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.

Members of NH's Congressional delegation are demanding that DOE Secretary Steven Chu (pictured) explain DOE's process for selecting the current contractor team working on the Northern Pass envrionmental review.

Two weeks ago, CLF exposed and brought to the public’s attention internal government documents showing that the Department of Energy (DOE) has illegally allowed the developer of the Northern Pass transmission project, Northern Pass Transmission LLC (NPT) to have significant and improper influence over the ongoing permitting process and environmental review of the project. After filing its concerns about the information with DOE, CLF issued a call to action, urging the public to join CLF in demanding that DOE replace the contractor team charged with preparing the crucial Environmental Impact Statement (EIS), which was handpicked by NPT, with a new, unbiased contractor or internal team with no conflict of interest.

We’re pleased to report that the responses – your responses – to the revelations and our call to action has been remarkable.

In the past two weeks, more than 300 members of the public (and counting) filed comments with DOE demanding replacement of the contractor team and a new commitment to a fair and open permitting process for Northern Pass. (You can take action yourself and file your own comment via this link.)

Yesterday, in a joint letter to DOE, a group of nine organizations representing New Hampshire’s conservation community and the grassroots opposition to Northern Pass, along with more than 60 individuals, expressed their deep concerns about the information exposed by CLF and called for a new EIS contractor with no conflict of interest. (Coverage on NHPR here.)

In the past week, Senator Jeanne Shaheen, Senator Kelly Ayotte, and Congressman Charlie Bass have each sent letters to DOE Secretary Steven Chu demanding that the matter be reviewed and addressed immediately. (Union Leader coverage here.)

• In her letter to Secretary Chu, Senator Jeanne Shaheen demands an “immediate, detailed response” from DOE to determine whether a conflict of interest exists, emphasizing that “in order for the public to have confidence in DOE and the outcome of any Presidential Permit application there can be no conflict of interest or appearance of conflict in the application process” and that “[a] loss of faith from stakeholders would be difficult, if not impossible, to restore. “
• Senator Ayotte’s letter urges DOE to review CLF’s concerns and highlighted the need to “make certain that the outcome of this process is perceived as legitimate and that the process remains transparent.”
• Congressman Bass is asking for a “detailed explanation of the DOE selection of the EIS contractor” in light of “the importance of this matter to the state of New Hampshire and the absolute necessity for a fair and transparent process for all stakeholders.”

It’s clear that the documents CLF disclosed provide only the part of the story of DOE’s mishandled process so far – we don’t know exactly what DOE did internally, in phone calls with NPT and others, or in closed-door in-person meetings. That’s why the members of the delegation are right that DOE owes them and the public a detailed explanation of what happened.

Since CLF’s detailed filing with DOE, we’ve actually learned more about the process from NPT than from DOE. In a letter sent to DOE last week, NPT admitted – rather than rebutted – the facts CLF has exposed. NPT admits that DOE directed it to conduct the contractor search, including the vetting of potential contractors for conflicts of interest .  NPT also admits that it – not DOE – drafted several key documents governing the environmental review and DOE’s arrangement with the contractor team. In effect, NPT admits its enormous, behind-the-scenes role and still can’t understand why anyone would have a problem with it. (We previously explained why NPT’s and DOE’s defensive responses to this effect were off the mark.)

NPT’s letter also publicly disclosed a crucial part of the story for the first time. According to a footnote in the letter, NPT was permitted to “rule out” the qualified environmental review teams at DOE’s own National Laboratories because their rates were higher than NPT wanted to pay. The fact that DOE deferred to NPT’s desire to keep down the costs of the federal environmental review of Northern Pass (even as it spends many multiples of market value to acquire properties in Coos County for the northernmost corridor for the project) is among the most troubling information we’ve yet obtained: if true, DOE did not even consider hiring its own experts to prepare the EIS. It’s hard to imagine clearer evidence that the contractor selection process violated the federal regulations requiring that that the choice be “solely” DOE’s or that the violation directly threatens the integrity and rigor of the environmental review.

Above all, the public’s responses to the revelations about NPT’s role in the DOE permitting process make crystal clear that New Hampshire deserves – and is insisting on – a truly fair, rigorous, and objective review of the Northern Pass project, not the deeply mishandled, applicant-driven process we’ve seen to date.

For more information about Northern Pass, sign-up for our monthly newsletter Northern Pass Wire, visit CLF’s Northern Pass Information Center (http://www.clf.org/northern-pass), and take a look at our prior Northern Pass posts on CLF Scoop.

Yesterday, the U.S. Department of Energy (DOE) and Northern Pass Transmission LLC (NPT) reacted in the media (here and here) to news stories reporting that the federal review of the Northern Pass project has been tainted by DOE’s abdication of critical responsibilities to the project developer and permit applicant, NPT. It is frustrating, but not unexpected given what the document trail revealed, that DOE and NPT don’t see any problems with the permitting process to date.

DOE says that it exercised independent judgment in selecting the contractor team and considered other contractors for the job (while it won’t say which ones or how many, apparently absent a FOIA request, which – if CLF’s last request is an indication – could take as long as a year).

While it is clear DOE signed off on the new team, DOE is ignoring that its actions were wrong because of the undisputedly pervasive role DOE allowed NPT to play –with NPT’s counsel personally recruiting, assembling, and coaching the team, helping the team make its proposal to DOE, making a side agreement (of which DOE apparently has no copy) with the team setting the budget and schedule for the process, and actively helping to draft key DOE documents governing the environmental review.

Giving NPT this role and opportunity for influence is at odds with the core purpose of the legal requirement that any third-party contractor be chosen solely by DOE without meaningful participation by the permit applicant: the selected contractor must have no conflict of interest in favor of the applicant – even a perceived conflict of interest. Like DOE itself, the contractor must be seen by the public as an impartial, independent arbiter of the data, the facts, and the analysis contained in the environmental impact statement of the project. Here, the public can have no confidence that this will be true precisely because NPT was so instrumental in choosing the contractor team. The documents make clear that the contractor team owes its job to NPT. How can the public have any confidence that the team will fulfill its obligations indepedently, with no special treatment or preferences for NPT?

DOE’s other comment – that it is routine for applicants to be involved in selecting contractors – is merely an admission that DOE always handles permitting processes in unacceptably close coordination with developers. “We always do it this way,” is no excuse for illegal and improper conduct.

Indeed, it is telling that DOE has no comment on evidence of actual bias on the part of a senior member of the contractor team who – even before being hired – stated the position (one favored by NPT) that the Champlain-Hudson transmission project is not an alternative to be considered as part of the Northern Pass alternatives review. This evidence means that there is not only a risk of bias with the current contractor team, but that bias already has crept into the process – and on a critically important aspect of the environmental review.

By just adding CLF’s filing (PDF) to the pile of public comments received on the project to date, DOE appears to be following a strategy of bureaucratic defensiveness and imperviousness to public feedback – a strategy that is reflected in one of the most troubling documents CLF obtained, an internal email revealing that one of DOE’s principal priorities is to avoid “setting the precedent of backing down under the weight of public criticism.” If DOE continues on this path, as we say in our filing, “it would be fair for the public to conclude that DOE is not interested in meaningful public involvement and is incapable of reaching a legitimate final decision on the permitting applications that the President and Congress have entrusted it with faithfully reviewing on the nation’s behalf.”

For its part, NPT’s response reflects the absurd allegation that CLF merely is trying to cause delay. To the contrary, our filing with DOE implores the agency to fix the process now, before the permitting process begins again in earnest. Given that there are still several months before NPT says it will restart the process by filing a new northernmost route for the project, DOE has ample opportunity to cure deficiencies.    To be clear, every day of delay that has occurred to date is NPT’s doing – DOE has allowed NPT to drag out the federal environmental review for two years so that it can assemble a new northernmost route, without a definitive end in sight.

NPT also says CLF is trying to “preemptively discredit” the process. Of course, it isn’t CLF’s filing but instead DOE’s and NPT’s own actions, documented in black and white in the 22 exhibits to our filing, that are preemptively discrediting the process.

You can help CLF tell DOE – in only a few clicks – that its actions are unacceptable and that New Hampshire deserves a truly fair review of Northern Pass. Please take action now.

To learn more about this issue, take a moment to review our posts from earlier this week here and here.

For more information about Northern Pass, sign-up for our monthly newsletter Northern Pass Wire, visit CLF’s Northern Pass Information Center (http://www.clf.org/northern-pass), and take a look at our prior Northern Pass posts on CLF Scoop.

(photo credit: flickr/timtom.ch)

The new revelations of unfairness and bias in the federal environmental review of Northern Pass have struck a chord, garnering front-page coverage in the Union Leader and a story on New Hampshire Public Radio. You can join our fight for a fair review of Northern Pass. We have made it easy for you to take action and tell the United States Department of Energy (DOE) that New Hampshire deserves an unbiased process that follows the law – it will only take a couple of seconds. You can submit your comment to DOE here.

To understand what’s at stake in the wake of these developments, it’s important to take a look back at the history of where we’ve been and what we’ve been fighting for.

This week marks the second anniversary of the formal announcement of the Northern Pass project and Northern Pass Transmission LLC’s (NPT) application to DOE for a Presidential Permit. Shortly after the announcement, it became clear that DOE’s review of the project was off to a terrible start. DOE had selected a “third-party” contractor to prepare an environmental impact statement or “EIS” for the project – a crucial, comprehensive, and impartial study of the project’s environmental and socioeconomic impacts and its reasonable alternatives. But that contractor, Normandeau Associates, was the same firm that was on NPT’s payroll to advocate for the project’s approval during the state siting process, which will follow the federal process. This was a clear conflict of interest in violation of the regulations that govern federal environmental reviews.

After CLF and others objected to DOE’s hiring of Normandeau on the ground that the contractor had, NPT initially defended Normandeau’s dual role. Then, in an about-face, NPT terminated the arrangement, saying that:

[T]he strong expressions of concern by certain members of the public about the arrangement lead us to believe that continuing with this arrangement may cause the public to lack confidence in the objectivity and rigor of the ultimate environmental analysis of the project. That outcome obviously does not serve the interests of the project, any of the permitting agencies or the public.

It turns out, however, that our fight for fairness and integrity in the Northern Pass permitting process was only beginning. Over the last two years, CLF has advocated for a truly rigorous analysis of alternative technologies and strategies, a comprehensive review of the region’s energy needs, and a much more honest accounting of the current proposal’s impacts – on electric bills, the climate, our domestic renewable power industry, and natural resources in Canada – than the threadbare and misleading information NPT has provided to DOE and to the public. Along the way, CLF has encouraged members of the public to make themselves heard in the permitting process and sought improvements in that process.

After DOE announced it had selected a new, supposedly independent contractor team to prepare the EIS, CLF identified the potential for unfairness in DOE’s agreement with the contractor and encouraged DOE to fix the problems. We’ve been joined in this important fight by many, many other advocates, from the record crowds at DOE’s public meetings in March 2011, to passionate Granite-Staters on and off the project’s path, to our allies at other environmental organizations.

What we’ve now learned – that DOE has repeatedly abdicated its responsibility to control the process and that NPT has had improper influence over major decisions about the review – has deeply shaken our confidence in the process we’ve been fighting so hard to protect and improve. With NPT expected to announce a new northernmost route soon (now the end of 2012) and restart DOE’s review once again, we are at a new crossroads, just as we were at the process’s outset. Will the federal review of Northern Pass be the fair, objective, and open process that New Hampshire deserves? Or is the game rigged in the developer’s favor yet again?

Again, please join our fight. Take action now.

For more information about Northern Pass, sign-up for our monthly newsletter Northern Pass Wire, visit CLF’s Northern Pass Information Center (http://www.clf.org/northern-pass), and take a look at our prior Northern Pass posts on CLF Scoop.

DOE Headquarters, Washington, DC (Energy Department photo, credit Quentin Kruger)

A year ago, CLF asked the Department of Energy (DOE) for documents regarding its environmental review of Northern Pass – the major power-line project proposed by Northern Pass Transmission LLC, or “NPT.” We fought for an open, rigorous, and impartial permitting process that would independently scrutinize all elements of the Northern Pass proposal. We wanted to be sure that’s what New Hampshire and the region would be getting from DOE and its new contractor team, which is charged with preparing the ever-crucial environmental impact statement or “EIS” – the document that analyzes the proposed project, all reasonable alternatives, and all related environmental and socio-economic impacts.

On the surface, we saw some blemishes, but it appeared that, despite the potential problems (which we noted in a submission to DOE last October), DOE’s new contractor team would be substantially more objective than the original contractor, which had an obvious conflict of interest due to its dual role (incredibly) working for both DOE to prepare the EIS and for NPT in seeking to obtain state-level approval for the project.

It took nearly a year, but DOE finally sent us a large set of documents – emails, letters, and document drafts. The documents provide the first real window we’ve had into DOE’s handling of the process so far.

What they show is profoundly troubling: abdication by DOE of important non-delegable responsibilities to the permit applicant, NPT; and significant and improper influence over the permitting process by the permit applicant, NPT:

• NPT’s counsel – who was once DOE’s top lawyer and still appears to have extraordinary access and influence at DOE – handpicked the new EIS contractor team, with what appears to be minimal DOE involvement. Counsel for NPT acted as the new contractor team’s agent, recruiting the team, pulling together its submission of qualifications and a work plan proposal to DOE, and organizing a face-to-face meeting between DOE, NPT, and the team. It appears DOE conducted no real search of its own, in violation of governing regulations requiring that EIS contractors be chosen “solely” by DOE.
• A senior member of the new contractor team has already demonstrated that she is biased in favor of a narrow, NPT-preferred alternatives analysis. In an email included in the documents obtained by CLF, one of the new contractors opined that the underground Champlain Hudson Power Express project connecting Canada and New York City will not be considered an alternative to Northern Pass in the EIS. This is precisely the position expressed just one month earlier by NPT in its objection to CLF’s and others’ request for a regional energy study, which was based in part on DOE’s need to evaluate Northern Pass and Champlain Hudson together. The email was, ironically, intended to show that email’s author lacks a conflict of interest in working as an EIS consultant on the Northern Pass project and as a DOE consultant on the Champlain Hudson project.
• DOE allowed NPT to design the arrangement among DOE, NPT, and the contractor team, which was memorialized in a Memorandum of Understanding that, we’ve learned, DOE asked NPT to draft. It appears that DOE doesn’t even have a copy of the key agreement between NPT and the contractor team establishing the budget and schedule for the EIS.

Unfortunately, this pattern of NPT’s influence over the process is not unique to selecting and managing the project’s EIS contractors:

• DOE apparently reviewed and okayed NPT’s deeply incomplete permit application before it was even filed.
• DOE asked NPT’s counsel to write up the “purpose and need for agency action,” a crucial DOE determination that will help shape the scope of the EIS, including what alternatives to the current Northern Pass proposal should be studied. NPT’s draft was virtually identical to the version that then appeared in last year’s Federal Register notice announcing that DOE would prepare an EIS and kicking off the scoping process. In our scoping comments, CLF identified DOE’s “purpose and need” statement as illegally narrow.
• NPT and DOE have had private discussions, outside the public eye, about pending requests by stakeholders to improve DOE’s process. In the case of CLF’s and others’ request for a regional study of our energy needs, a request that became all the more important in the aftermath of the announcement of the Northeast Energy Link project last July, NPT’s counsel went so far as to give DOE talking points and supporting legal citations explaining why granting the request was “not warranted.” DOE’s decision on the request? As NPT would prefer, DOE hasn’t commissioned any regional study or EIS.

What should happen next? Yesterday, CLF filed extensive comments with DOE (1 mb PDF linked here, 10 MB .zip archive of exhibits here), laying out the evidence and requesting major changes in DOE’s environmental review of Northern Pass:

• First, DOE’s new contractor team has a clear conflict of interest, in violation of governing regulations that prohibit the use of contractors with “any conflict of interest.” The team apparently owes its new contractor job – and potentially hundreds of thousands of dollars in consultant fees – to NPT. To ensure the objectivity and integrity of the permitting process, the new contractor team needs to be replaced by a new contractor or qualified DOE team with no conflicts of interest, and without NPT’s involvement.
• Second, and more fundamentally, DOE needs to change course – now. New Hampshire deserves a fair, impartial, and rigorous review of Northern Pass. NPT, as the permit applicant, predictably would prefer an easy path to approval. It’s DOE’s legal obligation to control the process, promote meaningful public involvement, and safeguard its decision-making from bias and undue influence. In light of NPT’s failure to piece together a northernmost route, DOE has ample time to start again, with a more open and objective approach that would help to rebuild the public’s confidence in this important permitting process.

UPDATE: Help us tell DOE to fix the process by replacing the contractor team and instituting the fair, legally sound process that New Hampshire deserves. It only takes a few clicks. Take action now here.

For more information about Northern Pass, sign-up for our monthly newsletter Northern Pass Wire, visit CLF’s Northern Pass Information Center (http://www.clf.org/northern-pass), and take a look at our prior Northern Pass posts on CLF Scoop.

Hands Across New Hampshire protest, Deerfield, NH, September 1, 2012 (photo credit, Wes Golomb, Bear Brook Photography)

After a summer when many in New Hampshire expected to hear about a revised route and a renewed public relations campaign for the Northern Pass transmission project, the current proposal, which surfaced almost two years ago, is facing new obstacles:

• On the heels of its successful campaign to protect the Balsams, the Society for the Protection of New Hampshire Forests has announced a new $2.5 million land conservation plan that seeks to stymie the new North Country route Northern Pass has been trying to assemble for more than a year. The fund-raising campaign to support the Forest Society’s plan appears to be off to a good start.
• Last Saturday, in a peaceful statewide event called Hands Across New Hampshire, hundreds of concerned citizens across New Hampshire – from Manchester to Colebrook – joined about a dozen spirited protests against the project. The picture above shows the protest along PSNH’s existing transmission corridor in Deerfield, the proposed southern terminus of the line. The protests showed that grassroots opposition is strong in the North Country but also in the central and southern parts of the state.
• Every gubernatorial candidate on the ballot is on the record calling for careful consideration of alternatives to the current proposed overhead lines, and many are agreeing with CLF that the current proposal does not provide any real benefits for New Hampshire residents and ratepayers.
• A legislative commission is evaluating the feasibility of using state-owned transportation corridors, including rail beds and highways, for high voltage transmission projects like Northern Pass, an approach that Maine and other states are pursuing. The commission already has heard from state agencies and the makers of high-tech underground transmission technology, and it is now evident that burying transmission lines in available state highways and rail corridors is potentially practical and viable. The commission’s work will culminate in a report to the Legislature later this year.
• In yesterday’s provincial election, Québec’s Liberal government – the sponsors of Québec’s energy strategy and Hydro-Québec’s plans to export more hydropower to New England through Northern Pass – was ousted from power. Although the sovereigntist Parti Québecois, which will lead a new coalition government, has committed to continue the Liberal government’s Plan Nord (with its substantial hydropower component), it is unclear how these political changes will affect Québec’s and Hydro-Québec’s relationships with Northern Pass, especially in light of the declining economic value of the project for Québec.

It is long past time for Northern Pass to acknowledge (contrary to Northeast Utilities’ recent sunny pronouncements to investors) that the current proposal – new route north of Groveton or not – is a non-starter in New Hampshire. Instead, we should be shelving this fatally flawed proposal, critically exploring whether and to what extent hydropower imports are needed, evaluating all the alternatives in an open and well-informed planning process, and continuing to pursue greater regional consensus and coordination to build a real clean energy economy with broadly shared benefits, on both sides of the border.

For more information about Northern Pass, sign-up for our monthly newsletter Northern Pass Wire, visit CLF’s Northern Pass Information Center (http://www.clf.org/northern-pass), and take a look at our prior Northern Pass posts on CLF Scoop.

As the nation continues to move beyond coal as a fuel for electricity generation, PSNH continues to cling to its obsolete, uneconomic coal plants that need massive subsidies from ratepayers to operate. Conservation Law Foundation recently filed a brief with the New Hampshire Public Utilities Commission that blows the whistle on PSNH’s failure to meet its obligations under New Hampshire law to engage in responsible – or in some cases any — planning regarding the future operation of these plants.

New Hampshire requires that every electric utility file a biannual “least cost integrated resource plan,” which demonstrates that the utility has assessed its supply options and analyzed both the long and short term environmental, economic, and energy impacts it will have on the State. Instead, PSNH has filed a deficient plan that, by its own admission, has “very limited value” for decision-making purposes (Pg 115-116). CLF’s full brief in PDF format can be downloaded here. An excerpt:

PSNH’s business model is broken. PSNH’s energy supply cost structure is rapidly exceeding the ability and means of its ratepayers to pay, in what is now an intractable death spiral as customers migrate to competitive suppliers. The company over-relies on and has over invested in aging and uneconomic generating facilities at the expense of ratepayers and the environment. PSNH energy service customers are paying 40% or more above prevailing retail rates of other New Hampshire utility providers and the discrepancy is growing. The consequence is that hundreds of millions of dollars in above market payments are being extracted from New Hampshire ratepayers, while PSNH and its shareholders continue to benefit as if they are a low cost supplier, which the company clearly is not. The question before the Commission is whether the excessive costs being imposed by PSNH on its ratepayers and New Hampshire reflect, in some measure, the quality of PSNH’s 2010 least cost integrated resource plan (the “Plan”) and thus inform the adequacy of such planning as required by [New Hampshire law]. The Commission must decide whether lapses in PSNH’s planning materially contributed to adverse and avoidable ratepayer outcomes and the unsustainable rate spiral which will apparently require legislatively mandated cost shifting and/or lead to PSNH’s bankruptcy.

The evidence in this proceeding unequivocally demonstrates that PSNH’s planning failed to consider a multitude of material planning elements that are crucial to least cost planning. Without limitation, these include: 1) the Plan’s failure to include or consider forward price curves for natural gas which would dictate projected economic dispatch and margins; 2) the Plan’s failure to forecast customer migration which substantially informs the need for and cost-effectiveness of PSNH’s owned generation and entitlements; 3) the Plan’s failure to address or consider future environmental costs for PSNH’s generation fleet; and 4) the Plan’s failure to project forward energy service rates during the five year planning period. At the core of these planning lapses lies the question of whether and the extent to which it is in the ratepayers’ interests for PSNH to continue to own or operate its aging fossil fuel generation fleet, including the 1950’s vintage, small uneconomic coal units at Schiller Station. PSNH’s planning completely ignored the market trends which, beginning in 2008, reduced the capacity factors of Merrimack and Schiller Station to the point of being coal-fired peakers, notwithstanding the Plan’s assertion that they will remain baseload generators.

PSNH is continuing to ignore market realities, which is reflected by their failure to adequately plan for the future costs of continuing to operate its fleet of antiquated power plants. As we noted earlier this month, PSNH ratepayers are stuck subsidizing these uneconomic and dirty power plants through above-market energy costs.

Schiller Station, in Portsmouth, NH (photo credit: flickr/Jim Richmond)

If you’re looking for the most egregious example of PSNH’s poor planning, look no further than the continued operation of the two coal units at Schiller Station in Portsmouth. These two 1950’s era units operated at a loss of over $40 million between 2009 and 2010. An analysis conducted by the consulting firm Synapse Energy Economics predicted that this grim trend will only continue, and likely worsen, in the foreseeable future. These units are operating less each year, yet the cost to PSNH customers for the limited power they do produce is increasing. The report concluded that the continued operation of these units will result in future net losses and PSNH ratepayers should not be forced to pay for these shortfalls. PSNH needs to engage in a rigorous review of continuing to operate the coal-fired units at Schiller Station, as “given their age, operating costs, low reliability, and high heat rates, there is not likely to be any economic future for these units” (Pg 14).  Similarly, Connecticut’s integrated resource plan has predicted that the Schiller coal units should retire by 2015 for economic reasons (Pg B-21). Furthermore ISO-NE, the regional energy overseer, is also planning for the retirement of antiquated coal power plants, noting that these resources are facing economic challenges (Pg 9-10).

The operation of uneconomic units, coupled with PSNH’s ongoing attempt to recoup the cost of installing a $422 million scrubber at its half-century-old coal-fired Merrimack Station, boils down to increasing the energy rates for PSNH customers – already the highest in New Hampshire. This cost recovery charge, along with charges for above-market supply contracts, has led PSNH to propose a rate structure that will exceed 10 cents per kWh! As other companies enter New Hampshire to provide lower cost alternatives, the migration away from PSNH’s above-market rates has continued, worsening PSNH’s economic “death spiral.”

Why is PSNH acting this way? It’s pretty clear – like other dinosaur fossil fuel companies that have failed to anticipate the contours of a clean energy future, PSNH wants to preserve its subsidies to boost near-term corporate profits, virtually all of which are the above-market costs of PSNH power plants (including the 10% rate of return that New Hampshire guarantees). The New Hampshire Public Utilities Commission is taking note.  On June 27 it ordered PSNH “to undertake a systematic review of operation, materials and capital costs, including personnel costs, associated with the operations of its fossil fuel plants given the low capacity factors of these units.”

CLF is calling for PSNH to conduct a rigorous planning analysis to investigate whether continued operation of its antiquated coal units is in the best interests of New Hampshire. All the evidence suggests that, if credible, any such analysis would show, unequivocally, that it is (long past) time for PSNH to stop asking ratepayers to subsidize uneconomic and dirty coal power.

Northern Pass’s developer has a long track record of public statements attributing the deep New Hampshire opposition to the current proposal to the go-to developer bogeyman – “not in my backyard” obstructionism. Accusing critics of short-sighted “NIMBYism” is even part of Northern Pass’s expensive marketing campaign (which suffers from other deliberately false and misleading claims). Continuing this tradition, the CEO of the developer’s parent company recently derided opponents as “special interests.”

This is loaded, derogatory rhetoric, and exactly the wrong frame for having any constructive dialogue with the New Hampshire communities that face living with the project’s major new infrastructure, as I argued on NHPR last year. And on a personal level, after nearly a year and a half of advocacy on the Northern Pass project, I can say with certainty that the New Hampshire opponents of the current proposal don’t fit the caricature. Those with backyards that would be affected are indeed concerned about their homes, but also about the broader issues of whether the project will benefit their communities, New Hampshire, and the region. Like CLF, they aren’t seeing meaningful public benefits that would make the burdens of the project worth bearing.

Our colleagues at the Society for the Protection of New Hampshire Forests recently produced a pair of videos that help bring to life some of New Hampshire’s very real concerns about the project, many of which are key parts of CLF’s Northern Pass advocacy.

In this video, Appalachian Mountain Club’s Susan Arnold explains our history of protecting the White Mountain National Forest and the problems with Northern Pass’s proposal to build new towers through this nationally treasured landscape:

(If impacts in the White Mountain National Forest are of interest to you, I’d also recommend a recently launched resource with lots of information on the details of Northern Pass’s current proposal and the unique permitting process that applies: ProtectWMNF.org.)

In this video, you’ll meet a Deerfield, NH family that would be directly affected by the project:

(In line with prior non-responses to criticism and strong-arm tactics, Northern Pass’s developer posted an odd rebuttal to this video on its website, attacking as “inaccurate” certain general statements and images showing towers close to the family’s house. Leaving aside that accuracy in communications hasn’t been its own priority, the developer has released no detailed mile-by-mile design of the project to back up its post, nor does it deny that its representatives told the family that towers could be built very close to their home. And if you watch the video, it’s clear that the “rebuttal” is more about trying to discredit the Forest Society than providing a meaningful response to the video’s substance.)

From the families who live along the proposed route, to the small businesspeople in the state’s tourist economy who are concerned about the effect of the project on their livelihoods and communities, to the New Hampshire residents and groups questioning the wisdom of erecting massive new towers through treasured landscapes like the White Mountain National Forest, New Hampshire’s many critical voices are focused on real, legitimate concerns about the impacts of Northern Pass on our state and beyond. We will not be marginalized, bullied, or deterred as we raise these issues in public forums and in the federal and state permitting processes to come.

CLF was not involved in the production or content of the videos above. They are posted here with the permission of the Society for the Protection of New Hampshire Forests.

For more information about Northern Pass, sign-up for our monthly newsletter Northern Pass Wire, visit CLF’s Northern Pass Information Center (http://www.clf.org/northern-pass), and take a look at our prior Northern Pass posts on CLF Scoop.