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Public Service seeks rate hike; blames energy costs

New Hampshire Union Leader

December 16. 2013 8:38PM

If one of your New Year's resolutions is to pay less for electricity, take a tip from the 1960 hit by The Miracles, "You'd Better Shop Around."

Public Service of New Hampshire announced on Friday that it would ask regulators to approve an energy charge of 9.23 cents per kilowatt hour, effective Jan. 1, an increase of .61 cents per kwh from the current rate of 8.62 cents.

That means the average residential customer, using 500 kilowatt hours a month, would see the energy service portion of his or her bill go from $43.10 to $46.15 per month. Other charges, such as transmission fees, are not expected to change significantly in 2014.

The state's largest regulated utility had predicted in October that it would need an energy supply charge of 8.99 cents for 2014. In the months since, fluctuations on the wholesale energy market and uncertainty about future prices prompted the utility to seek the higher rate in its year-end filing.

The Public Utilities Commission will hold hearings this week to rule on the PSNH request.

"The updated rate appears to be in line with what is occurring with the region's utilities, largely as a result of higher energy market prices," said PSNH spokesperson Mike Skelton.

The regulated utilities in the state — PSNH, Unitil and Liberty — are paid by consumers to deliver the electricity no matter who provides it, although each offers energy supply on a "default" basis. If consumers don't select an unregulated competitor, they "default" to the regulated supplier.

With competitors offering 12-month rates as low as 7.70 cents per kwh, the migration of customers from PSNH to third-party suppliers is likely to continue.

The other two regulated utilities previously offered default rates that were equal to or lower than competitive rates, but they, too, are now likely to lose energy supply customers due to rate hikes approved late this year.

Liberty Utilities, which serves 6 percent of the state's customers in western and southern areas, is charging 8.89 cents per kwh until April 30; while Unitil, serving 11 percent of the state in the Seacoast and Concord area, is charging 9.55 cents through May 31.

The exception to the trend is the New Hampshire Electric Co-op. Its rates are set by a board of directors and not regulated by the PUC. The co-op was charging 7.11 cents per kwh and lowered the rate to 6.77 as of Nov. 1 for its 60,000 customers in the central part of the state.

Volatile natural gas price

The state's two largest competitive suppliers are offering lower rates than all three regulated utilities. ENH Power is offering a "Long Saver" rate fixed at 8.70 cents per kwh for 24 months. North American Power is offering a 7.99 cent six-month fixed rate, and a 7.69 cent 12-month fixed rate.

One of the earliest entrants into the competitive market for residential customers, Resident Power, is offering 7.77 cents for 12 months for customers who sign up before Jan. 1. A newcomer to the residential market, Neighborhood Energy, is offering 7.92 cents guaranteed for six months.

The website,, reports its lowest rate at 7.70 cents, offered by NextEra Energy, is guaranteed for 12 months.

PSNH is the only regulated utility in the state that also operates power plants, the cost of which is built into the PSNH energy charge. About one penny of the PSNH energy supply charge is associated with cost-recovery on more than $422 million spent on mercury scrubbers at the Merrimack Station coal-fired plant in Bow.

"We are essentially very competitive with the energy market," said PSNH spokesman Martin Murray. "We do have the question of the mandated scrubber and how to fairly recover those costs. Absent the scrubber, our rate would be 8.25 cents."

Susan Chamberlin, the consumer advocate who represents ratepayers before the PUC, said the new PSNH energy service rate highlights the problem with placing PSNH generation costs on the default customers, most of whom are residential customers.

"As the energy service rate increases, more customers leave, increasing the rate for the remaining customers," she said. The Office of Consumer Advocate has argued that the PUC should re-examine how the energy service rates are determined.

Wholesale prices for natural gas delivered into New England are volatile and likely to rise over the winter, due largely to a lack of pipeline capacity into the region.

Speaking at the N.H. Business and Industry Association Energy Seminar last week in Manchester, Jim Shuckerow, director of energy supply for Northeast Utilities, predicted there would be no new "iron in the ground" into New England until 2020, with natural gas prices expected to continue to rise from their 2012-2013 low-water mark between now and then."Perhaps 2013 will be recalled as the good old days of power-supply pricing," he said.

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