State regulators have agreed to put a legal dispute with a major utility on hold so that lawmakers, state officials and Public Service of New Hampshire can work out a settlement.
The Public Utilities Commission issued a decision yesterday pausing proceedings in the PSNH scrubber case, a years-long legal battle that focused on the cost ratepayers will shoulder for a $422 million mercury scrubber the utility installed at its coal-burning power plant in Bow.
While a few raised concerns over the decision, lawmakers and other officials said they are now hopeful the parties can reach an agreement by spring that will benefit New Hampshire ratepayers and solve an issue the state has been dealing with for nearly a decade.
In 2006, the Legislature passed a law calling for PSNH to install a scrubber at Merrimack Station in Bow to reduce the plant’s mercury and sulfur emissions. The project was expected to have a $250 million price tag, but costs ballooned to more than $400 million by the scrubber’s completion. At issue in the PUC case – and what parties hope to resolve in a settlement – is how much of that cost PSNH can recoup from ratepayers.
PSNH contends the project was a mandate and it should be able to recover the scrubber’s entire cost, but opponents say the utility should have abandoned the project when rising costs became apparent.
The PUC was expected to release its decision on the case by the end of 2014. In late December, PSNH requested a stay, asking for time to work with legislators on a settlement.
The PUC granted that request yesterday, saying in a filing it will not oversee the settlement discussions but will require PSNH to file monthly updates beginning Feb. 1.
Senate Majority Leader Jeb Bradley, state Sen. Dan Feltes and Meredith Hatfield, director of the state’s Office of Energy and Planning, will negotiate with PSNH.
Several parties involved in the scrubber case before the PUC – including TransCanada and The Sierra Club – won’t have a seat at the table. But Bradley said he expects to be engaging in “shuttle diplomacy” and that if those parties don’t agree that a settlement proposal is reasonable, it will make it hard to get others onboard.
PSNH had also asked the PUC in December to put a second case on hold, one initiated by the Legislature last session that asks regulators to decide whether it’s in ratepayers’ best interest for PSNH to sell off its electric power generation fleet. PSNH is the largest utility in New Hampshire and the only one to own and operate power plants, which include Merrimack and Schiller stations. The PUC denied that stay, but said in its filing that the case’s next step wouldn’t adversely affect any settlement process.
A settlement outcome will likely affect PSNH rates. Currently the utility’s default customers, who purchase their energy from PSNH, pay a “temporary charge” of 0.98 cents per kilowatt-hour to cover scrubber costs.
It’s unclear now what a settlement deal would look like, and what it will do for rates overall.
Bradley, for his part, said the settlement could include the company recovering less than the full $422 million scrubber cost and using low-cost bond financing, a measure that requires legislative approval.
“Especially at a time of high electricity prices, it’s about saving money for customers,” said Bradley, a Wolfeboro Republican. “Based on my own experience in the past, settlement is usually a better way to get to a win-win situation.”
Feltes also talked about an agreement that meets customers’ needs. “PSNH will need to offer a solution that benefits all ratepayers, including low to middle income residential ratepayers who are struggling to get by,” he said in a statement.
