PSNH says Former Customers Should Pay

by Dennis Paiste

MANCHESTER — So many large electricity users have switched from Public Services of New Hampshire to competitive energy suppliers that PSNH’s remaining residential and small customers pay about 8 percent more.

The New Hampshire Public Utilities Commission is weighing how to remedy that disparity after a yearlong inquiry into the matter.

A determination from state regulators is expected any time now.

PSNH is unique in that it still owns and operates power plants, while its smaller competitors in the state have divested their power generation and meet their customers’ energy supply needs through competitive bids from wholesalers. As more customers leave PSNH, the fixed costs of operating its power plants, with 1,150 megawatts of capacity, are spread over a smaller pool of remaining customers.

In testimony to the PUC, PSNH senior counsel Gerald M. Eaton identified those costs as depreciation, property taxes and debt service. The extra cost to customers who buy their power from PSNH has grown from 5 percent to 8 percent over the last year.

PSNH is seeking to shift $40 million in costs through a non-bypassable charge to be paid by all customers, even those who buy their energy supply from PSNH competitors.

“A shift of $40 million to all customers would not unduly harm the competitive markets,” Eaton wrote in a post-hearing brief to the PUC.

But the non-bypassable charge would mean $100,000 a year in extra costs to companies such as Summit Packaging Systems Inc. in Manchester, the company wrote to the PUC.

Another business, Turbocam, of Barrington, wrote it would see $32,000 a year in extra costs.

Both companies oppose the non-bypassable charge.

Companies can move back and forth between PSNH’s energy and that of competitive suppliers as frequently as monthly to get the most favorable rates.

PSNH argues the non-bypassable charge addresses PSNH’s status as supplier of last resort. “We believe this is fair because by law, we have an obligation to serve as the supplier of last resort,” PSNH spokesman Michael Skelton said.

“Our plants have to be maintained and ready to serve any and all customers. If you leave our system today, but come back next week or next year, we have to be prepared to serve you,” he said.

But Gus Fromuth, managing partner of Freedom Energy Logistics, said, “It’s not a common sense transaction for them to stage it this way.

“What they might stage instead is a model of, if somebody has gone to a private vendor and then gone back to Public Service, they should pay a re-entry fee or a return fee or some sort of mitigation (payment) because Public Service is in a standby mode,” Fromuth said.

One of several alternatives offered during the PUC review includes a stay-out provision, supported by the Office of Consumer Advocate, that would bar customers who leave from returning to PSNH for a specified period of time, or pay a premium to return before that.

For the months from April through June, more than three out of four large commercial and industrial customers got their power from suppliers other than PSNH, the utility said in a report to the PUC. But the competitive market for households and small businesses has yet to develop in the state.

Overall, the percentage of customers who have migrated from PSNH to other suppliers rose from 34.82 percent in April to 37.73 percent in June.

In its filings, PSNH said cheap natural gas over the last several years has made its own generation more expensive than New England wholesale market prices.

The Freedom Energy Logistics family of companies obtains power at the lowest possible price for New England consumers. FEL Power (felpower.com) provides high-end energy management services in electricity and natural gas. Its unique Direct to Grid (or Self-Supply) model guides large-scale users into New England’s wholesale electricity market, guaranteeing them access to electricity at the lowest available cost. Halifax American Energy Company (haecpower.com) is a retail electric energy marketer which, in partnership with South Jersey Energy, specializes in transactions converting wholesale and bulk power products into shapes and durations suitable for industrial, commercial, institutional and governmental end users. Its newest division, Resident Power (residentpower.com), is New Hampshire?s first competitive electricity aggregator to focus exclusively on residences and small businesses.