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Garry Rayno's State House Dome: PSNH says customers owe $57m more

State House Bureau

November 30. 2013 11:06PM

EVERY YEAR, Public Service of New Hampshire gets to "true-up" its energy and stranded costs.

Some years, the utility credits customers for overcharging them in the previous year by lowering rates. But most years, rates increase because Public Service did not charge customers enough to cover expenses.

In a case before the Public Utilities Commission, Public Service says it is due an additional $57.2 million from customers to meet expenses incurred in 2012.

Some of the items on the list include a revenue shortfall of $11.7 million created by power customers buying their electricity from alternative suppliers. The company had counted on the revenue to break even.

The company also claims it cost $8.1 million more than budgeted to buy power on the open market.

However, the state consumer advocate is contesting about $21 million of the charges Public Service wants customers to pay.

Public Service's parent company, Northeast Utilities, recently merged with NSTAR. In the company's filing, it seeks to recover $900,000 from customers for affiliate costs assigned to Public Service because of the merger.

Consumer Advocate Susan Chamberlin said the problem is the company did not file an affiliate agreement, so by law the PUC cannot authorize the charge without a contract.

"We don't have it. It may be somewhere, but we haven't found it," she said, noting that the way in which NU allocates the charges is up to the company, but there has to be an affiliate agreement.

Another concern is the rate of return Public Service wants to collect from customers for its fossil fuel generating plants. The company does not operate the plants at 100 percent of capacity and should not be collecting 100 percent rate of return on the plants, Chamberlin contends. One plant, Newington Station, hardly operates at all, she said.

At issue is about $18.4 million Public Service wants to collect.

Chamberlin cited the "use and useful" provision, which says utilities cannot collect on their assets unless they are used and useful.

Because the low price of natural gas has driven down the cost of generating electricity, Public Service's coal- and oil-burning plants cannot meet the price and are not called on to produce electricity except in peak-demand situations.

"The company has the ability to sell or retire the plants," Chamberlin said, "but has no reason to do so as long as its shareholders are getting their full return on investment if they run or not."

Another issue raised by Chamberlin's office is the sale of fuel oil the company stockpiled at Newington Station from 2009 until it was sold in 2012. The company purchased the oil for $7.7 million and adds $2.7 million for its rate of return for a total cost of $10.4 million. When it was sold, the company received $8.4 million, and it seeks to recover $2 million from customers for the difference.

"We don't understand the decision," Chamberlin said, and can only guess at what the reason would be because there is no economic analysis provided.

"We have questions as to whether the sale was in residential ratepayers' best interest," Chamberlin said.

Under winter reliability rules from the independent system operator ISO New England, companies were asked to keep oil in reserve in case of extreme weather. With the region's heavy reliance on natural gas to produce electricity, pipeline capacity could be exceeded in very cold weather, and natural gas-powered plants are the first to go off line so residential customers have the gas they need to heat their homes.

A public hearing on the merits of Public Service's request is scheduled for Jan. 23.

Public Service declined to respond to the Office of Consumer Advocate's concerns.

"We are actually due to provide discovery questions relative to the OCA testimony (Wednesday)," said Public Service spokesman Martin Murray. "Technical hearings will be in December. Until we have a chance to learn more through the discovery process, we do not have any comment at this time."

The true-up is one of several cases pending before the PUC that will determine what Public Service customers will pay per kilowatt hour next year. Estimates are it will be about 2.2 percent higher than current rates.

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JUVENILE NO LONGER: During former Gov. Steve Merrill's administration, there were several high-profile murders committed by people younger than 18.

At the same time, several juveniles were arrested bringing large quantities of drugs into the state. Drug dealers used juveniles as mules because they would only spend a short time in detention and then be set free when they turned 18.

Massachusetts and most other surrounding states had lowered the age to 17 to try someone as an adult.

For all those reasons, Merrill pushed and lawmakers agreed to lower New Hampshire's age to 17, as well.

Since then, there have been several attempts to return the age of majority for crimes to 18, but all have failed - until this year.

House Bill 525 was retained by the House Children and Family Law Committee, and last week the committee voted, 15-0, that it ought to pass.

At the time, the bill's prime sponsor, Rep. David Bickford, R-New Durham, and others said including 17-year-olds in the adult criminal system does more harm than good, making them better criminals.

Others argued judges are often reluctant to sentence 17-year-olds to prison, so they never have to pay the price for the crimes they do commit.

But others say the law works just fine, including law enforcement. Others note a large number of 17-year-olds will overwhelm the juvenile justice system and increase state costs.

With New Hampshire now only one of nine states with the 17-year-old age of majority, chances are the House will look favorably on the change.

The question is: Will the Senate?

The bill will be heard during one of the first three days of the 2014 session.

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MEDICAID FALLOUT: A poll done by New England College indicates New Hampshire voters think the state should have expanded Medicaid by a 52-32 margin, with independent or undeclared voters favoring expansion by a 51-23 margin.

The poll contacted 675 state residents, broken down by party affiliation.

No surprise that 84 percent of Democrats polled favor expansion, or that 52 percent of Republicans oppose it.

Most of the votes in the House and Senate last week were down party lines.

Democrats have also seized on the popularity of Medicaid expansion, and the New Hampshire Senate Democratic Caucus sent out an email seeking to drum up business for a Christmas party/fundraiser.

"Over the last week, Senate Republicans have tried to mislead you about wanting to expand Medicaid for 50,000 low-income Granite Staters," wrote Sen. Donna Soucy, D-Manchester. "They had the audacity to tell us they want a compromise on Medicaid expansion, but their actions spoke louder than words. They defeated a bipartisan proposal passed with bipartisan support by the House. They killed a Senate bill proposed by Democrats. And they even stopped a bill written by the Republican Senate president."

She goes on to say it's now more important than ever for Democrats to take control of the Senate.

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