Turner: HB 365 plugs the net metering utility loophole

It eliminates the possibility of cost-shifting to customers

Anyone who followed the progress of raising the net metering cap from 1 megawatt to 5 megawatt last year knows that Governor Sununu vetoed that 2018 bill (Senate Bill 446). The argument centered on purported cost-shifting from those customers who would net meter to those customers who would not.

In reality, the cost-shifting that could have been created under SB 446 was a result of some current New Hampshire investor-owned utility practices of purchasing net metered power at rates approved by the New Hampshire Public Utilities Commission, and then purposely selling that power to ISO-New England at a loss on the wholesale spot market. The resulting “loss” would then be recovered by the utility from all their customers … and then be labeled a subsidy, or referred to as cost-shifting.

I say “some” utilities, because not all New Hampshire utilities follow this practice.

Specifically, Liberty Utilities deliberately uses the energy supplied to them by their net metering customers, who are located on their distribution system, to reduce the default service supply energy and capacity they need to purchase from third-party suppliers through the ISO-New England system. Essentially, they “load reduce” their requirements before purchasing the gross amount needed to service all their customers, saving transmission and capacity costs flowing through ISO-New England power in the process.

Liberty doesn’t own any electrical transmission line assets.

I would also mention that Liberty has proposed an innovative energy storage (batteries) pilot project that would study how electrical energy storage equipment can be deployed to help reduce costs to ratepayers as well.

Now comes House Bill 365, which passed the House and Senate by veto-proof margins. Language contained in this year’s version of net metering expansion, from 1 MW to 5 MW, specifically forbids the utilities from reselling the energy they receive from their net metering customers to ISO-New England in the wholesale market.

Under HB 365, customer-generated power will “displace” power the utilities would have previously purchased from their third-party default service supplier – which occurs every six months. The price they must pay to customer generators for their power is set by law to be the same price they pay to their third-party suppliers. The result is that the local utility (distribution) companies will contract for less default service supplies, all of which comes through ISO-New England regulated transmission lines (along with the ISO-New England transmission and capacity costs).

Whether originally intended or not, Governor Sununu’s 2018 veto of SB 446 effectively resulted in 2019 legislation (HB 365) that plugged the utility loophole and eliminated any possibility for utility cost-shifting to their customers.

Maybe he was one step ahead of all of us. Now, the final step is for the governor to sign HB 365 into law. That’s good news for all New Hampshire ratepayers and good news for the governor.

Harold Turner, a business owner and entrepreneur from Concord, serves as chair of the Granite Institute, a State Policy Network-affiliated free-market think tank.

Categories: Opinion

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