Environment
4:36 pm
Wed August 28, 2013

Any Action On PSNH Power Plants Remains Distant

The mercury scrubber which came online late in 2011 remains at the center of the dispute surrounding PSNH's above market rates.
The mercury scrubber which came online late in 2011 remains at the center of the dispute surrounding PSNH's above market rates.
Credit PSNH / Flickr Creative Commons

New Hampshire lawmakers weighing the future of Public Service of New Hampshire are not ready to force the utility to divest, or sell, their power plants. During its third meeting of the summer on Wednesday, the joint Electricity Restructuring Oversight Committee admitted that they did not have enough information – and perhaps not enough expertise – to make an informed decision.

Members of the committee drew up a long list of questions that needed answers before determining whether PSNH should have to sell its power plants. What happens if ever more customers leave the utility? What will increased environmental regulations from the feds mean for PSNH? What will happen to the price of natural gas? And many more.

“Many unknowns equals caution,” said Republican Senator Jeb Bradley, echoing the sentiments of many legislators at the table. “I think that divestiture should be explored but it has to be entered into cautiously, and I’m not ready to say that we should go there.”

That’s not to say that lawmakers were feeling optimistic about the future of PSNH’s power plants. The plants, which in recent years have run very infrequently because they are not competitive with cheap natural gas, have helped to drive up PSNH’s rates.

That in turn has meant 55 percent of PSNH’s customers have left for other suppliers, creating what some lawmakers are calling a crisis.

“Natural gas prices are probably going to stay low,” said Representative Robert Backus, a Manchester Democrat, pointing to this week’s announced closure of Vermont Yankee Nuclear Plant. He says it’s a sign that PSNH’s power plants will continue to struggle in the near to medium term. “That decision was an economic decision, and it was economic because they were going up against the price of gas fired generation. And if they thought the price of gas was going to be bouncing up, I don’t think we would have had that closure announcement.”

But for the time being the committee is in a holding pattern, with one lawmaker even suggesting they could wait until January to draft any legislation, and suggesting that any decision on divestiture perhaps should be left to regulators at the Public Utilities Commission (PUC) who have more expertise in the area. 

"We as the legislature don't really have the expertise to weigh in or even to put this issue before the legislature," Portsmouth Democrat Martha Fuller-Clark told the committee, "It's very difficult to educate the members of the House and the Senate to these complex issues."

While the lawmakers weigh their options, regulators are gearing up to decide if PSNH will be allowed to bill its customers for all of the $422 million it invested in a mercury scrubber on Merrimack Station, the largest coal-fired power plant in the state.

PSNH holds they were obligated to install the scrubber by the legislature, but environmental groups and competitors argue that the utility did not act “prudently” by continuing with the installation of the scrubber on Merrimack station, even after costs ballooned to nearly double the estimate. If that is found to be the case, the costs will have to be written off by investors. Most recently the PUC has ordered a deposition of Gary Long - now Executive for New Hampshire Energy Policy - who was president of PSNH when the scrubber was built.

The decision, due at the end of the year, will help set the utility’s rates, and determine how much pressure will be on PSNH as lawmakers come back into session. If rates at PSNH continue to decline as they did this spring, it could stem the bleed of customers. If they rise again – which is likely if the full cost of the scrubber is added to the rate – lawmakers might feel like the “crisis” will continue unless they act.