The $700 Million Canard: PSNH Again Claims Savings, While Its Customers Have Lost

Steve Coteus

PSNH-canard

(photo credit: flickr/Takashi H)

 

Like PSNH’s zombie talking points about the Northern Pass project, the company has once again repeated a baseless and misleading claim—this time in a vain hope of sustaining its failing coal-fired business model. Once again, the cold, hard facts belie PSNH’s claim of a $700 million savings to its customers over the last decade.  PSNH customers have lost hundreds of millions of dollars since 2003.

In early 2012, PSNH vigorously opposed a bill that would have required it to sell its power plants, where the market would be deciding their fates. It proclaimed, as it has for a decade, that divesting would be the wrong choice for PSNH customers and New Hampshire residents. A PSNH executive told legislators that “PSNH customers have saved more than $700 million over the last decade because our energy was priced below the market price for most of that time.”

PSNH has repeatedly touted this $700 million savings—most recently in a statement on its website last month—but it has never substantiated the figure. PSNH might have compared its rates to the average spot rates on the wholesale market, or it might have conducted some other irrelevant calculation. What is certain is that PSNH has never offered the most relevant and useful calculation, which is: How much would PSNH customers have paid for electricity if they had been served by a different New Hampshire utility for the past decade? The answer is, less. Hundreds of millions of dollars less.

Using data from PUC dockets, we compared the default service rates for small/residential customers of PSNH and those of Granite State Electric Company (GSEC). For PSNH, all figures were taken directly from PUC filings. For GSEC, figures from 2008 to 2013 were taken directly from PUC filings, and the average yearly rates from 2003-2008 were estimated based on a graph from the PUC Staff Report on Market Conditions, Default Service Rate, Generation Ownership and Impacts on the Competitive Electricity Market, which we explained here. By multiplying the cost differential of the PSNH and GSEC rates by the total kilowatts of electricity PSNH has delivered each year to its customers, we estimated that PSNH customers would have paid about $400 million less if they had been served by GSEC.

PSNH has already spent $40 million buying up land in the North Country for its Northern Pass route—the same amount its customers have lost on average every year. That average yearly loss has jumped to over $100 million/year since 2009.  That’s like buying a smartphone for every single residential PSNH electric supply customer every year, and then throwing them all in the Merrimack River.

PSNH could have purchased power competitively from the market like GSEC, and it could have had the same or even lower rates. As PUC Staff point out in their report: “If PSNH were to no longer own its generation fleet, and PSNH were then to procure its default service requirements as do the other New Hampshire distribution utilities . . . PSNH’s default service rate would more closely mirror prevailing market prices.” But instead it chose to continue running its inefficient fossil plants, forcing New Hampshire ratepayers to subsidize dirty, inefficient energy sources along with mounting costs for PSNH’s failed investments in its power plants, including the astoundingly costly $422 million scrubber project at Merrimack Station.

The good news is that every PSNH customer can choose to escape these costs and not to support these dirty, inefficient plants. 90,000 residential customers have already fled PSNH supply to competitive suppliers, who offer lower rates for cleaner power. This mass migration moves us closer every day to the clean, affordable energy future New Hampshire deserves.

As the PUC Staff Report predicts, the cost of this lost opportunity for PSNH customers will likely grow exponentially in coming years as PSNH’s coal units become increasingly inefficient. No matter how PSNH spins the numbers, the truth blares louder every day: By holding on to its dirty coal plants, PSNH is sucking millions of dollars out of New Hampshire ratepayers and denying the state the clean energy, public health, and economic benefits of a post-coal Granite State.

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