CONCORD – When it comes to New Hampshire’s energy future, state Sen. Jeb Bradley is looking to the past.
Long the state’s legislative point-man on electricity costs, Bradley was at the table in the early part of the last decade when Public Service of New Hampshire was forced to sell the Seabrook Nuclear Power Plant at a significant loss.
A state representative at the time, the Wolfeboro Republican was part of the team that negotiated a deal to split the losses between ratepayers and PSNH shareholders. He’s planning to bring many of the same players to the table once again, in negotiations he hopes will save ratepayers millions of dollars for years to come.
And he’s joined PSNH in asking state regulators to put their deliberations on hold while those talks continue.
The issue this time around is not a nuclear power plant, but the rest of PSNH’s “generation fleet,” consisting of coal-fired and hydro-electric power stations around the state. In a deregulated market, the utilities that deliver electricity do not usually own power plants.
If PSNH is going to be forced to sell those plants at a loss and complete the deregulation of electricity in the state as it was envisioned in the 1990s, someone is going to have to pick up the tab.
“You have to structure a settlement so that both sides get what they need,” Bradley said. “When we did this 15 years ago, customers got rate relief, PSNH got their money, and we got low-cost financing.”
With interest rates at an all-time low, the time is right to repeat the process, he said.
The alternative could be protracted and costly court battles, with an uncertain outcome for the utility, the state and its electricity customers, 70 percent of whom are served by Public Service.
With that in mind, Bradley and PSNH joined forces on Dec. 26 and filed a petition with the Public Utilities Commission, asking regulators to suspend two regulatory proceedings regarding the future of PSNH power plants and the cost of air quality controls (the so-called scrubber) at the Merrimack Station coal-fired plant in Bow.
“Both Senator Bradley and the company desire an opportunity to seek a collaborative resolution to the myriad issues that are under consideration,” states the motion, filed the day after Christmas. “Senator Bradley believes that such discussions, along with requisite legislation, have the potential to provide significant rate, reliability and public interest benefits.”
Upending a process
The motion, if successful, would upend a regulatory review that’s been under way since 2011 regarding the cost-recovery for the scrubber, and since September in the case of the power plants. There are other parties to that process beyond PSNH, and they were caught off guard by the Dec. 26 “motion to stay proceedings.”
“I don’t have any details on what they’re proposing or why they need a stay,” said attorney Susan Chamberlin, who represents consumer interests in PUC proceedings. “They can always continue to negotiate or work on legislation without a stay, so I’m not sure what the stay is for.”
Other intervenors include the New England Power Generators Association, representing power plant owners, and the Retail Energy Supply Association, representing competitive energy supply companies. Environmentalists are at the table with groups like the Conservation Law Foundation and the Sierra Club represented.
The cities of Berlin and Manchester are also stakeholders, given their interest in PSNH hydroelectric generators in each community. They all have until Monday to respond to the PSNH/Bradley motion.
“This coming the day after Christmas, and giving us the New Year’s week to respond, has complicated things, but we certainly plan to respond by Monday,” said Dan Dolan, president of the power generators group, which has long argued for PSNH to sell off its power plants to level the competitive playing field.
While intervenors are not likely to oppose the motion outright, they will argue about process and participation, Dolan said.
“Everybody’s first choice is to avoid litigation. So if we can do that, all to the good,” Dolan said. “But as is so often the case, the devil is in the details.”
Legislation likely
Those details are likely to be contained in a bill that will emerge from the House and Senate Joint Oversight Committee on Electric Utility Restructuring, of which Bradley is a member. He has filed a request with legislative staffers to draft a bill “relative to electric rate reduction financing.” Exactly what that bill will say depends on how the negotiations unfold in the weeks ahead.
Bradley says the process will be inclusive and transparent, and that a settlement would have to be reached by late March or early April, when bills approved by the Senate must go to the House and vice versa.
“If we can’t do this by the time crossover comes, I don’t know that it would work,” said Bradley. “It has to be fully public, and for any settlement to work, the parties to the proceeding now at the PUC have to be involved in those settlement discussions.”
A possible settlement on the cost recovery for the scrubber would be for ratepayers to cover the initial cost estimate of $250 million, approved by the Legislature, while the utility shareholders pick up the cost-overruns that resulted in the final price tag of $422 million.
When it comes to the coal-fired power plants, PSNH could be required to sell them, according to Bradley, “when it is in the best interest of customers.”
A volatile marketplace
With limited pipeline capacity for natural gas into New England during the coldest months of the year, the power plants are arguably a benefit to PSNH consumers in the winter. It may not be “in the best interest of consumers” to sell the plants until a new pipeline is built or capacity increases in some other fashion.
Meanwhile, PSNH could spread the benefits or costs of the plants to all PSNH customers, not just those who buy energy supply from the utility as is now the case. The company floated that idea in a brief filed with the PUC just two weeks before the Dec. 26 surprise.
Bradley’s initiative suggests some movement toward resolving these electricity pricing and supply issues, many of which have lingered for years. That comes as no surprise to PSNH spokesman Martin Murray.
“I think it speaks to the current volatility in the regional marketplace. The depth of the challenges that we’re facing was not fully realized until the (winter) energy rates went into effect recently,” he said. “Do not underestimate what’s going to happen when people open their electric bills this month and next. It will be a real eye-opener.”
