CONCORD — The debate over a new law that requires New Hampshire utilities to purchase power from wood-burning power plants at higher than market prices is now headed to the Federal Energy Regulatory Commission.
The New England Ratepayers Association on Nov. 2 filed a petition with FERC challenging the legality of the biomass subsidy bill (SB365) that became law on a veto override in September.
The petition claims that the requirement for utilities to buy power from wood-burning plants at above market prices is a violation of federal law that gives FERC sole authority to set wholesale prices for electricity.
The state’s independent consumer advocate on utility issues says the petition for a declaratory order on SB 365 “raises some very significant issues.”
“We have filed to intervene in the case and are evaluating what position we will take on behalf of residential utility customers,” says attorney Don Kreis. “The Federal Power Act reserves to federal regulators — and thus not the states — the right to determine what rates for wholesale electricity are just and reasonable. Sales of electricity by New Hampshire’s biomass and trash burning plants definitely qualify as wholesale electricity.”
SB 365 was one of the most controversial bills in the last legislative session. Supporters argued that, for a small increase in their electric bills, Granite State ratepayers could ensure that six wood-burning power plants and a trash-to-energy plant in Concord could remain in business, sustain about 1,000 jobs and ensure that forest land owners had a market for the byproducts of their harvest.
The wholesale price of electricity on the open market is not high enough to keep the wood-burning plants in business.
Gov. Chris Sununu vetoed the bill, arguing that it would increase electricity rates which are already among the highest in the nation. The legislature, swayed by the biomass and forestry industries and their employees, overturned that veto.
“The New England Ratepayers Association has consistently argued that SB 365 was bad policy and was detrimental to electricity end users in New Hampshire,” said Marc Brown, NERA president. “When the state is facing some of the highest electricity costs in the country, why would the New Hampshire legislature overreach its authority to charge ratepayers another $20 million to $30 million a year in excess and unnecessary charges? This petition seeks to remedy what we believe is bad legislation in violation of federal law.”
The petition to FERC claims that “precedent from the Supreme Court and this Commission make clear that whatever the states may do to encourage the use of renewable or fuel-diverse generation, they may not advance those objectives by setting the price for wholesale sales of electricity.”
The NERA had to pay a $27,130 filing fee in addition to its attorney fees.
“I suspect the folks who are raising this objection now thought the veto would be upheld,” said state Sen. Jeb Bradley, R-Wolfeboro, who shepherded SB 365 through the Legislature and led the fight to override Sununu’s veto.
“Who is paying this $27,000?” he said. “I find it extraordinary that anyone would want to throw almost 1,000 out of work in New Hampshire. I am very troubled by that.”
Bradley said the bill was structured to avoid violating any FERC rules, according to attorneys who testified on its behalf.
Funding source unknown
Brown has over the years declined to reveal the organizations or individuals funding NERA or paying its legal bills.
“We believe the focus should be on the policy not the composition of our membership,” he said. “Senator Bradley is trying to divert from what the real issue is – the policy. Our membership pays the $27,000.”
The six wood-burning power plants are located in parts of the state served by Eversource, which now faces the requirement to purchase their power.
The law firm representing the ratepayers association in the FERC petition, Steptoe and Johnson of Washington, D.C., is the same law firm that has represented Eversource in rate-related cases.
“It’s factually correct that Eversource has been represented by Steptoe and Johnson,” says Brown. “But they are highly regarded in the energy industry as a whole.”
“We have not made any contributions to NERA,” said Eversource spokesman Kaitlyn Woods. “It’s not surprising that NERA has selected Steptoe to bring its petition to the FERC as Steptoe is a nationally recognized legal firm that specializes in representing clients bringing regulatory issues before the U.S. government.”
“Senate Bill 365 was enacted by the New Hampshire Legislature, and as a regulated utility we will comply with whatever determination the FERC and the NH Public Utilities Commission makes in this case,” she said.
The petition asks for a declaratory order that SB 365 is preempted by federal law on or before Feb. 1. That’s when electricity customers in the Eversource franchise area, more than 70 percent of the state, would begin paying the higher rates.
“NERA has raised some arguments that FERC and ultimately perhaps the federal courts will have to take very seriously,” said Kreis.