Combating the myth of N.H.’s ‘high’ energy prices

The state has the nation’s sixth-highest energy rates – but only for some businesses

Recently, this publication featured a column by Jim Roche of the Business and Industry Association of New Hampshire discussing energy prices and urging businesses to follow an energy-efficient strategy to reduce their power consumption and their electricity spend.

He cited U.S. Energy Information Administration statistics that branded New Hampshire as the state with the sixth-highest energy rates in the country. I find something very wrong with that yardstick and suggest we find an alternative way to examine if, in fact, our energy costs are indeed “high.”

Fact: Wholesale electricity prices aren’t high and haven’t been for many years. Combine this fact with deregulation that lets all businesses have a choice of an energy provider. If they have stayed with Public Service of New Hampshire, then yes, they are paying quite a bit more per kilowatt now than they were five or 10 years ago. If, though, they are among the 85 percent of large businesses that have migrated to third-party providers, their cost of energy is very likely below the 8.54 cents that PSNH currently charges.

What they are indeed stuck with is the fixed delivery rate charged by PSNH common to all commercial and industrial customers, which ranges from 3.5 cents to about 5 cents per kwh, depending on load shape and size of said customer. But if we examine the energy-only portion of the bill, large business customers have only themselves to blame for paying the “sixth-highest” rate in the land.

The best way to illustrate this is to look at data from the region’s wholesale power producer, Independent System Operator New England for guidance. Any power supplier in New England can avail itself of the power supply constantly available from this, the “host” utility for all New England. So, when PSNH goes to the wholesale market to purchase power to meet demand greater than its owned generation can supply, it buys from the ISO. In fact, all suppliers operating in New Hampshire buy some portion of their supply at wholesale, and then convert it into the products they offer businesses at retail.

Some energy retailers offer fixed product prices covering a customer’s entire load, while others offer a set amount of energy at a fixed price. But, one way or another, the power does emanate from the ISO system supply, and those prices reinforce the main point here – we are most certainly not in a high-energy-cost environment.

In 2010, prices for wholesale energy were at 6 cents or below 82 percent of the time. In 2011, pricing did not exceed 6 cents 86 percent of the time, and in 2012, that value rose to an astonishing 93 percent. Meaning, of course, that for only 7 percent of all the hours in 2012 was the hourly price of energy higher than 6 cents.

The question is, can the business customer directly access the wholesale market and take full advantage of the wholesale product? Yes. Deregulation has brought with it a complete makeover of the old rules.

Companies and institutions in New Hampshire, such as Saint Anselm College in Manchester and Highliner Foods in Portsmouth, have had much success in sourcing directly from the ISO and reaping years of benefits of buying their electricity at cost.

You can as well. The ISO website provides a thorough set of instructions with explanation of how you can become a wholesale customer – and not pay the sixth-highest energy costs in the country.

August G. “Gus” Fromuth is managing director of Freedom Energy Logistics, a New Hampshire-based firm that specializes in direct enrollment of end-users in the New England Power Pool and the New England markets.