Opponents try to turn up the heat in Bow coal scrubber case

They’re questioning the costs passed on to customers in continuing contentious case

What did Public Service of New Hampshire officials know and when did they know it? And did they withhold information from regulators when the decision was made to go ahead with a $420 million scrubber on the coal-burning Merrimack Station plant in Bow?

Those are two of the questions raised by intervenors in what is becoming an increasingly contentious case before the Public Utilities Commission, so contentious that the intervenors asked Gov. Maggie Hassan and the Executive Council on Wednesday to take the unusual step to appoint a special third PUC commissioner just to work on it.

At issue on the PUC’S docket is how much of the scrubber’s costs PSNH should be allowed to pass on to ratepayers.

Ratepayers currently pay 0.98 cents a kilowatt hour to cover costs related to the scrubber. Steve Mullen, assistant director of the PUC’s electric division, recommended that the agency approve another 1.05 cents, bringing the total to 2.03 cents a kilowatt hour over seven years.

But most intervenors, ranging from the Sierra Club to the PUC’s Consumer Advocate to the energy company TransCanada, clearly had other ideas.

The sheer volume of testimony and documentation – amounting to over 1,100 pages – caused PSNH to file a New Year’s Eve request for a two-week delay in the case, until Jan. 21.

Michael Hachey, vice president of regulatory affairs at TransCanada, provided some of the most biting testimony.

Hachey contended that PSNH should have known it could have saved a substantial amount (he estimated about $150 million) by retiring the facility rather than upgrading it to comply with state and federal pollution control mandates, especially after the cost estimate jumped from $250 million. Indeed, he maintained PSNH lobbied for the 2006 law that mandated the scrubber.

Citing a letter to the PUC, Hachey alleged that Gary Long, at the time PSNH’s president, “took credit for ‘spearheading’ and ‘crafting’ the scrubber law … in fact, PSNH by its own admission had a major role in the creation of its ‘mandate’.”

When lawmakers passed that mandate, the vote was based on the assumption that the scrubber would cost $250 million and was not intended to give the utility a blank check, said Hachey. However, PSNH knew that it would cost much more by May 2008, according to an SEC filing in August of that year, Hachey said. However, Hachey said, PSNH failed in its June 2008 presentation to the oversight committee to mention “the dramatic increase in the cost of the project which, as noted above, PSNH knew about at least a month earlier.”

Hachey also said PSNH omitted discussions of the economic impact of the projected price of natural gas. PSNH officials allegedly told the board of trustees of its parent company, Northeast Utilities, that there had to be a difference of $5.29 per million Btu for the scrubber project to be economically viable, but that the spread averaged more than $2 less than that over the last 15 years.

However, “there was no mention of the required spread” to the PUC, he said.

PSNH, as part of four motions to strike testimony, argued that Hachey’s attacks on the motivations of PSNH – particularly on supporting the scrubber legislation – were not only unreliable, since he can’t “opine on PSNH’s state of mind,” but were also irrelevant, as the PUC has previously ruled on the matter.

PSNH also argued that closing down the scrubber, or selling it off, was simply was not permitted by state law, since “retirement was not an option to installing the scrubber,” the utility said. Thus all the testimony surrounding the economic viability of that option was also not relevant, said PSNH.

Hearings on the matter are expected in March, but who should hear the case is another question. Already, the three-member commission has one new addition – Martin Honigberg, who would have to familiarize himself with the two-year old-docket – and Commissioner Robert Scott, who dealt with the scrubber when he headed the state’s Air Resources Division of the Department of Environmental Services, recused himself.

Three of the intervenors – The Office of the Consumer Advocate, TransCanada and the Conservation Law Foundation – have asked the governor and the Executive Council to appoint a special commission to break any tie.

PSNH did not concur with the motion, and will file a full response in the coming weeks, but spokesman Martin Murray had this to say: “There seems to be a bit of absurdity at play here. The commission has worked on this docket for two years, and issued a dozen orders, with two commissioners participating, and these parties have never raised an objection. There is no compelling reason now to hold up the process.”