With electric rates headed up for the winter, more than a few people are admiring the perennially high but stable rates of PSNH, New Hampshire’s largest utility and the owner of the state’s two coal-fired power plants. But what’s behind PSNH’s rate’s new luster—the first time in the state’s decade-plus experience with a restructured electric market that PSNH’s rate is appreciably lower than other utilities?
Just like they did last winter, PSNH and its parent company Northeast Utilities are touting PSNH’s ownership of coal plants as a “hedge” against the natural gas-driven volatility in the overall market for electric power. In fact, they’ve been repeating similar things for years, and this winter’s rates might seem like vindication. That’s probably why it’s popping up as fact in letters to the editor and in news stories, to the extent that some are second-guessing the state’s ongoing review of whether PSNH should own its power plants.
Franklin Pierce University Professor Michael Mooiman, the author of an assiduously even-handed and deeply researched blog on New Hampshire energy issues, put that idea to the test. He burrowed into PSNH’s most recent regulatory filing to analyze the costs of PSNH generation. And he reached a conclusion directly at odds with the PSNH talking point:
PSNH rates are low this winter but this is not a consequence of owning their generating assets. Instead, it is a result of their low cost purchases through a portfolio of long-term power purchase agreements and wholesale market purchases.
Professor Mooiman pegs the all-in cost of PSNH generation at a year-round 13.2 cents per kilowatt-hour. Even with this winter’s dramatic price spikes, the year-round average retail rates for the state’s and region’s other utilities are much less than this, and competitive suppliers are offering year-long fixed rates well below that figure. Compared with the contracts available for new wind power or energy efficiency, PSNH plants are much more costly. (If the Merrimack Station scrubber is fully added to rates, PSNH’s generation will only look worse.) In other words, PSNH customers could replace all the power from its power plants with other resources available in the market, and its customers would pay lower rates than they are now. So PSNH’s talking point about the “value” of its coal plants in keeping PSNH rates “low”? It’s just not true.
You can read Professor Mooiman’s full analysis here.
If you’re looking for the straight story on what’s happening with winter price spikes, be sure to read my colleague Shanna Cleveland’s post on the 3 things no one is telling you about rising energy costs. And, if you’re looking for ways to save money on your energy bills this winter, look no further than Shanna’s video series demonstrating low-cost ways to save energy at home. You also can learn more about competitive supply options from EmpowerNH.