Today, the New Hampshire Department of Environmental Services provided an annual report to the New Hampshire legislature detailing the results of the Regional Greenhouse Gas Initiative (RGGI) Carbon Dioxide Emissions Budget Trading Program.  The report notes that the program has supported approximately $20 million in job creating energy efficiency investment in New Hampshire and that each dollar of invested RGGI revenue resulted in $3.42 in direct energy savings (See this study by the University of New Hampshire). The report concludes that the effect of the RGGI program on rates has been negligible, amounting to .06 cents per kWh, or approximately 30 cents per month per household.

At the same time, electricity bills for customers of New Hampshire electric utilities have decreased dramatically since RGGI went into effect, with the exception of PSNH customers.  According to the report, the average PSNH residential customer is currently paying approximately $27 per month more than a New Hampshire customer in National Grid’s service territory for the same amount of power ($89 per month for PSNH versus $62 per month for National Grid).

Given the magnitude of the excessive energy costs paid by PSNH residential customers (comprising the overwhelming majority of New Hampshire homes), one might assume that the legislature would use the report as a basis for reviewing and revising the state’s policy that forces New Hampshire residents to subsidize PSNH’s above market costs to the tune of $324  per ratepayer per year.

Instead, House Speaker William O’Brien and Majority Leader D.J. Bettencourt issued a statement today criticizing RGGI for laying an extra “$5.50 per year on the backs of our ratepayers.”  They appear to have missed the forest for the trees (and bungled their math).  New Hampshire ratepayers pay among the highest rates in the country because PSNH imposes on them the above-market cost of its dirty and expensive power.  In fact, the report shows that National Grid ratepayers in New Hampshire, having been spared the legislative mandates that inflict exorbitant costs on PSNH ratepayers, pay the lowest electric rates in New England. National Grid and other New Hampshire utilities purchase power from newer, more efficient power plants selling into the wholesale market.

Improving New Hampshire’s economic future requires a thoughtful review of the statutory policies that extend the lives of PSNH’s uneconomic power plants and foist the exorbitant costs of these plants, and the pollution they emit, on New Hampshire residents. Portraying a successful and economically beneficial program such as RGGI as a burden to ratepayers lays blame in the wrong place and amounts to a game of political charades—a disservice to New Hampshire voters and job creators.

Are you concerned about the Northern Pass transmission project? Do you want to learn more about what it could mean for New Hampshire and New England’s energy future, for our climate, for energy rates, and for the communities and natural environment of New England and Québec? Do you want to keep up with the latest developments as the project progresses through the permitting process?

If you answered yes to any of these questions, you’ll want to sign up for CLF’s new email newsletter – Northern Pass Wire.  In a concise format, Northern Pass Wire will provide the latest news and analysis regarding the Northern Pass project direct from CLF advocates, with links to additional resources from CLF’s Northern Pass Information Center, our latest Northern Pass posts here on CLF Scoop, and CLF’s recent legal filings. Northern Pass Wire will also keep you informed about ways you can get involved and make your voice heard as the permitting process for the Northern Pass project continues. We expect to publish Northern Pass Wire about once a month, and perhaps more frequently when events warrant. The first edition can be previewed here, and you can sign up to get Northern Pass Wire here.

Please sign up and encourage your family, friends, and colleagues to do the same!

Click on the image to preview the first edition of CLF's Northern Pass Wire

photo credit: l . e . o/flickr

With each passing day, the dire reality of PSNH’s coal-fired business model is becoming clearer in New Hampshire.  The cost of operating PSNH’s obsolete power plants continues to grow, accelerating the Company’s death spiral where fewer captive ratepayers are saddled with unsustainable above-market rates as more PSNH customers choose to buy power from better managed competitive suppliers.  We are also learning that Northern Pass will make the situation worse for ratepayers, not better, and that PSNH and its Northern Pass partners are poised to pull in huge profits.  In just the last few days:

• PSNH revealed that, as it has begun bringing online its $450 million scrubber project at PSNH’s 50 year old coal-fired Merrimack Station, the bill is now coming due. If state regulators at the New Hampshire Public Utilities Commission (PUC) approve passing the cost on to ratepayers, the energy rates for PSNH customers – already the highest in New Hampshire by a wide margin – will go up by at least 1.2 cents per kilowatt hour, or almost 15%.  CLF is seeking to intervene in the PUC proceeding on the rate increase.  PSNH, unsurprisingly, wants to keep CLF out, in addition to any other party seeking to intervene on behalf of ratepayers.  There is no better illustration of the folly – for ratepayers and the environment alike – of major new investments in coal-fired power plants than PSNH’s flawed effort to extend the life of Merrimack Station.  These investments are a disaster for ratepayers, and don’t even ensure compliance with the plant’s environmental requirements – a case CLF is making right now in federal court with regard to other modifications to Merrimack Station.
• Large commercial and industrial customers with the buying power to avoid the high rates for PSNH’s fossil power continue to do so in dramatic numbers.  PSNH announced that, in September, about 82% of these customers were buying power elsewhere in the market (accounting for 93% of the power delivered to these customers) – a phemonenon known as “migration.”  Meanwhile, more than 99% of New Hampshire residents in PSNH territory were left behind to pay PSNH’s already exorbitant rates.  The scrubber rate increase is going to make this situation even worse for residents – additional businesses will find other suppliers and PSNH will need to jack up its rates even more.  More cost-effective competitive suppliers are cleaning PSNH’s clock among large customers.  Given the company’s excessive and increasing rates, residential ratepayers are starting to vote with their pocketbooks for more sustainable energy supplies.
• It is becoming increasingly clear that the current Northern Pass proposal is designed around PSNH’s bottom line, not the interests of New Hampshire ratepayers.  As we’ve mentioned before, the large customer “migration” problem and its upward pressure on homeowners’ electric bills are likely to get worse with Northern Pass, which would further depress regional wholesale electric rates and encourage more customers to leave PSNH.   Adding in the cost of the scrubber will only widen the divide between the businesses that can choose other suppliers and potentially benefit from Northern Pass, and the residential customers who are currently  stuck with PSNH. A new wrinkle emerged last week – testimony from PUC staff showing that PSNH’s consultants estimated a year ago that Northern Pass will cannibalize PSNH’s already meager revenues from Newington Station, PSNH’s little-used power plant in Newington, New Hampshire, that can operate with either oil or natural gas.  Northern Pass would mean it would almost never run and that the investments ratepayers have made over the years to keep Newington Station operating will essentially be lost.  This same dynamic will apply to the rest of PSNH’s power plants:  Northern Pass will diminish their market value further exposing New Hampshire businesses and residents to the risk of excessive costs.  Once again, a series of poor decisions and self-interested advocacy by PSNH (at the expense of ratepayers) is forcing the legislature to intervene.

The costs of PSNH’s coal-fired power plants are becoming untenable, and a radically redesigned Northern Pass proposal and other alternatives could help PSNH meet its customers’ power needs more cheaply and with less damage to public health and the environment.  Instead of planning for a cleaner energy future, PSNH is working only to preserve its regulator-approved profits.  CLF will be using every tool at our disposal to force a rethinking of PSNH’s approach.

PSNH: In a death spiral? (photo credit: CC/Nick Seibert)

In every possible way – on television, in mailings, and on the web – New Hampshire has heard again and again that the proposed Northern Pass transmission project will reduce electric rates for New Hampshire customers. The claim is at the core of PSNH’s case that the project is a good deal for New Hampshire. If only it were true…

As I mentioned in a post last month, the very design of the project as it stands is for reduced electric rates to benefit only those ratepayers that get their power from the regional electric markets. In New Hampshire, homes and small businesses in PSNH territory would see very little benefit because their energy rates are overwhelmingly tied to propping up PSNH’s old, inefficient fleet of coal-fired and oil-fired power plants.  These plants would not be able to compete with other cleaner power sources if forced to compete in the marketplace, something New Hampshire law does not currently allow and PSNH has fought to avoid. (Supposedly, an agreement between PSNH and Hydro-Québec for some power for PSNH customers is in the works, but, if it ever materializes, Northern Pass has said it would only be for a small amount of power, which would not do much to change PSNH’s overall portfolio. Northeast Utilities admitted as much in testimony before the Massachusetts DPU this week and also noted that there is “really little activity” around securing any such agreement.)

As explained in a piece on NHPR featuring our own Jonathan Peress, the above-market costs of PSNH’s aging fleet are causing large customers to buy power from (or “migrate” to) cheaper suppliers. Regulators this week turned back PSNH’s attempt to saddle those customers with its fleet’s escalating costs. But this situation is creating a so-called “death spiral,” because PSNH is forced to raise its rates again and again on a shrinking group of customers – homeowners and small businesses who do not have the purchasing power to contract with another supplier.

What does this all have to do with Northern Pass? The truth is that Northern Pass will – indeed, is intended to – make the “death spiral” worse.  If Northern Pass lowers the regional price of power as all those ads proclaim, it will make PSNH power even less competitive, causing even more customers with choices to leave PSNH behind.  PSNH spokesman Martin Murray so much as promises that result when he says in the NHPR piece that Northern Pass power will not displace PSNH generation. As Jonathan explained on NHPR, that means that the same homeowners and small businesses that will have to deal with 180 miles of new transmission lines will have higher, not lower, electric rates. This is not the Northern Pass story PSNH has been telling.

None of this makes sense. PSNH’s coal- and oil-fired power plants are bad for ratepayers and disasters for public health and the environment. As our lawsuit filed last week makes clear, PSNH’s efforts to prop up its largest plant failed to comply with even basic emissions permitting requirements and have increased that plant’s emissions. Any plan to import Canadian power with PSNH’s name on it should provide real benefits to its own customers and focus on responsibly freeing New Hampshire (and the lungs of millions of New Englanders) from PSNH’s dirty, uncompetitive dinosaurs.

ADDED: I should also point out, in the same Massachusetts DPU proceeding mentioned above, that counsel for NSTAR (the junior partner in Northern Pass) asserted that “[i]t’s entirely speculative as to what the impact of Northern Pass will be on rates in New Hampshire, and then [migration].”  Quite a statement given Northern Pass’s public relations campaign asserting that rates will go down. And we disagree with NSTAR’s counsel wholeheartedly. It is reasonable – not speculative – to expect the current proposal will lead to higher rates for PSNH ratepayers.

Merrimack Station power plant in Bow, NH. (Photo credit: John Moses)

Today CLF filed a federal Clean Air Act citizen suit in New Hampshire federal district court against Public Service Company of New Hampshire (PSNH), the owner of Merrimack Station power plant for the plant’s repeated failures to obtain required air permits. CLF’s citizen suit also cites numerous violations of Merrimack Station’s current permits and the resulting illegal emissions from the plant.

Merrimack Station  is among the most polluting coal-fired power plants in New England and is the single largest source of greenhouse gas emissions in New Hampshire, releasing over 2 million pounds of toxic chemicals every year. In addition, the plant is causing PSNH’s energy rates (already the highest in New Hampshire) to steadily climb as ratepayers are forced to foot the bill for the above-market cost of keeping PSNH’s old coal plants in operation.

CLF’s complaint contends that the plant, which is more than a half-century old and is in the midst of a major, multi-faceted life extension project, never obtained required permits authorizing renovations to major components of Merrimack Station, including much of an electric-generating turbine, even though the changes increased pollution from the plant.  As predicted by PSNH’s own projections, the changes led to more emissions of pollutants, including smog-causing nitrogen oxide and particulate matter, or soot, which causes respiratory problems when inhaled and is linked to increased hospitalizations, lung damage in infants and children, and premature death.

“In the course of this project, PSNH has repeatedly violated the Clean Air Act, putting the health of the public, especially children and senior citizens, at risk,” said Christophe Courchesne, CLF staff attorney. “PSNH is not above the law and CLF is committed to holding them accountable. With PSNH trumpeting the supposed ‘clean air’ benefits of the Northern Pass project with full-page ads in newspapers across New Hampshire, it is imperative to shine a light on PSNH’s coal plants, which easily cancel out the purported benefits of Northern Pass.” Read more >

PSNH's Merrimack Station (photo credit: flickr/Jim Richmond)

I appeared on NHPR’s The Exchange with Laura Knoy this morning, and the topic was the potential energy and economic impacts of the Northern Pass project. The show provided a good opportunity to explain why the project is inspiring so much opposition, why CLF has been skeptical of the current proposal, and how Canadian hydropower could play a role in the New England electric system if pursued appropriately. There was also a segment on the project’s potential impact on property values. You can catch the replay here if you’re interested.

Joining me on the show was Julia Frayer, an economist hired by the Public Service Company of New Hampshire (PSNH) to tout the energy and economic benefits of the project. Recently, she penned a widely-reprinted op-ed and provided testimony to the New Hampshire legislature, suggesting the project will be a boon to consumers and the reliability of the electric system.

Unfortunately, and as I made an effort to point out on the show, the arguments for the current proposal are pleasant talking points without much to back them up. All the cited benefits are speculative, rather than firm commitments, and are not forthrightly presented alongside the proposal’s potential costs. As any student of economics can attest, an intelligent discussion about the economics of a project requires that we at least try to describe and compare the costs and benefits.  We know that the project may have significant negative impacts, ranging from the environmental impacts of generating the power in Canada to the potential effects of major new transmission lines on New Hampshire’s tourism and recreation industries. PSNH and the project developer, Northern Pass Transmission, LLC, have stubbornly failed to acknowledge these impacts, and there is no evidence they were taken seriously in the planning of the current proposal.

One point worth highlighting – the current plan calls for all of the supposed clean energy benefits and electric rate reductions to be delivered through the wholesale market, where Hydro-Quebec intends to sell the power delivered by the project.  But these benefits would mostly bypass the very residential ratepayers in New Hampshire who pay PSNH for electricity – because PSNH acquires very little power from the wholesale market. Instead, as customers of PSNH’s retail power, PSNH residential customers have been left to shoulder the uneconomic costs of PSNH operating several coal-fired generating units – and to pay the highest electric rates in New Hampshire as a result. Northern Pass does nothing to change this situation.  Many commercial ratepayers in PSNH territory have “migrated” in increasing numbers to other utilities that – unlike PSNH – do buy substantial power from the wholesale market to supply their customers. Residential ratepayers don’t have this choice – which means they’re saddled with PSNH’s higher costs, as PSNH loses more and more of its commercial rate base.  Again, Northern Pass does nothing to change this situation.  On closer inspection, the claimed benefits for New Hampshire consumers look more like phantom benefits than anything real.

The proposal promises to send huge profits to Hydro-Quebec, as it bids power into the wholesale market (easily paying back its investment in the transmission lines), and to provide a revenue stream of transmission payments to Northeast Utilities, PSNH’s parent company. But this structure makes very little sense because it means New Hampshire residents will continue to bear the burden of high cost power and dirty air from PSNH’s coal plants and will also face the environmental and economic impacts of a massive transmission project, while the power would only displace relatively less-polluting natural gas generation and may undermine the development of local renewable energy projects in the state. If it does indeed lower costs on the New England market, the effect will be to increase costs for PSNH’s residential customers as more large customers migrate to the competitive market and fewer customers are left to pay the costs of PSNH’s expensive coal plants.

The current proposal is coming into focus as a bad energy and economic deal for New Hampshire, and regionally the benefits seem less than impressive – especially because the emissions reductions made possible could be so much greater if there was a firm commitment to pair the new imports with the retirement of coal-fired units. As the project continues to wind its way through the federal and state permitting process, CLF will keep pushing for the project to make sense for New Hampshire and for the energy future of the region as a whole.

For more information about Northern Pass, visit CLF’s Northern Pass Information Center (http://www.clf.org/northernpass) and take a look at our prior Northern Pass posts on CLF Scoop.

CLF has intervened in proceedings regarding the proposed merger of Northeast Utilities (NU) and NSTAR, which combined would create the third largest utility in the country and the largest in New England. CLF has intervened in the proceedings before the Massachusetts Department of Public Utilities (DPU) to ensure that the merger will only be allowed to go forward if it is “consistent with the public interest.”  This will require a thoughtful analysis of the merged utility’s long-term strategies for delivering energy while fully meeting the greenhouse gas emission reductions, renewable energy and energy efficiency requirements of the MA Global Warming Solutions Act and Green Communities Act.  It also will require a close look at the economic and environmental risks posed by the energy generation assets that would be owned by the merged utility.

One of CLF’s concerns is that NU subsidiary Public Service of New Hampshire (PSNH) owns and depends upon outdated, inefficient coal- and oil-fired power plants. These plants – which are obsolete and increasingly more expensive and less economic to operate – present risks and liabilities that would be spread to NSTAR’s ratepayers if the merger goes forward.  Another concern is that the merged utility might seek to weaken Massachusetts’ renewable energy standards, as suggested in some of the utilities’ public statements, allowing large hydropower to “flood” the market (pun intended!) and chill development of other renewable energy sources such as small wind and solar facilities.

Currently, the procedural schedule for the merger proceeding pending before the Massachusetts DPU has been suspended while the DPU considers whether to modernize the legal standard it will apply.  CLF and other parties have asked that the legal standard be adapted to account for changes in relevant laws, including the Global Warming Solutions Act and Green Communities Act.

Stay tuned as we await the DPU’s ruling and further action in the merger proceeding!

CLF Director of Clean Energy and Climate Change N. Jonathan Peress appeared on an NHPR segment yesterday to discuss the possibility of state energy utility PSNH increasing the price of power for its consumers. He argued that the proposed price increases are the result of PSNH’s struggle to cover increasing costs of their aging facilities.

“The coal-fired power plants that are utilized by Public Service of NH have either passed their useful life or are approaching the end of their useful life,” he said.

If you missed the broadcast, listen here:

Concerned about the cost of coal? Learn more about CLF’s Coal-free New England campaign.