NHBR Article

PUC OKs PSNH rate increase

Monday, July 26, 2010

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Public Service of New Hampshire’s rates will be increasing by 5.4 percent starting tomorrow -- an average of $4.72 a month for residential customers, according to a company spokesman.

The rates are rising even though the company’s cost to produce electricity actually has gone down.

The New Hampshire Public Utilities Commission on Monday approved a settlement allowing the company to get back $44.5 million on what it spent on various capital projects, including widespread repairs after last winter's ice storm.

But the increase is largely due to a 15 percent regional increase in transmission costs that is beyond the control of both PSNH and the PUC. That rate is subject to approval by the Federal Energy Regulatory Commission (FERC).

The PUC order also put into effect a recovery process for the next four years for various capital improvements that should increase distribution rates a total of 5.4 percent over four years (including tomorrow’s increase.)

"We conclude that this is a reasonable increase," said the PUC.
The distribution rate increase was sought primarily to deal with what PSNH called "attrition" -- the declining amount of return based on capital investment.

Meanwhile, a combination of aging equipment, increased regulations and bad weather (including $60 million in costs related to the ice storm) has forced the company to increase investment at a time of declining revenue.

The company is theoretically allowed a 9.67 percent return on investment related to distribution. At the end of 2008, it was earning 6.26 percent and by March of 2009, that return dropped to 5.54 percent.

Everybody agreed that the company need to raise its rates. The question was by how much. PSNH originally asked for a $51 million boost this year. The PUC staff wanted the increase kept to $32 million, and the Consumer Advocate's Office asked for $36 million. The groups settled on an amount at the end of April, and the proposal came before the PUC on May 10. On Monday, the commission ruled that they reached "a fair and just compromise."

Only one party disagreed with the settlement: the city of Manchester, which actually obtains its electricity elsewhere but pays PSNH separately for distribution. Manchester said its distribution bill for streetlights will rise from $700,000 to $900,000 a year, and it sought either lower rates or to handle distribution itself. But the PUC said that that was too complicated an issue to figure out at this late date. -- BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW

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