StateImpact
12:45 pm
Wed April 18, 2012

What A Small Firm's Challenge To PSNH Could Mean For The Future Of The Electricity Market

More than a decade ago, the New Hampshire legislature partially deregulated its electricity market.  The move was supposed to allow residential customers the chance to buy power from companies other than Public Service of New Hampshire, which dominates the state’s electricity market.  But for a long time, nothing really happened.

Now, NHPR’s Sam Evans-Brown reports one company is finally mounting a challenge to PSNH.  Resident Power guarantees customers will save at least five percent on the PSNH rate.

“Resident Power’s bid to woo residential electricity buyers away from Public Service is the first major challenge that the utility has faced since the market was deregulated in 2001. They can offer savings because they buy electricity on the open market, while PSNH generates much of its own power, in older, less efficient power plants.”

While Resident Power is the only start-up provider competing with PSNH at the moment, a handful of other companies have filed with the Public Utilities Commission in the hopes of jumping into this new market.

“For its part, PSNH says it isn’t very concerned about losing customers to new competition. Public Service spokesman, Martin Murray, says the only reason other providers can offer substantially lower costs is because natural gas is keeping electric rates low.

He says that’s not a situation that will last forever.

‘It’s something we’re certainly keeping an eye on,’ Murray notes, ‘but there’s so much volatility that it’s literally changing week to week and even hour to hour.’”

Evans-Brown reports that so far, not even one percent of PSNH customers have switched to Resident Power.  So far, the new utility doesn’t look like a credible threat.  But Resident Power just filed with the PUC last fall.  That’s not a lot of time to build a big customer base.  And given Granite Staters’ reputation for frugality, it’s conceivable that down the line (especially if power prices continue to rise), a critical mass of people might decide to make the switch:

“The problem with that is that New Hampshire has only half deregulated its electric market. PSNH still owns some of its own power plants, and rate-payers pay for the upkeep and upgrades on those plants. For now, it’s only a trickle of customers leaving PSNH, but if that trickle becomes a flood there are real problems down the road.

Representative Jim Garrity chairs the house committee that hears bills about utilities.  He says, “it begs the question, what happens if just you or I are the only ones left, how much is our bill gonna be from PSNH? Well that will never happen seems to be the answer, but… it’s happening!”

Garrity says, we’ll just have to wait and see, but this new competition may force the issue of what to do with PSNH’s aging power plants.”

Garrity was a key supporter of HB 1238, a bill that would have finished deregulating the state’s energy market by forcing PSNH to sell its power plants.  But at the end of last month, Kevin Landrigan reported for the Nashua Telegraph that Garrity changed course:

“Garrity asked the House to sideline the bill, and the House agreed, 304–19, effectively killing it.

…Garrity scored a bipartisan agreement on divestiture, prompting PSNH CEO Gary Long to call it the most dangerous bill he had seen in 10 years…

‘The primary purpose of us introducing HB 1238 this year was so that we could reopen in public the policy debate of the divestiture of PSNH assets,’ Garrity said. ‘That mission has been accomplished a lot and that discussion will continue.’

Garrity said there are Senate bills that could be used to advance the debate, but supporters of divestiture conceded the House vote effectively ends the threat for 2012.”

Copyright 2012 StateImpact New Hampshire. To see more, visit http://stateimpact.npr.org/new-hampshire/.