New Hampshire to Deregulate Electricity

New Hampshire Legislature is headed toward approval of a bill that would direct the Public Utilities Commission (PUC) to start a process that could lead to the sale or closure of PSNH power plants. Such action would complete the deregulation of the electricity market, which was started more than a decade ago.

Testimony on HB 1602 before the Senate Energy and Natural Resources Committee on April 09, 2014 was mostly favorable. The bill passed the House, 185-134, on March 25.

The bill does not order the sale or closure of the power plants. It directs the PUC to conduct hearings on the matter and empowers regulators to order divestiture if they conclude it is in the best economic interests of the state.

Bill Smagula, vice president of power generation for PSNH, told the committee that the regulated utility is not opposed to the review. He said the PUC staff report that triggered the legislation is “a good report; a good starting point,” but that a full regulatory process would bring more facts to the table.

The legislation instructs the PUC to submit a progress report to the Legislature by December 31. The power plants at issue are under contract by the operators of the wholesale electricity markets in New England, ISO-NE, to provide power when called upon at least until 2017, so no divestiture is likely before that time.

During his presentation, Smagula outlined what he described as the many benefits the coal-fired plants have provided to New Hampshire consumers by keeping costs down when natural gas, which fuels most power plants in the region, becomes too expensive.

PSNH owns and operates nine hydroelectric plants, three fossil-fueled generators, a biomass plant that burns wood products, and five combustion turbines that are typically used only during peak demand.

“You say you are not opposed, but everything you just told us says we should retain these plants,” said Sen. Jeb Bradley, R-Wolfeboro, whose involvement in electricity deregulation in the state goes back to the earlier part of the last decade, when PSNH was forced to sell the Seabrook Station nuclear power plant.

As the hearing got under way, Bradley asked House sponsors of the bill how they would feel about a “purpose statement,” which would be introduced as a Senate amendment, stating that the Legislature wants the plants to continue to operate whether they are under regulation (owned by PSNH) or not.

He called them “good generating assets” at a time when many other coal, oil and nuclear power plants are closing due to age and environmental legislation, current or anticipated. He expressed a fear that the fossil-fuel powered plants would be “bought and sold for scrap.”

Rep. Naida Kaen, D-Lee, one of the bill’s sponsors, said such an amendment could affect sales negotiations if the plants do go on the market. “My concern about that would be that it would limit the options and lead to a lower outcome in the sale,” she said.

Representatives of power generators, retail electricity providers, business groups and environmental groups all testified in favor of the bill, although that does not necessarily mean all support closing or selling the power plants.

“Support for this legislation does not translate into support for divestiture,” said Michael Licata, vice president for public policy at the N.H. Business and Industry Association. “That decision should be based on the best available data, with broad stakeholder involvement, making the PUC the best venue for such a process.”