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Michael Vose: Energy bill vetoes protect NH ratepayers

August 26. 2018 8:18PM

GOV. CHRIS SUNUNU did our state a great service with his recent veto of two costly energy bills, SB 365 and SB 446. His action put New Hampshire on a path to grow our manufacturing economy, while protecting low and fixed income residents from ever-increasing electricity costs. These vetoes will also serve to open a dialog about how best to support our forest products industry without putting an unnecessary burden on our state’s electricity ratepayers.

Sununu’s vetoes and the tens of millions of dollars they will save ratepayers are a huge win for our state. Those millions of dollars would have gone to prop up six highly inefficient and very expensive to operate wood burning (biomass) plants and one waste-to-energy plant. Those plants have cost ratepayers billions of dollars in above-market costs over the past 40 years. That money would also dramatically increase the size of hydro and solar generators who could participate in net metering programs.

The proponents of these bills understandably want the legislation to pass. While their arguments may be in their best interest, they do not serve the interests of all the citizens of our state. Why?

Overturning the veto of SB 365 will raise electric rates by $15 million to $20 million each year for at least three years, totaling $45 million to $60 million in additional ratepayer costs. Similarly, rejecting the veto of SB 446 will add another $5 million to $10 million to our electric bills.

Business ratepayers use 60 percent of the electricity in the state, so they will shoulder much of burden of these increased costs. Higher electric bills hurt business competitiveness and discourage expansion. Worse yet, they may lead to an out-of-state exodus of good-paying jobs.

Sununu’s visit to Epping in early August to sign several energy bills included an energy roundtable with numerous business executives and legislators. Ron Cohen, the CEO of host Sig Sauer, talked at length about the need to keep electricity costs under control. He stated that his company, with facilities in Arkansas as well as New Hampshire, could save $1.2 million a year by moving its 1,500 employees to Arkansas.

That’s the risk inherent in overturning the governor’s vetoes.

The arguments in favor of these bills do not stand up to close scrutiny. One claim asserts that the veto will cause New Hampshire to incur $17 million in new forward capacity payments. That’s not how the capacity market works. Capacity payments go to generators, and ratepayers will still make the same payments as before, just to other generators.

Another alarming claim states that without SB 365, all the biomass plants will close. But of the six affected biomass plants, one closed in April 2017, before SB 365 was introduced. Two others have announced a curtailment of operations (but have not said categorically that they will close, since they can make money at times of peak demand in winter and summer) leaving three plants fully operational. Those plants will benefit from a decrease in the number of available Class III renewable energy certificates (RECs,) which will drive up the price of those RECs from $22 to as much as $55, all as a result of last year’s SB 129. Since the biomass plants need to get $80 per megawatt for their power, a $55 REC price added to the ISO-NE spot price of $32.70 (on Aug. 20 at 5:30 p.m.) puts them in the black. Plants making money will not close.

The future of our forests is not in jeopardy. Our state has more than 115 facilities, like school and county buildings that burn wood chips for heat. Thousands of residents heat their homes with wood. Our forests will continue to provide this sustainable fuel, and jobs for those who love to work in the woods.

The Legislature anticipated trouble in the biomass industry back in 2017. It required the Governor’s Office of Strategic Initiatives to come up with a plan to deal with disruptions in the biomass industry by Nov. 1.

The vetoes of SB 365 and SB 446 will preserve our state’s economic advantage over our neighbors. By keeping electricity costs down, they will ensure the future of new industries, like the Advanced Regenerative Manufacturing Industry that may eventually bring thousands of jobs to New Hampshire. Overturning these vetoes will be a step backward economically for our state.

As the state’s consumer advocate stated recently, bills like SB 365 are “a 1978 solution to a 2018 problem.” Fortunately, Gov. Sununu has our state’s bright future in mind.

Rep. Michael Vose (R-Epping) serves on the House Science, Technology, and Energy Committee.

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