New Hampshire was one of the first states to deregulate their electricity market. In 1996, the state legislature passed a law requiring the Public Utility Commission to implement retail choice for all customers under its jurisdiction. Over the past decade and a half competition has produced numerous benefits. Developers invested billions in new generation facilities since the late 90?s and plant efficiency improved dramatically. Plant outages decreased from 22 percent to 12 percent- permitting service to an additional 1.96 million homes without the need to build new power plants. All this meant lower electricity rates for consumers.
To create a competitive market place, New Hampshire?s law required divestiture of generation capacity by the state?s utility companies. By 2003, Unitil and National Grid had completed divestiture but the process was temporarily halted for Public Service of New Hampshire (PSNH) due to volatility in the marketplace and the Enron disaster in California that caused rolling blackouts and outages across the county. The PUC held that divestiture would continue once sale of the assets was deemed to be in the economic interest of retail customers.
Now Rep. Frank Holden has introduced HB 1238 to spur the divestiture of PSNH generation assets. Rep Holden and proponents of electric competition believe now is the time to complete divestiture as customer migration from PSNH default service increases, additional costs to update PSNH?s generation assets loom, and the risk of volatile energy prices is low.
One third of consumers in the PSNH territory are now shopping and receiving power from competitive suppliers. As PSNH?s consumer pool continues to decrease, each consumer is bearing a larger share of legacy costs, making the utilities rates even less competitive and spurring further switching. The status quo is unfair to those who have not shopped and is it sustainable.
PSNH was struggling to finance expensive new retrofits even before new more stringent EPA emission standards were approved last December. The utility applied for a non-by passable charge to help offset a $440 million scrubber at the Merrimac generation plant, (originally estimated to cost $250 million) but was denied. Instead, the utility is instituting a temporary rate increase to pay for the project. If PSNH divested its generation assets these costs would be the responsibility of shareholders, not captive ratepayers.
Finally, the volatility of electricity rates in New England is low as natural gas rates are expected to remain low for the foreseeable future. These market conditions should placate any concerns over rate volatility in the near future.
New Hampshire residents already have been waiting over a decade for full competition. Today, PSNH?s base residential rates are higher than those paid by the other utilities in New Hampshire and its sister companies. It?s time to finish the transition; it’s time for cheaper energy.