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House bill might help lower PSNH electric rates, supporters say

State House Bureau

March 25. 2014 7:16PM

CONCORD — The House wants to know if Public Service of New Hampshire should be forced to sell its fossil fuel generating facilities in order to reduce rates for its electric customers.

House Bill 1602 is sponsored by the chair of the House Science, Technology and Energy Committee, David Borden, D-New Castle, and directs the Public Utilities Commission to determine if selling the plants would benefit Public Service ratepayers economically.

Supporters said the bill would have the PUC do due diligence to determine if would be in the state’s best interest to sell the fossil fuel plants.

However, one opponent said the bill would be a radical change in regulating public utilities.

Rep. David Hess, R-Hooksett, said instead of asset owner Public Service having the right to sell its plants, the bill would give the PUC the power to order the sales.

“The word regulate is entirely different from word dictate,” Hess said.

He also opposed a change in state law that would replace “public interest” with “economic interest,” which he said means cheap instead of ensuring an adequate power supply for Public Service’s customers.

But Border argued state regulators currently have the power to order the sale of the assets.

He said the Electric Utility Restructuring Oversight Commission had two choices, mandate the divestiture legislatively or ask the PUC to perform due diligence and make a determination. “We choose the later course,” he said, noting the bill is backed by both PSNH and the Business and Industry Association.

“Under the guidance of the PUC we can follow a thorough, methodical course that I hope is guided by negotiations not litigation,” Borden said. “I hope all parties will collaborate to seek common ground for the good of all the people of our state.”

The House voted down an attempt to table the bill, before approving HB 1602 on a 185-134 vote.

Under the bill, the PUC would have to file a report by Dec. 31 with its determination.

On Tuesday, Public Service of New Hampshire announced its power generation facilities saved ratepayers $115 million by using its electric generating facilities rather purchasing energy on the wholesale market. The company said escalating natural gas prices created significant volatility in the price of electricity this winter.

According to company press release, all of PSNH’s hydro-electric, biomass, coal and oil-fueled generation facilities were frequently producing electricity because they were more economic than alternatives.

Last year, the PUC staff told lawmakers selling the plants would reduce Public Service customers’ costs. The report was completed before natural gas prices spiked this winter driving up the cost of electricity.

The Electric Utility Restructuring Oversight Committee spent the summer and fall exploring divestiture and the state’s high electric rates, but declined to force Public Service to sell the plants, including Merrimack Station in Bow where the company recently invested $422 million in an air emissions scrubber.

Customers are currently paying some of the cost of the scrubber, but the assessment is expected to increase in the future.

The PUC is in the process of determining how much of the $422 million Public Service customers should pay. Regulators are not expected to reach a conclusion until late this year or the beginning of the next year.

Significant change

The House also approved House Bill 1385, which defines when new approval is needed for expanding an existing energy production facility and forbids state regulators from including more than $1 million in cost overruns in electric rates unless there is “substantial evidence of unforeseeable factors.”

A new approval would be needed is an expansion exceeds 20 percent of the assessed value of the facility.

The Site Evaluation Committee did not require a full blown investigation into the $422 million scrubber at Merrimack Station after it determined the project would not be a substantial change in the plant’s production.

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