Vermont Yankee – Worth More Dead than Alive

Jan 2, 2013 by  | Bio |  Leave a Comment

Photo courtesy of Andy Hares @ flickr.com

The financial world is waking up to what a drag Vermont Yankee really is. The tired, old and leaking nuclear plant in Vermont is not carrying its weight. Financial analysts report that Vermont Yankee is economically vulnerable and a retirement announcement would boost stock prices for its parent, Entergy.

You can read the UBS Investment Research report “Re-assessing Cash Flows from the Nukes” here. It states:

 

“Notably, we believe both its NY Fitzpatrick and Vermont Yankee plants are at risk of retirement given their small size; while potentially negative to sentiment, an announcement to retire the units would likely drive positive FCF revisions.”

Clearly it is past time to close this plant.

Analysts today dropped the projected price target for Entergy’s stock. They see high debt and little cash coming in. Not good news for any investment.

It is good the financial world is waking up to what Vermonters have known for years. Vermont Yankee is not a good deal. It hasn’t been for years. It is expensive and financially risky. Conservation Law Foundation submitted testimony to the Public Service Board on the lousy economics of allowing Vermont Yankee to continue to operate. It does not have enough money for decommissioning, low energy prices mean it is not making money and any problems would saddle Vermont with big problems. You can read CLF’s testimony here.

These are not problems we need. Nuclear power was once touted as too cheap to meter. That has never been true. Now it is too expensive to even keep operating. Thank goodness financial markets are waking up to this fact.

This Holiday, New Hampshire Will Buy a $128 Million Lump of Coal

Dec 18, 2012 by  | Bio |  Leave a Comment

photo credit: TimothyJ/flickr

Today, the New Hampshire Public Utilities Commission takes up PSNH’s request to charge its customers 9.54 cents per kilowatt hour for electric energy service in 2013. In a op-ed published this week, long-time CLF friends Ken Colburn and Rick Russman explain why New Hampshire’s crisis of escalating PSNH rates – and how New Hampshire policymakers resolve it – may be the defining economic issue for New Hampshire’s new class of leaders next year.

With PSNH’s rates to be by far the highest in the state and almost three cents higher than those of its sister utility NSTAR in Massachusetts, New Hampshire is dealing with an untenable situation: small businesses and residents are subsidizing PSNH’s above-market costs to operate and maintain dirty, inefficient, and uneconomic coal plants, to the tune of $128 million.* The average residential customer will pay $212 extra in 2013 for the dirtiest energy in the region.

To put $128 million in perspective, in 2011 New Hampshire invested less than a seventh of that amount, a mere $17.6 million, in electric energy efficiency programs – an energy solution that is lowering rates, reducing pollution, avoiding expensive new transmission projects, and creating jobs.

New Hampshire energy users are in effect giving this money away to keep alive New Hampshire’s biggest sources of toxic and greenhouse gas pollution (even though PSNH projects they will only operate at around 25% of their capacity in 2013) and to pay dividends to PSNH’s owner, New England mega-utility Northeast Utilities. And the situation will only get worse with time as PSNH customers join the thousands who have already picked an alternative energy supplier, leaving a shrinking base of customers to bear the heavy costs of PSNH’s coal fleet. (If you’re still a PSNH customer, you should definitely make the switch before the new year begins and PSNH’s new rates kick in.)

The blame for this economic and environmental travesty lies squarely with PSNH’s self-serving failure to plan for the future.

Yet PSNH is already trying to make the case that it needs a “fix” from the New Hampshire legislature to protect its coal plants, its 10% profit margin guarantee, and its protection from cleaner, cheaper competition. What’s even more bizarre – and indicative of its refusal to approach these issues honestly – is that PSNH is pinning its skyrocketing rates on the very factors that have reduced electric rates for everyone else in New England – namely, investments in energy efficiency and environmental protection and the increasing use of natural gas and competitive renewable energy sources. PSNH’s foolhardy but lucrative investments in its outdated power plants – for which it fought tooth and nail over the last decade – are the culprit, not environmental requirements that apply to all power plants in New Hampshire and across the region.

Please take a moment to read the op-ed and share widely with friends, neighbors, and especially your new representatives in Concord. For the good of the state’s economic and environmental health, they need to hear from you!

*  The math: PSNH customers will pay a 2.85 cent “premium” for every kilowatt hour over and above PSNH affiliate NSTAR’s market-based rates, and PSNH is projecting that it will sell more than 4 billion kilowatt hours of power to its remaining customers in 2013. The average household in New Hampshire uses 7,428 kilowatt hours per year.

PSNH's Merrimack Station

Distributed Generation Standard Contracts Act: A Success in Three Parts

Dec 13, 2012 by  | Bio |  Leave a Comment

On June 26, 2011, Governor Chafee signed into law the “Distributed Generation Standard Contracts Act.”  The bill had passed both houses of the General Assembly unanimously. The “distributed generation” in the title of the law refers to small, local renewable energy projects.

The new law was designed to do three things: (1) increase the number of small renewable energy projects that are built in Rhode Island; by (2) making it easier, quicker, and cheaper for developers of these projects to get contracts to sell their electricity to Rhode Island’s dominant utility, National Grid; and (3) get those renewable energy projects distributed into more of Rhode Island’s cities and towns.

Not every law passed by the General Assembly works out the way it was meant to, but the Distributed Generation Standard Contracts Act has been phenomenally successful in accomplishing each of its three goals.

Previous renewable energy laws in Rhode Island have worked the way they were intended: to get National Grid to buy more and more of its electricity each year from clean, renewable energy sources. But Rhode Island’s previous renewable energy laws also had a significant flaw: they worked very well for big projects, like Deepwater Wind’s proposed offshore wind farm, but they worked less well for small projects (like a town that wants to set up a single wind turbine at its town hall, as Portsmouth did). That is because under the prior laws, developers would have to hire a small army of lawyers to negotiate an excruciatingly long, detailed contract with Grid, setting forth everything from the price of the electricity to delivery schedule. (For example, the contract that Deepwater filed with the Public Utilities Commission on December 10, 2009 ran 62 pages in length!)  Hiring lawyers to negotiate a 62-page contract was just too time-consuming and expensive for a developer who had a small project.

The new law fixed that problem. As the name of the law suggests, it provided for a “standard contract” for developers of small projects. The standard contract was short, written in plain English, and easy to understand. In addition, the law provided for a standard price to be paid, and established a mechanism for setting a fair price for each different type of project – wind, solar, and so forth. These prices were designed to be high enough to get projects actually built, but low enough to protect electricity rate-payers.

And that is exactly how the new law has worked. In the 15 months since the bill was signed into law, National Grid has held three separate sign-up periods. To date, 18 separate projects have been signed up.  Each of these 18 separate projects will be built right here in Rhode Island. Thus, Rhode Islanders will directly enjoy the environmental and economic-development benefits of these projects. The main purpose of the new law, to get more local renewable energy projects built, has been accomplished – in spades.

The developer of each of these 18 projects got a simple, standard contract to sign, and will receive a set price for the electricity produced.  Thus, another one of the law’s purposes has been accomplished.

The projects themselves are located in Providence, East Providence, Portsmouth, Lincoln, Westerly, Bristol, West Greenwich, East Greenwich, Hopkinton, Middletown, Cumberland, North Kingstown, North Smithfield, and West Warwick.  This geographical distribution of new renewable energy projects was a third purpose of the law.

Rhode Island’s new Distributed Generation Standard Contracts Act has been so successful that it is becoming a model for the rest of the country. Renewable energy advocates in New York and Iowa are hoping to replicate the Rhode Island law in their states. The California Public Utilities Commission has circulated the Rhode Island law to its in-house legal staff. A group of Oregon legislators is poised to introduce a bill in the coming legislative session modeled after the successful Rhode Island law.

The Distributed Generation Standard Contracts Act is a classic win-win. It addresses the problem of climate change by reducing the carbon emissions that cause climate change. And it helps the Rhode Island economy by facilitating local development of renewable energy projects.

This is a law that Rhode Islanders can be proud of. Its enactment reflects well on our legislators (who passed it unanimously) and on Governor Chafee (who signed it into law). The law has been administered carefully and diligently by our Office of Energy Resources. And National Grid, which receives an economic incentive when projects start producing power, has worked conscientiously with developers to help developers succeed.

Bright Energy Forecast: Saving Electricity, Reducing Pollution, Saving Money

Dec 12, 2012 by  | Bio |  Leave a Comment

For decades Conservation Law Foundation has pushed for more energy efficiency, which continues to be the lowest cost, cleanest and most reliable way to meet power needs. More energy efficiency means fewer dirty coal plants, fewer monstrous transmission lines, and more money in our pockets. We all win.

The operators of the New England Power grid, the ISO-New England, released their energy-efficiency forecast. The news is pretty remarkable.  It shows the real effect of our commitment to energy efficiency. You can read the report here.

In states like Vermont, efficiency will more than offset expected growth and allow older and dirtier supplies to step aside.

 

By comparison New Hampshire, which has not invested as much in efficiency, continues to grow its power use and continues to pay too much for ever more polluting power supplies.

In the words of the ISO New England, the energy efficiency forecast shows the states’ investment in energy efficiency is having a significant impact on electric energy consumption and peak demand. About $260 million in transmission expenses have already been deferred for New England customers. (p.23).

That’s $260 million in our pockets.

What’s also important is that these are very conservative numbers: if states like Massachusetts and Rhode Island meet their goals for helping customers to save energy and money the reductions in energy use will exceed what the ISO is presenting.

This report shows that investments in electricity efficiency are really paying off – we need to apply the lessons from that sector to other areas, like ensuring we use natural gas and oil very efficiently as well, saving customers money while reducing pollution and fuel imports.

More savings are available. Some states are not making as large investments in energy efficiency as others. New Hampshire for example is causing its citizens to experience unnecessarily high costs.

It is good to see the bright payoff from what are only the beginnings of our efficiency investments.

 

 

 

 

The Pursuit of Clean, Renewable Energy: The “North Atlantic” Right Way

Dec 12, 2012 by  | Bio |  5 Comment »

Yesterday, the North Atlantic right whale was only an historical symbol of one consequence associated with the relentless and unsustainable pursuit of energy.  Today, it is also a new symbol of renewable energy done the right way.  The agreement CLF is announcing today reflects support for the pursuit of renewable energy and also demonstrates that real leadership to change how we pursue energy can come from industry itself.

The pursuit of cheap energy from the 17th century forward hasn’t exactly been what one would call sustainable. From the time the first right whale was killed for its oil to today’s efforts to take and refine oil from the Canadian tar sands, our industries have drawn down limited resources with little regard for the environmental consequences. In fact, the right whale stands as a particularly distressing symbol of our history of exploitation.

The North Atlantic right whale was so-named because it was considered by whalers to be the “right” whale to kill. It was slow, swam close to shore, and was easy to harvest – accommodatingly floating to the surface with a head full of oil after it has been killed. Between the 17th and 19th centuries, the North Atlantic right whale, an animal that according to Herman Melville’s 1851 reflections in Moby Dick “would yield you some 500 gallons of oil or more” in just its lip and tongue, was hunted to the brink of extinction. The relentless pursuit of this limited resource in such an unsustainable way is the reason that today the North Atlantic right whale is considered critically endangered, with fewer than 500 animals remaining.

Despite the right whale’s lesson, our reliance on oil continues. According to the United States Energy Information Administration, the United States consumed a total of 6.87 billion barrels (18.83 million barrels per day) in 2011. Our reliance on exhaustible, limited fossil-fuel resources is causing climate change and setting into motion a series of unavoidable consequences, but still we drill for oil – albeit no longer in the head of a whale.

So while today’s landmark North Atlantic right whale agreement is a collection of voluntary measures designed to provide further protections for the North Atlantic right whale, primarily by reducing or avoiding sound impacts from exploratory activities that developers use to determine where to build wind farms, it is also so much more than that.

The offshore wind developers party to this agreement – Deepwater Wind, NRG Bluewater, and Energy Management, Inc. (owner of Cape Wind) – are willing to go above and beyond because they recognized that more could be done to protect North Atlantic right whales in the pursuit of energy. These developers’ willingness, and indeed enthusiasm, for protecting the whales reflects a new way of thinking – a 180-degree turnaround from the way other companies viewed energy generation over the last century and a half.  Instead of treating the natural world as an adversary to be exploited and consumed, these companies recognize that we can accommodate natural systems (like the whales’ migratory patterns and feeding grounds), that we can avoid extracting limited resources, that we don’t have to burn fuels that exacerbate climate change, and that we can still produce the energy to fuel modern society. Now that’s the right way.

Why We Need to Repair and Maximize the Efficiency of Our Existing Natural Gas System Before Looking to Expand

Dec 7, 2012 by  | Bio |  Leave a Comment

As the exuberance for “cheap, domestic” natural gas has heightened, so has pressure to build new pipelines and power plants.  Often lost in the frenzy, however, is the sobering reality that our existing natural gas infrastructure is in need of some serious care and attention.  A recent study highlighted the fact that the pipelines that deliver gas to our homes and businesses are riddled with thousands of leaks.  A large number of those leaks can be blamed on a system that still includes significant amounts of cast iron–some of which dates back to the 1830s.

Explosions in Philadelphia and Allentown, Pennsylvania in 2011 as well as a 2009 explosion in Gloucester, MA were traced to aging cast iron.  Coupled with the massive San Bruno explosion, the issue spurred the U.S. Department of Transportation to issue a “Call to Action” urging regulators and pipeline operators to accelerate the repair and replacement of high risk pipe.  Given this sense of urgency, the estimated timelines for replacement seem interminably long:

  •  81% of the remaining cast iron is buried in only 10 states:
State
Miles of
Cast/Wrought
Iron Mains (2011)
New Jersey
5,138
New York
4,541
Massachusetts
3,901
Pennsylvania
3,260
Michigan
3,153
Illinois
1,832
Connecticut
1,509
Maryland
1,422
Alabama
1,416
Missouri
1,180
  • Of these states, seven have implemented programs with deadlines for complete replacement:
  • New Jersey – 2035; New York – 2090; Pennsylvania – 2111; Michigan – 2040; Illinois – 2031; Alabama – 2040; Connecticut – 2080; Missouri – 2059.

Really? Decades to get the job done, at best?  And about a century to fully “modernize” pipes in some states? Sad, but true.

Though public safety is the primary driver behind pipe replacement and repair, whether the natural gas industry ultimately delivers on its claims for being less damaging to the climate than oil or coal depends on how well natural gas infrastructure addresses leaks.  In addition, those who are clamoring to blindly forge ahead expanding new natural gas infrastructure before we’ve fully assessed the condition of our current system would do well to remember the lessons that New England has already learned so well about the financial and environmental benefits of looking to efficiency first.  Not only is investment in new pipelines and power plants expensive, but it comes with serious and lasting environmental consequences whose costs are too often discounted or ignored.  Why not maximize opportunities for operating the existing natural gas system more efficiently first, before building (and paying for) more?

Despite the fact that we know natural gas prices are predictably volatile, several states have begun to take action to lock energy customers into long-term commitments to buy natural gas-fired power, thus locking them into paying for the fuel even when the price spikes.  For example, here in Massachusetts, one legislator has championed the idea of providing 10-20 year long term contracts for a new natural gas plant.  The problem with signing a long-term contract for electricity from gas is that while customers benefit when the cost of gas is low, they suffer when the price spikes, as it inevitably does.  That’s notably different from long-term contracts for renewable energy which typically have a guaranteed, fixed price.

Proposals for new massive interstate pipelines are in the works as well.  Spectra, a Houston-based natural gas pipeline company is proposing a $500 million expansion for Massachusetts. And all the lines on the map for proposed expansions of pipeline leading from the Marcellus Shale to the Northeast rival the Griswold Family Christmas lights display.

Before we spend billions on new infrastructure chasing the next gold rush, we must repair and rebuild our existing infrastructure and examine the tried and true tool of efficiency.   A recent study on the potential for natural gas efficiency in Massachusetts showed that efficiency could reduce winter electric demand enough to support the increased use of gas on the system without building new infrastructure:

The Benefits of Energy Efficiency

From Jonathan Peress's presentation at the Restructuring Roundtable on June 15, 2012

 

But there is a risk that regulators will not fully take these very real benefits into account as they review and approve the latest energy efficiency plans.  Indeed, traditional energy efficiency naysayers are using the low price of gas as an excuse to call for reduced investment in efficiency.

The bottom line is that natural gas does have a role in our energy future, but it  is one that must be carefully managed and minimized over time if we are to have any hope of averting climate catastrophe.  In the meantime, before we jump to expand new natural gas infrastructure, we need to look closely at what we already have in the ground and apply the lessons we’ve learned about efficiency.

 

 

 

Risky Business: Leaking Natural Gas Infrastructure and How to Fix It

Nov 28, 2012 by  | Bio |  Leave a Comment

On the day after Thanksgiving, an explosion shook the City of Springfield. A natural gas pipeline leak led to the explosion that injured eighteen people and brought down two buildings.  The details behind the cause of this explosion are still being pieced together, but  once again, public confidence has been shaken in the pipeline system that is supposed to transport natural gas safely and reliably to homes, businesses and institutions in communities throughout the nation. Today, CLF is releasing a report on the importance of addressing problems with our aging, leaky natural gas  infrastructure. (You can download a free copy of that report here, and find the press release here.)

In Massachusetts, local distribution companies operate almost 21,000 miles of pipeline—that’s almost enough pipe to encircle the earth. But people seldom give much thought to those pipes that are running beneath their homes, beneath their businesses and beneath their feet.

That has been changing since the explosions that rocked San Bruno, California in 2010 and Allentown, Pennsylvania, in 2011. Shortly afterwards, the Secretary of the Department of Transportation issued a national “Call to Action” to address pipeline safety, but there are still many hurdles to be overcome. One of the toughest obstacles to tackle is the replacement of aging, leak-prone pipelines and the swift repair of leaks on the system. Public safety is the primary driver behind the repair and replacement of aging pipes, but it is also important to recognize the added benefits of reducing greenhouse gas emissions, conserving a valuable resource, and reducing ratepayer costs.

The need for action is particularly acute in Massachusetts where over one-third of the system is considered “leak-prone”—made up of cast iron or unprotected steel pipe. According to the Pipeline and Hazardous Materials Safety Administration, 50% of the cast iron left on the United States distribution system is centered in only four states: Massachusetts, New Jersey, New York and Pennsylvania. Though Massachusetts regulators have been working to find solutions to this problem, there is more to be done.

This infographic underscores the need for additional work in Massachusetts. So significant are the leaks that the gains from efficiency programs put in place by Massachusetts regulators have been overwhelmed by the amount of gas lost through leaky pipes. The costs of those leaks are being borne not by the utilities, or by the regulators, but by consumers. Utilities pass the cost of lost gas onto ratepayers to the tune of $38.8 million a year.

“Fugitive emissions from aging gas pipelines across Massachusetts are polluting our environment – releasing more greenhouse gases than we are saving through all of our energy efficiency efforts,” said D. Michael Langford, national president of the Utility Workers Union of America. “This is problematic for the environment and the economy, but fixing this problem provides an important opportunity. Putting people to work fixing leak-prone pipelines will save Massachusetts ratepayers money by simultaneously modernizing our pipe infrastructure, improving efficiency and helping to protect the environment.”

Fortunately, there are some clear policy options that could be implemented relatively quickly to prevent this valuable resource from endangering the public and vanishing into thin air.  “The good news is that not only would these policies increase public safety and reduce greenhouse gas emissions, but they also provide an opportunity to create good, local jobs,” according to Cindy Luppi, New England Director of Clean Water Action.  As she points out, “local neighborhoods, as well as first responders, will bear the brunt of impacts if this aging system experiences an explosion.   We hope all public officials will embrace real solutions that value health and safety, ratepayer equity and climate leadership.”

As outlined in our report, Into Thin Air, CLF is advocating for five specific policies to accelerate the replacement of aging pipe and ensure that existing pipeline is properly examined and repaired:

1)    Establishing Leak Classification and Repair Timelines that provide a uniform system for classifying leaks according to level of hazard and require repair within a specified time;

2)    Limiting or Ending Cost Recovery for Lost and Unaccounted for Gas so that companies have an incentive to identify the causes of lost gas and prevent them;

3)    Expanding existing replacement programs and adding performance benchmarks;

4)    Changing Service Quality Standards to include requirements for reducing leaks on the system;

5)    Enhancing monitoring and reporting requirements to give the public and regulators more information.

Over the coming months, we’ll be working with our allies at Clean Water Action and the BlueGreen Alliance to raise public awareness about the need to tackle this issue. We’ll also work with communities to make sure they know how to identify and report gas leaks and talk with them about the benefits of policies that make for a safer, cleaner natural gas system. If you’re interested in joining us, please contact me at scleveland@clf.org.

Doing The Math, Boston style

Nov 16, 2012 by  | Bio |  Leave a Comment

The unique combination of lecture, rally, music show and secular revival known as the 350.org Do The Math tour came to Boston last night. As has been documented in coverage of earlier stops in the tour this is a very special event that brings together vibrant music, powerful information and an energizing call to action.

CLF proudly played a role in helping this worthy effort gain access to the historic Orpheum Theater in downtown Boston and raising awareness about the event — the seventh straight sold out show in the tour.

CLF President John Kassel took the stage after a very energizing and customized video from 350 Massachusetts energized the crowd with a rap song that somehow pulled together Rex Tillerson, Barack Obama and the fact that the oil companies have “five times as much in the ground as it is safe to burn” – literally putting Bill McKibben’s powerful words to music.

John fired up the crowd with a call for greater funding for public transit (which met with a roar of approval from a crowd who had largely gotten there on the train), finishing the job of ending coal fired power plants in New England that CLF and allies has well underway and a massive push for new renewable energy projects including getting the Cape Wind project over the finish line. John ended by invoking the powerful history of Boston and the possibility that once again, right here and right now we could be again launching a revolution from this city.

For those who were there last night, and didn’t catch up with any of our clipboard toting staff in the lobby, you can join CLF today by clicking here.

John linked together the core message of Do The Math – that our adversary is the fossil fuel industry who have a business model that is incompatible with the survival of humanity – with the specific story told by the Cape Wind Now! campaign that CLF leads – that leaders of that same fossil fuel industry like Bill Koch are doing all they can to stop the flagship Cape Wind clean energy project.

There were many powerful voices on the stage ranging from students to musicians (most notably the Charles Neville Trio, led by one of the legendary Neville Brothers, the first family of New Orleans) to powerful testimony from the great Canadian writer and activist Naomi Klein about her recent visit to the storm ravaged neighborhoods of New York. But the undisputed star of the show was Bill McKibben who told the story of how as a 27 year old writer he had published the End of Nature, twenty-five years ago, innocently believing that he could sway decision makers and change the world simply by writing a book and how he had come to appreciate the need for deep and broad action and activism and mobilization across all sectors of society to push back against the interests of the fossil fuel companies who literally have invested in a course of action that will end life as we know it on this planet.

It was an evening of both hope and heavy messages.  An evening filled with information and observations that could bring you to the brink of despair or to the uplifting realization that you have the opportunity to help millions of people across the world, both present and future, by fighting to head off climate catastrophe.  It is the definition of daunting to realize that you are being asked to help accomplish something very important, but difficult, but the message from the stage at Do The Math was that we all must hear and heed the call to action.

New Data: PSNH’s Coal-Fired Business Model in Free Fall

Nov 9, 2012 by  | Bio |  Leave a Comment

It’s not news that New Hampshire’s ratepayers are paying too much money to support PSNH’s ancient, massively inefficient, and heavily polluting coal-fired power plants. CLF has repeatedly called out PSNH’s calamitous insistence on continuing to operate coal-fired units at Merrimack Station in Bow and Schiller Station in Portsmouth and the resulting exorbitant electric rates that PSNH customers pay.

It’s still possible to be shocked, however, by the magnitude of PSNH’s growing problems and the environmental and economic harm that PSNH’s collapse is causing in New Hampshire. And the situation is worsening: new data are confirming the futility and waste of operating coal plants, and New Hampshire ratepayers are, in what is now a full-scale stampede, abandoning PSNH to meet their electric needs with cleaner, cheaper energy from competitors.

Here is an update on PSNH’s so-called “death spiral”:

Unprecedented Idling of Power Plants

A power plant’s “capacity factor” is a ratio between the amount of electricity the plant actually produced over a given period and the amount that it would have produced had it been running at full capacity during that time. Because coal plants – like nuclear plants – take some time to ramp up and take offline, they are built to operate with a very high capacity factor, on a 24-7 basis. In 2007, PSNH operated Merrimack Station’s coal boilers at 91% capacity and Schiller Station’s coal boilers at 84%.

The new reality for PSNH: these numbers have fallen precipitously since then; over the first nine months of 2012, Merrimack’s coal units had a capacity factor of 31%, and Schiller’s coal units 9.7%.

* 2012 data through September (source: EPA and ISO-NE data)

With dirty coal being trounced in the marketplace by cheaper power sources, especially natural gas, it is a disproportionately expensive undertaking to operate a coal unit – and a veritable folly at these levels of output.

Energy Service Rate Hike in 2013

The problem for PSNH’s customers is that even though the writing is on the wall for coal power plants around the country and here in New England, PSNH is still guaranteed a ratepayer-funded profit for owning Merrimack and Schiller, which is handed over to PSNH whether or not the plants produce power. Add it all together – PSNH’s operating costs for Merrimack, Schiller, and its other power plants, PSNH’s guaranteed profit, and the cost of the “replacement” power PSNH buys from the regional market to provide electricity to its customers while its plants sit idle – and PSNH customers are paying a huge and increasing premium over rates in the competitive market.

While there are many separate charges on an electricity bill, the “energy service” rate reflects the costs of generating the electricity. At the end of September, PSNH filed a projection (PDF) with the New Hampshire Public Utilities Commission warning of a residential energy service rate increase to take effect on January 1, 2013. The utility requested a 26% increase in the amount customers pay for electricity supplied by PSNH, bringing the overall default energy service rate to 8.97 cents per kilowatt hour. PSNH has also separately requested a permanent rate increase to recover the costs of the $422 million mercury scrubber that, if passed, would bring the default energy service rate to 9.27 cents per kilowatt hour.

By contrast, just over the border in Massachusetts, PSNH affiliate NStar’s residential customers will be paying a mere 6.69 cents per kilowatt hour for power that NStar almost wholly buys from the regional market. NStar’s rates are, like virtually all New England utilities other than PSNH, reflective of the historically low electricity prices available in that market, which have steadily fallen since 2008.

What this means is that, come January, the average PSNH-served New Hampshire home will be subsidizing PSNH and its power plants to the tune of $169 per year, or more than $190 per year with the addition of the extra charge for the scrubber.

Residential and Small Business Customers Increasingly Abandoning PSNH

As CLF documented recently, PSNH’s increasing rates represent an enormous market opportunity for competitive energy suppliers in New Hampshire.

They are seizing it. September 2012 data show 17,507 residential PSNH customers (about 5%) purchasing power from non-PSNH suppliers, an increase of more than 6,000 customers over the month before and a whopping 16,000 more than September of 2011. The number of small businesses fleeing PSNH’s electricity supply has grown at a steady rate: 14,617 purchased power from non-PSNH suppliers in September 2012, compared to 9,351 in September 2011.

(source: PSNH filings with N.H. Public Utilities Commmission)

Meanwhile, the most recent data show that there are now virtually no large or medium-sized businesses that buy power from PSNH.

While retail choice in suppliers for New Hampshire’s residential and small business customers was slow in coming, the available options have expanded considerably in the past year. Resident Power, Electricity NH, and Glacial Energy all quote lower rates than PSNH, and they are increasingly offering additional choices of electricity supply from coal-free, renewable, and sustainable sources at fixed rates lower than PSNH. We can expect an even faster exodus to these suppliers and new ones like them after PSNH’s rate increase in January.

Despite the rapidly increasing number of customers choosing alternative electricity suppliers, the vast majority of New Hampshire’s residential customers still purchase their electricity from PSNH. Many customers are unable or too busy to research comparative rates and make the change. And energy supply choice alone will neither affect the astounding subsidies that PSNH is getting to prop up its failing business nor force PSNH to make the economically rational decision to retire its dirty, outdated coal plants.

We need to correct this massive public policy failure and bring to an end the severe economic, environmental, and public health damage that PSNH’s ancient coal plants are causing in the Granite State. There is now reason to believe that we are turning a corner. Maggie Hassan, New Hampshire’s new governor-elect, has been outspoken about the importance of reducing pollution from electricity generation, especially from PSNH’s coal fleet. CLF is ready to work with the new administration and Legislature to develop a comprehensive climate and energy plan that transitions the state out of the grip of PSNH’s coal-fired business model and moves New Hampshire toward a cleaner and affordable energy future.

Fellowship Attorney Caitlin Peale co-authored this post.

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