PUC Report: Current Electric Market Conditions "Unsustainable" for PSNH

Jun 8, 2013

PSNH's rates have trended above the market rate since mid 2009, with a notable spike this year. This has spurred exponential growth in the number of competitors entering the residential market to court rate-payers away from the last N.H. utility to own power plants.
Credit NH Public Utilities Commission

Staff for the agency that regulate electric utilities have released a strongly worded investigation into the effects of cheap natural gas on Public Service of New Hampshire’s electric rates. The report on market conditions suggests the current situation is unsustainable.

The Public Utilities Commission’s report offers several alternatives to the status quo, including PSNH selling all or some of its power plants, or retiring some of them.

The problem, as the report outlines is this: because PSNH owns several power plants that aren’t competitive with the current low price of natural gas, those plants have gone from saving customers money to costing them extra. As more customers leave PSNH for competitive suppliers, the more PSNH rates go up, as the cost of those plants is spread over fewer rate-payers.

In a statement PSNH faulted the report for ignoring the role these plants play as a hedge, if gas prices were to rise. But the report does not share PSNH’s view of the value of that hedge, stating instead that “our analysis shows that the fossil units have very little market value”.

It recommends the legislature and governor get involved and PSNH present a proposal for how to move forward, saying "there is not a great deal of time for the State to act to address what will become an increasingly onerous burden" for PSNH ratepayers.