Today, CLF is announcing its participation in a historic settlement agreement that will, at long last, put New Hampshire on a path to a fully competitive electric market and an energy future focused on clean, innovative, and affordable resources. Under the agreement, Public Service Company of New Hampshire (PSNH, now known by the same name as its parent company, Eversource Energy) will sell its electric generation fleet, including the coal-fired Merrimack Station in Bow, the coal and wood-fired Schiller Station in Portsmouth, the oil and natural gas-fired Newington Station in Newington, and several hydropower facilities in the state.
If approved by the Public Utilities Commission (PUC), the settlement will complete the restructuring of New Hampshire’s electric power market, clearing the way for robust competition and shielding ratepayers from further financial risks inherent in rate-base power plants. This agreement resolves several long-running matters in which CLF has been engaged before the PUC. For years, CLF has advocated for divestiture of PSNH power plants as New Hampshire’s single most important clean energy opportunity, and this settlement delivers that outcome.
First outlined in a March term sheet signed by state negotiators and Eversource, the settlement is memorialized in a fully executed agreement that was filed today with the PUC by a diverse group of fifteen parties. The settlement will avoid years of adversarial litigation and will result in customer savings attributable to historically low interest rates that may not be available in the future. The settlement followed months of hard but collaborative work by the parties and, before that, years of perseverance in litigation and regulatory venues by CLF and others.
Last week, the New Hampshire legislature gave final passage to a bill (Senate Bill 221) that was needed for the settlement to advance. CLF offered written testimony supporting the bill. Governor Hassan has committed to sign the bill in the coming days.
The settlement’s key terms include:
- PSNH’s agreement to expeditiously pursue the divestiture of its generating plants after a final decision by the PUC approving the settlement agreement.
- A requirement that the power plants remain in service for 18 months following sale.
- Provisions in the event of a failed divestiture auction, which would lead to prompt retirement of any power plant that could not be sold.
- Funding of $5 million from Eversource shareholders to create a Clean Energy Fund.
- PSNH’s agreement to work with interested parties to establish and implement increased energy efficiency savings and distributed energy investment targets.
- PSNH’s agreement to forego recovery from its customers of $25 million associated with the Merrimack Station scrubber, which CLF was the subject of prudency hearings in which CLF actively participated.
- Financing—at a time of low interest rates, and using a tool known as securitization bonds—of the difference between the sale price for the power plants and the value of the plants on PSNH’s books remaining after the divestiture sale, known as stranded costs.
- A proposed rate structure for PSNH customers to pay the charges for securitization bonds and other costs that provides all customers significant savings and negotiated protections for large commercial and industrial companies.
- A transition to a competitive procurement process for PSNH to buy power for its customers who have not chosen a competitive supplier, similar to the process used by other New England utilities.
- PSNH’s agreement to freeze distribution rates for two years.
PSNH’s commitment to establish a Clean Energy Fund is a welcome step, consistent with similar environmental and clean energy commitments in prior restructuring agreements throughout New England. As a complement to the state’s existing clean energy initiatives, this investment is intended to leverage additional capital to advance local renewable energy and energy efficiency, both of which are proven strategies to lower energy costs, to reduce harmful air and climate pollution, and to create and sustain jobs in New Hampshire’s growing clean energy sector.
Like almost all settlements, this agreement is not perfect. It does not provide a legally binding guarantee that the power plants will retire, as some advocates sought. Although it provides savings to all customers, the negotiated rate structure for the stranded cost charge favors large businesses. And its $25 million write-off for the scrubber is less than we were seeking in engagement before the PUC.
But in the end, the extraordinary benefits of the agreement are worth these imperfections. The most important clean energy benefit of the settlement is PSNH’s agreement to sell its fossil fuel power plants. Divestiture will free New Hampshire customers from their now-indefinite commitment to paying the costs of running power plants built in the 1950s and 1960s, including likely upgrades to comply with future environmental requirements. These power plants will now compete in the marketplace, which has increasingly chosen more affordable and efficient resources, and which has led to coal plants ending operations throughout New England.
The end result of this monumental agreement is that New Hampshire is now turning the page on the polluting resources of the past and focusing on creating the clean energy future that New Hampshire needs. CLF is proud to be a part of it.