Who Will Clean Up PSNH’s Mess?

Feb 1, 2013 by  | Bio |  2 Comment »

The massive drag on New Hampshire’s economy caused by PSNH’s continued operation of the uneconomic and obsolete Merrimack Station and Schiller Station coal-fired units—extracting hundreds of millions per year in above market costs for its shareholders—is spiraling out of control, and several recent developments at the NH Public Utilities Commission raise troubling questions about what the agency empowered to protect ratepayers is doing about PSNH’s problems.

While competition among energy suppliers in New England is fostering efficiency, benefitting the environment and saving ratepayers money, PSNH’s energy service business, for which it collects its cost of service and a handsome profit, is increasingly looking like a dinosaur ready for extinction. Thousands of NH ratepayers are taking advantage of lower cost, more efficient electricity suppliers, but those remaining with PSNH are being dragged down into its death spiral.

One recent indicator is PSNH’s skyrocketing energy service rate. In early December, PSNH requested a 34% energy service rate increase (to 9.54 cents/kwh, equating to hundreds of dollars extra per household per year) beginning in 2013. At the end of December, the PUC approved the rate increase. CLF is challenging that increase at the PUC on the grounds that, even aside from the fact that it entirely consists of above market costs, NH law prevents the PUC from approving a utility’s requested rate increases when the utility has not submitted required planning documents demonstrating that it has a sound plan for serving its customers at the lowest cost. PSNH failed to submit long term least cost planning documents due last September; until they do so, the PUC is not authorized to approve their rate increases.

Fundamentally, the job of a utility commission dealing with a regulated utility like PSNH is to ensure that prices mimic the results of market competition while ensuring the best service for ratepayers. Thus far, the PUC has shielded PSNH from the consequences of its poor decisions, lack of meaningful planning, and insistence on retaining antiquated power plants that sit idly due to their high costs. It also is once again delaying the release of economic and environmental information that PSNH used when deciding to build the $422 million scrubber project at Merrimack Station. And days ago the PUC approved PSNH’s 2010 plan for its energy supply resources – a plan that utterly ignored lower natural gas market forecasts and impending environmental regulations when planning its future operations.  CLF is acting to protect ratepayers from PSNH’s dying business model; the extent to which the PUC is doing so is less than clear.

The PUC is engaged in dockets investigating both the costs of the scrubber project and PSNH’s increasing energy service costs. It remains to be seen whether these investigations will have any impact on the expensive mess PSNH has yoked to NH ratepayers, and whether PSNH will continue even farther down the path of  eroding New Hampshire’s advantage as a low cost state to grow a business and a family.

 

2 Responses to “Who Will Clean Up PSNH’s Mess?”

  1. David Weber

    I support CLF’s policy orientation and overall culture but occasionally am disappointed in CLF messaging. To say that PSNH is undermining NH’s advantage as a low-cost state in which to do business and raise a family is to implicitly endorse right-wing and therefore anti-environmental talking points. NH is not a low-cost state; it is to some extent a low-tax state, which is not the same thing. It continues to rationalize a tax system that is regressive, inadequate, and increasingly disastrous. It continues to prioritize the avoidance of income taxes or sales taxes over the provision of basic services. It is 50th in support for public higher education; its towns sue the DES and EPA because they receive no help from the state in funding modernization of wastewater treatment plants. Its courts are hobbled. The schools in its low-property-tax-base are underfunded. Its safety net is disintegrating. Its poor pay four times as much in taxes (as a percentage of income) as the rich do. It is heading for more and more pain. It is not helpful to buy into the mythology of Yankee frugality. NH is not frugal; it is penny-wise and pound-foolish and will be more so if it expands gambling and privatizes its prisons. See the web sites of NH Fiscal Policy Institute and Granite State Priorities. (I’m president of the GSP board.)

  2. Caitlin Peale

    Thanks for the comment, David. We take the point and appreciate your perspective, and agree that the state has often been short-sighted in failing to invest in public goods – from education and social services to needed infrastructure like water and wastewater facilities and transportation. We are grateful for your work to change this lack of vision. In the same vein of fighting for fairness and a realignment of priorities, CLF’s PSNH advocacy is aimed at ending the profoundly unjust subsidies to coal generation created by PSNH’s rate structure. These subsidies perpetuate the quiet but devastating damage to public health – especially to disadvantaged communities like low-income neighborhoods in Manchester – that is caused by PSNH’s power plants. Meanwhile, as in other public arenas, our neighbors have important lessons for us – states like Vermont and Massachusetts are earning the win-win of a cleaner environment and lower energy costs by making aggressive investments in energy efficiency and renewable energy.