House Committee to Weigh PSNH Divestiture
On Thursday (February 2) at Representatives Hall in Concord, the New Hampshire House Science, Technology and Energy Committee (SCT&E) will conduct a hearing on House Bill 1238, which calls for PSNH to divest all of its fossil, hydro, and biomass power generation assets by December 31, 2013, and requires that PSNH submit a plan for the divestiture by October 15.
Currently, PSNH generating facilities supply 27 percent of New Hampshire’s power generation. If HB 1238 becomes law, the forced divestiture would have “far-reaching cost and reliability consequences for New Hampshire business and residential customers,” says PSNH President Gary Long. It could also impact more than 325 jobs at PSNH’s power generation facilities throughout the state.
Although a unique deregulation system has been in place in New Hampshire since 2003, whereby PSNH maintains ownership of regulated generation while giving customers the option of choosing an alternative energy supplier, HB 1238 proposes to do away with that model entirely. The company believes that the bill will eliminate this “best of both worlds” for New Hampshire electric customers—the ability to buy from the competitive energy market whenever they choose, while having the protection of PSNH’s Energy Service when market conditions are less favorable or even extreme.
“Since the Legislature created this system in 2003, PSNH customers have saved $700 million during the many years when market prices were higher than PSNH’s generation,” Long explains. “PSNH’s Energy Service created these savings for customers through a combination of ownership of generation assets, as well as the ability to purchase energy from the market.”
In addition, PSNH believes its Energy Service price provides a hedge for New Hampshire electric customers against the volatility of the energy market while still providing customers the right to choose a supplier from the competitive marketplace. “Should HB 1238 be approved, however, PSNH customers will become beholden to the energy market at all times,” Long cautions. “Without this regulated hedge of protection, there will be no customer protection or predictability regarding market energy prices, which while stable today, are fraught with future market risks.”
Of the 15 states that adopted power generation deregulation in the early 2000s, four have since implemented price caps, seven have suspended deregulation altogether, and Maryland is looking to re-regulate its electric markets. “Why at a time when some states are moving away from deregulation would New Hampshire increase market risks to customers, especially when there is no clear benefit to customers?” Long asks.
PSNH is also concerned that HB 1238, if approved, would result in what would essentially be a new “divestiture tax,” requiring New Hampshire residents to pay for the stranded costs that will result from the forced sale of power plants in the current market. Such a tax, says the company, would potentially add hundreds of millions of dollars in additional energy costs for businesses and homeowners.
“House Bill 1238 will be one of the most important decisions to be made by the Legislature this year concerning the economic future of New Hampshire,” Long concludes. “The outcome is critical because once a decision is made to force the divestiture of regulated power plants, it is virtually impossible to reverse.”