PSNH News Press Release

PSNH Provides Updated January Rate Filing

Adjustments to Energy Service and Stranded Cost Rates Projected

MANCHESTER, N.H. (December 13, 2012) Public Service of New Hampshire (PSNH) has filed with State regulators an update to its rate adjustment forecast for January 1st. The filing is not final and requires approval of the New Hampshire Public Utilities Commission (NHPUC), but based on current energy market forecasts and continuing state government mandates, customers purchasing both delivery and energy service from PSNH can expect an average rate increase of about 8 percent starting on January 1st.

The company is forecasting an Energy Service rate of 9.54 cents per kilowatt hour (kWh) effective January 1st. By way of comparison, the company's Energy Service rate was 9.92 cents/kWh in 2009 and is currently 7.11 cents/kWh. An earlier forecast projected an Energy Service rate of 8.97 cents/kWh. The anticipated change in the Energy Service rate is tied in part to higher prices in the regional energy market driven by the winter heating season and increasing natural gas prices. The wholesale price of natural gas for delivery to New England has increased approximately 20% over the past two and a half months. The PSNH rate forecast also reflects the expiration of an Energy Service credit to customers that had been in place since July 1 in order to reconcile costs. PSNH's Energy Service rate is adjusted annually, based on the company's actual cost of producing or purchasing the energy it needs to serve its customers. The rate will be reviewed again mid-year to determine if adjustments are needed. 

A significant portion of PSNH's Energy Service rate is associated with state government mandates. It includes about $67 million in annual costs associated with the State's environmental initiatives, including: the Regional Greenhouse Gas Initiative; the NH Renewable Portfolio Standard; and the mandated installation of a mercury and sulfur reduction scrubber at the company's largest power plant, Merrimack Station.

"We are disappointed that the majority of these mandated costs, which are created to address statewide issues, impact only certain customers," said Gary Long, PSNH President and Chief Operating Officer. "We look forward to working with state policymakers to address this in a manner that benefits all." Long pointed to a new element of the filing that is designed to benefit all customers: a projection for an Alternative Default Energy Service Rate, also known as "Rate ADE," which is a new potential rate option for certain customers and currently is under consideration by the NHPUC. Assuming approval by the NHPUC, PSNH projects Rate ADE will be set at 7.76 cents/kWh. Rate ADE will be available to PSNH customers who have "migrated" to competitive suppliers and are returning to the company's default energy service rate. Any financial benefit accrued from the rate will be used to reduce rates for all customers.

In addition, PSNH's filing includes a reduction of the Stranded Cost Recovery Charge from 1.88 cents/kWh to 0.67 cents/kWh on January 1. The reduction is due to the expiration of "rate reduction bonds" used to recover past costs. The remaining charge is primarily to recover the above market costs associated with mandated purchases from New Hampshire Independent Power Producers, such as wood-fired plants and municipal waste facilities. For 2013, it is forecast that more than $43 million in payments to these plants must be collected from customers to reflect purchase costs that are higher than market prices. A government mandated rate order with a waste plant in Concord, for example, is set about 375 percent above current market rates. And, State sponsored agreements to purchase power from five small NH wood-fired power plants include about $11 million annually in above market costs.

Impact of Government Mandates on PSNH Rates:

PSNH Energy Service Rate vs. Regional Average (Residential Customers):

PSNH is New Hampshire's largest electric utility, generating and distributing clean electricity for more than 500,000 homes and businesses in an environmentally friendly manner.

December 13th 2012