It’s time to complete electric restructuring
Over a decade ago, the New Hampshire Legislature made the wise decision to restructure the state’s electric industry and provide consumers the ability to choose their electric provider. A vibrant competitive generation market developed here and across the region.Consumers have benefited from maximized efficiencies and lower emissions, and investment risks shifted from ratepayers to investors. To put a finer point on that, power plants have operated more efficiently, with an increase in plant availability high enough to power an additional 1.96 million homes, without building new plants. Regional environmental emissions have substantially decreased, and over 13,000 megawatts of new clean generation has been developed.The competitive market has driven many of these benefits, but room for improvement remains. In 2003, the Legislature decided to pause the transition to a fully restructured industry. Public Service of New Hampshire was able to retain its generation plants to serve customers as long as the assets’ ownership remained in the economic interest of retail customers.The time has now come to complete electric restructuring and ensure a fully competitive market exists.The current split system in which PSNH recovers all its generation costs from consumers while many of these customers exercise their choice of retail electric supplier, is not sustainable. More and more PSNH customers are finding cheaper alternatives, and now nearly 40 percent of PSNH’s electric load has left.This is all happening at a time when the costs of PSNH’s power plants continues to rise. With fewer remaining customers and increasing costs, the burden on remaining customers becomes more, representing a dangerous cycle for the utility.One such cost increase occurs in March when ratepayers will pay an estimated 15 percent more for PSNH energy due to the beginning of the recovery for costs related to the scrubber installation on PSNH’s Bow plant. This equals an increase of over $8 for the typical residential customer.House Bill 1238 offers the solution to this unsustainable situation. It would require PSNH to file a divestiture plan with the PUC by October 2012 and complete the sale by December 2013.PSNH’s sister companies in Connecticut and Massachusetts completed this process in the early 2000s. The other New Hampshire utilities – National Grid and Unitil – do not own generation assets either. This bill completes electric restructuring, offers PSNH consumers relief by ending the current unsustainable situation, and does not forbid PSNH from bidding on its own plants.As important as what HB 1238 does is what it does not do: • It does not force the shutdown of PSNH plants. A strong market exists for the sale of generation assets, especially “scrubbed” coal plants. • It is not a tax on electric supply. Any uneconomic costs left after a sale are costs already incurred and already slated for recovery for consumers. A sale ensures no more uneconomic costs related to generation will be paid for by consumers and that cheaper market prices can be passed on to consumers. • It is not a job killer. Asset buyers put a high premium on the employees that operate power plants and the retention of employees is often a required term of sale. PSNH can also bid on its own assets. • It does not move too fast. A typical generation asset divestiture takes six to seven months to complete, and another three to six months to close.At a time when New Hampshire is working hard to retain and attract businesses and jobs in a recovering economy, it is absolutely critical that the benefits of a competitive market be realized. All New Hampshire electricity consumers, whether served by a utility or an alternative provider, deserve the best price that the market can produce. HB 1238 implements this original vision for electric restructuring and continues to be the right choice.Sandi Hennequin of Portsmouth is vice president of the New England Power Generators Association Inc.