PSNH Response to NHPUC Staff Report

The Staff of the New Hampshire Public Utilities Commission released a prelminary status report yesterday regarding the future of PSNH's power plants. The company posted the following statement in response to the preliminary staff report:

We thank the PUC Staff members for their work to date on this important issue, and we look forward to participating as their work continues. We commend PUC Staff, La Capra Associates and ESS on their efforts to meet an aggressive deadline. We recognize this study is a piece of a longer process about the future of PSNH’s generation fleet as it relates to the interests of our customers, and we look forward to engaging fully in this dialogue.

We have not fully reviewed the material but do have some preliminary observations:

A regional energy crisis – New England is currently experiencing an energy crisis. Many customers paid a high price for energy purchased on the open market this winter, and next winter is expected to be even tougher.

The power grid operator recently reported a 55 percent increase last year in the wholesale price of energy and a continued increase this year.

Given the looming retirement of several existing plants this year and in the near future, we can expect our region will continue to be severely challenged.  Just this week (April 1), at a presentation to the FERC, an ISO New England official said he expects next winter to be more challenging than this one.

Value to customers – What we can all agree on is that the PSNH plants have historically provided benefit and value to our customers, and this past winter was no exception.

Our generation units produced energy at a cost that was more than $115 million less than the market price of that same amount of power.

Clearly, at a time when energy costs are increasing, PSNH-owned generation is creating huge value for NH ratepayers every day, and keeping our customers’ rates stable. In fact, in recent months many customers have returned to PSNH for energy service.

Trying to predict the future - The staff’s study is highly dependent on a number of issues that are uncertain and difficult to predict - the future price of gas, the retirement of other power plants, the construction of new gas and electric transmission infrastructure.  These variables have a significant impact on the market value that a prospective buyer would be willing to pay for PSNH’s generation fleet.

The study also highlights how divesture will result in major stranded cost charges for consumers – an important reminder for those who might suggest that the company’s investments in these facilities would disappear with divestiture. We agree with the Staff that if a divestiture of PSNH’s plant does occur, it will be necessary to review existing law to ensure that full recovery of any stranded costs is ensured through a non-bypassable customer charge.

What’s ahead? - When considering the value of our state-regulated power plants, it’s important to look at it from the perspective of the customer.

A decision on the future of our power plants cannot be made based on a single study of what a buyer might pay for an asset. It must include a thorough and comprehensive discussion about the value they provide today to customers and consideration of the impact on customers, communities and businesses if the plants’ status changes in the future.

The study indicates that the State should proceed with caution, considering the volatility of the energy markets and the significant implications for our customers.

Our perspective is this: PSNH generation currently provides important price stability, energy reliability, and a hedge against runaway prices such as those experienced this winter.

That's real value for New Hampshire customers, and for our economy.

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