Conference panel OKs giving PUC power to order PSNH power plant divestiture

But bill would not allow agency to order shutdown

The New Hampshire Public Utilities Commission will have the ability to order Public Service of New Hampshire to divest its coal-fired plant in Bow and other power-generation facilities, though not directly retire it, if a bill hammered out on Tuesday by a House-Senate conference committee becomes law.

House Bill 1602 would kick back to the PUC the politically sensitive question of whether PSNH – the only utility in the state and region to hang on to electricity-generating assets – should to get rid of them.

The main asset in question is Merrimack Station, the utility’s aging coal plant in Bow, recently added a $450 million scrubber to reduce mercury emissions, over the objections of those who argued that the plant should be scrapped altogether. The PUC is currently examining how much of that cost the utility would be able to pass on to ratepayers.

The issue has loomed large over recent years because of the migration of so many of PSNH’s customers to alternative suppliers, leaving those left behind to pay for the utility’s generating assets.

PSNH, however, has maintained that there is a danger in the region’s growing dependence on one fuel source – natural gas – particularly in light of the upcoming closure of several coal plants and the Vermont Yankee nuclear power plant. The utility argues that it should be allowed to hang on to its generating capacity as insurance for periods when natural gas prices go up, as they did last winter.

The PUC staff previously decided that continued operation of the plant would not be in the best interests of ratepayers, but the commission said it would not order divestiture without legislative authority.

Both the House and Senate version of HB 1602 would give the PUC that authority, but the sticky part was over language about shutting the plant down.

The House version would give the PUC explicit power to order that PSNH to scrap the plant. The Senate version would not order the plant to be shut down and would allow another entity to more easily repower the plant, perhaps with another fuel source.

The House conferees gave way, because they didn’t want to see the entire bill sacrificed to the issue, said Rep. Bob Backus, D-Manchester.

The Senate agreed that the bill would only provide for the continued operation or repowering of the plant “if appropriate.”

The compromise measure also moved to January the start date for the PUC to take up the issue while the PUC determines what the stranded costs would be. Whatever the PUC decides, most parties agree that the matter will come up again in the Legislature, and probably in the courts.

The House also tacked on a version of Senate Bill 281, which spells out the rules for the Site Evaluation Committee to approve wind farms. The wind industry objected to the original bill, arguing that it would effectively prevent wind farms from being built. The House tabled a compromise version and never passed it, so that language was included in HB 1602.