region divested their generation assets as part of deregulation in their states.

New Hampshire approved deregulation more than a decade ago, under the assumption that PSNH would divest itself of all power plants and focus exclusively on power delivery, leaving supply to the competitive market.

"The committee believes that it may be time to consider the process that began in 2000 for PSNH to fully divest its generation assets," the report states. "Though the Legislature put a temporary hold on the sale of PSNH's fossil and hydro assets, that was at a time when wholesale and retail markets were less developed and their regulation was less robust. The sale of the generation assets would be in line with the original intent of the restructuring law."

The committee directed the PUC to analyze the PSNH position that power plant ownership provides price stability and service reliability for default service customers in the volatile energy market; the level of risk associated with continued ownership, including environmental regulation; and the potential sales price for the power plants, with a deadline of April 1, "or earlier if feasible."

The report makes clear that if the power plants do get sold, any losses will have to be shared by the utility and ratepayers: "Given PSNH's strong and consistent advocacy for the scrubber project before the Legislature, it is only fair to ratepayers that PSNH bear part of the financial responsibility for any resulting excessive costs."

Senior executives from Northeast Utilities, the PSNH parent company, have told stock analysts that if the company is forced to sell the power plants, it expects to be fully reimbursed for any losses.

"Our view is that divestiture brings big risks to New Hampshire — higher costs, and loss of control of our energy future. Once you divest, you can never go back," said PSNH spokesman Martin Murray in response to the committee report. "We are in agreement with the committee, however, that if any examination of those benefits is to take place, the Public Utilities Commission is the proper forum."