PUC rejects PSNH surcharge for ‘migrated’ customers

Public Service of New Hampshire cannot impose a surcharge on the large customers dropping its services for lower-priced competitors, but it can charge them extra if they want to come back, the Public Utilities Commission concluded in an order issued Tuesday evening.The order is a clear victory for PSNH’s competitors, who argued that the surcharge, called a non-bypassable rate, would thwart consumer choice.The competitors also have called on PSNH to sell off its fixed assets instead, as most utilities have, but the PUC did not go there, leaving the decision on restructuring to the Legislature. But it did say it will explore requiring PSNH to bill its competitors for service provided to residential customers and small businesses, making it more attractive for competitors to compete in that market as well.The decision is the result of year long regulatory debate over how to deal with the migration of PSNH’s largest customers, which now purchase 37 percent of the power they used to buy from PSNH from other customers.That migration has increased the electric bills of those left behind, primarily residential customers and small businesses – by 8 percent.The fact that rates for those left behind are going up isn’t a matter of cost shifting, said the PUC. “Rather, this is a natural consequence of the transition to competitive markets.”A non-bypassable charge is not the cure, the order said. “Such a charge, in our view, would constitute unfair cost-shifting to customers that have taken advantage of competitive supply.”The charge would be “contrary to principles of the restructuring … customer choice and minimization of customer confusion.”And it “discourages customers from seeking power from competitive suppliers because the savings they might otherwise enjoy would be offset by the continued obligation to pay for a portion of generation-related costs”PUC agreed with PSNH that it would be unwise to prevent those fleeing customers from returning by imposing a stay-out period, but it did say it could impose an extra charge should they wish to return.In the case of large customers, it could be a charge on the actual cost to PSNH to buy replacement power that it didn’t expect, and for smaller customers it could be an add-on. These, however, were mere suggestions, and the PUC ordered PSNH to file a proposed tariff in late September 2011.The PUC also rejected the competitors’ position that PSNH should follow a more transparent request for proposal to bid out its need for supplementary power. (Many of those competitors would love to bid on that).It agreed that the utility needs to be flexible in purchasing its supplemental needs, but it did want to encourage more competition among smaller users by looking at a program that would require that PSNH bill for service provided by competitors at a fixed fee.As for requiring that PSNH sell off its assets, the way the law reads now, the “commission may not have authority to require divestiture, but only the authority to approve divestiture if proposed by PSNH.”That throws the divestiture hot potato back to the Legislature, which is certain to weigh in on the issue during the next legislative session at any rate. — BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW