Eversource lawyer poses a question: Should retail competition end for residential customers?

Suggestion at Energy Summit stirs heated discussion

Eversource’s top regulatory lawyer on Monday suggested that the state should consider ending retail competition for residential electric customers.

Speaking at the tail end of the NH Energy Summit in Concord, Robert Bersak cited a Massachusetts study that indicated that competition for residential customers actually results in higher energy prices. “What is the benefit of competitive choice if they are paying more than they would otherwise?” he asked. 

Bersak said he was sure the same thing is happening in New Hampshire. When it comes to solutions, the “low-hanging fruit” would be to “do away with residential competition at the retail level.”

He said that residential competition allows some companies to use aggressive tactics and trick consumers into buying an overpriced product, and it’s costly for the utility to administer. In addition, he said, “everybody is suing everybody,” resulting in legal costs that also drive up electric rates. 

“That’s a little drastic,” responded Don Kreis, the state’s consumer advocate, who was sitting as a member of the same panel, “The Future of Energy Market Restructuring.”

Kreis instead suggested a law that would prevent competitors from charging more than the utilities’ default rate. 

But another panelist, Dan Allegretti, recently retired lobbyist for Exelon Corp., a competitive supplier that serves mostly commercial customers, asked, “How can we offer a price below the cost of something I do not know yet?” Rather, he said, the state should make it easier to shop for competitors. “Comprehensive transparency would capture competitive efficiency.”

Even Eversource backed away from Bersak’s suggestion.

“Bob was not suggesting that Eversource is calling for an end to the competitive electricity supply market in the state, and that is not the company’s position,” said Kaitlyn Woods, a spokesperson for Eversource in response to a NH Business Review inquiry.

Changing attitudes

But Bersak’s suggestion does not come out of blue. It echoes the position of Massachusetts Attorney General Maura Healey, who has charged that competitive suppliers hoodwink elderly and low-income residents, costing Massachusetts consumers $177 million over the two years.

It indicates a recent shift in the tone over the debate on restructuring, a debate that many thought was settled when Eversource sold off its remaining generating assets, but it has been revived for a number of reasons, especially following a NH Supreme Court decision that would require that the NH Public Utilities Commission allow utilities to invest ratepayer dollars in expensive energy projects if it could be shown that the project it could lower prices. 

That decision, in the words of Kreis, may have caused the competitive supply industry to suffer a “fatal heart attack.”

Kreis raised the specter of the Seabrook nuclear power plant debacle, which drove Eversource’s forerunner, Public Service of New Hampshire, into bankruptcy in the 1980s, sticking ratepayers with millions of dollars in stranded costs to “cover the cost of bad business decisions.”

The state’s restructuring law required that utilities divest itself of such generation assets. It stalled for decades, in August, Eversource sold off the last of such assets.

At issue now is whether that restructuring law was ultimately about lowering cost or about competition. Eversource has argued that it should still have the right to invest ratepayer money in projects like the Access Northeast natural gas pipeline or in a long-term contract for power generated by Northern Pass, if it can prove that it will save consumers money.

But Kreis said the utility’s owners should take the risk, not consumers.

At the same time, Kreis said there are several indications that the trend is shifting away from restructuring. He noted the push for fuel security has led to efforts to subsidize Mystic Generating Station in Everett, Mass. Wouldn’t power plants in New Hampshire be next, Kreis asked. 

“It is sadly ironic that just as restructuring concludes, it is now under siege,” he said. He argued that utilities will always want “their toys” at the ratepayer’s risk.

But Bersak said electricity is not like other commodities and should not be left totally to supply and demand. That assumes surpluses and shortages to regulate price. Surpluses are OK, “but shortages are terrible, leading to brownouts and blackouts.”

He added, however, that , “after we got rid of our generating assets, we aren’t anxious to build another one now.”

But if the utility could invest in a niche project that could keep rates down or the grid stable, it would be “crazy” not to build it. It is not “black and white … if the goal is to reduce electricity it doesn’t make sense to say, no, you utilities can’t play.”

The NH Energy Summit, held at the Holiday Inn in Concord was presented by The Dupont Group. NH Business Review was among the sponsors.