Big Change in Buying Power Contracts Being Advanced in NH Legislature

Print More

Don Kreis, head of the Office of Consumer Advocate, testifies Monday before the subcommittee of the House Science, Energy, and Technology Committee working on SB 54.


CONCORD – Ratepayers, along with new offshore wind and hydropower, could benefit from a bill, SB 54-FN, that is making its way through the legislature to allow companies to enter long-term contracts.

It would be a major policy change for the state and it is a complicated undertaking.
This bipartisan, enabling legislation is favored by Gov. Chris Sununu, the Business and Industry Association, and many others as a way to help stabilize electric costs. It has passed the Senate after being amended.

Existing power generators oppose the measure unless it is crafted to include them and warn the state could have a price and reliability problem as the bill is currently structured.

A subcommittee of the House Science, Energy, and Technology Committee met to work on the language of the bill Monday following a lengthy hearing last week. It went through a list of questions legislators have. They meet again next Monday to finish up and will recommend something to the full committee at 2 p.m. on May 1.

A copy of the bill as it is structured is here:
Former senator and Deputy Mayor of Lebanon Clifton Below, who was the prime author of the 2019 Community Power Law (NH RSA 53-E,2019) which is giving municipalities and counties an alternative to buying power themselves, said if passed, Senate Bill 54-FN could be a long-term hedge which could help all ratepayers in the state.

Speaking to the committee, Monday, he said it would recognize the limits and volatility of price in the current short-term markets for electricity which the state has used for the past 20 years, and create long-term contracts for one-fifth of the electricity or “base power” used in New Hampshire.

The bill would allow the state’s three utilities to enter into 20-year power purchase agreements to get up to 2 million megawatt-hours annually.
But he cautioned that the language should be written carefully, particularly as it relates to energy generators which can use Renewable Energy Credits or RECs and that is the source of part of the bill that needs working on still.

Originally conceived as a renewable energy bill, the measure was amended in the Senate with the help of the Sununu Administration to allow for all sources of new power generation to be considered for long-term contracts.
Some said it most likely favors offshore wind development, which is being considered and supported by Sununu for the seacoast, and a possible new proposal from Hydro Quebec to bring hydropower into the state.

The Northern Pass proposal to bring such electric power through the state to Massachusetts was rejected, but Sununu has mentioned the possibility of hydro-power from Quebec several times since.

The bill does not dictate that the utilities pursue the purchase of any particular energy source, but clean energy advocates say the proposal could help low-cost renewables compete against established generators.
Other New England states have carved out procurements limited to renewable energy, like offshore wind, partly to help develop those resources by providing a guaranteed revenue stream.
None of the state’s utilities have their own power generation now, but simply buy power and distribute it through their infrastructure to customers with the approval of the Public Utilities Commission.
Not included in this is New Hampshire Electric Cooperative which is not regulated by the Public Utilities Commission.

Also, there are now 34 communities using the 2019 law to buy their own power and more communities are considering it through their town meeting proposals, county government, and city councils.
This bill requires that any procurement for the utilities including Eversource be from a new electrical energy source — as opposed to an existing facility.

Deputy Commissioner of the Department of Energy Christopher Ellms acknowledged that this is a major change in the way New Hampshire has bought power for some time.
But after the huge hike in electric rates last fall from the six-month contracts, it was time to rethink that.

The administration’s 10-year energy strategy for the state rejected state-backed power purchase agreements.
Sununu told reporters when the sticker shock hit everyone, largely due to the high cost of natural gas used to make electricity, that he would be looking at alternatives to this every six-month market purchase, approved as a passthrough by the PUC.

Sam Evans-Brown, executive director of Clean Energy NH, helped write the bill and testified in support of it before the whole committee. He said renewable resources need long-term stability to develop and the measure will allow for that.

Evans-Brown noted most of the proposed construction projects in the ISO (Independent System Operator) queue for the region are renewable energy projects, anyway.

Sen. David Watters, D-Dover, who sits on the Energy and Natural Resources Committee, is a co-sponsor of the bill along with Republican Kevin Avard of Nashua.

The Business & Industry Association of New Hampshire supports the bill’s passage.
The proposal “could be an innovative way to lower energy costs for Granite State ratepayers,” said Kristen Koch for the association.

But the New England Power Generators Association is opposed. Dan Dolan, the association’s president testified the bill would further accelerate the degradation of existing facilities.
“I do not believe this is the right prescription,” he said.

Meredith Hatfield of the Nature Conservancy also opposed the bill as amended by the Senate. She said the organization did support it initially for clean energy resources but is now concerned.

Marc Brown, vice president for state affairs for the Consumer Energy Alliance, spoke in support of the bill.
Volatility and the geopolitical issues which brought such high prices to New England this fall are not going to end any time soon, he said, and the region is “energy constrained”, particularly in the winter.
He said the bill would provide the state’s ratepayers a hedge against that volatility.

It’s not a mandate, he noted.
The bill would just allow for contracts, including those from out of state and that involve multiple entities from other states could combine.

The fact they may have competing laws and concern for protection for New Hampshire ratepayers were expressed by members of the subcommittee.

Daniel Phelan, who manages regional electric issues for the state energy department, said the goal is to get the rates low and the state would not want to preclude other regional options by making this New Hampshire-only bill.

Lindsay Bourgoine, director of policy and government affairs for Revision Energy, spoke in support of the bill.
Michael Lacata, director of government affairs for Eversource Energy, the state’s largest utility also spoke in support of the bill.
He said the region is looking at the retirement of a number of baseload generators.

In the future, if those retirements occur, “we do not have enough reliable low-cost energy to meet the demand,” Lacata said. “The bill before you is reasonable, if I might say, a modest approach,” to solving the problem.

If passed, there will be input from the Office of Consumer Advocate, which was added to the bill in the Senate, and the office of the state’s new Department of Energy which supports the bill.

Ellms said the state was “honestly lucky this winter that we had a mild winter…”

“Put together this (Purchase Power Agreement) proposal is laser-focused on price stability, price volatility, and the reliability challenge…There is no perfect solution to this problem,”  Ellms said.
Ellms said there is obviously a risk of a bad deal.
Would there be room for existing baseload sources in the bill, legislators asked.

Jasen Stock of the NH Timberland Owners Association said legislators would be remiss in not considering an existing facility if it can provide a benefit to the ratepayer.
He noted the Burgess power plant in Berlin and trying to reopen and negotiate that long-term contract, which could provide a ratepayer benefit.
“To not consider existing, and again I represent a baseload facility…We would advocate that you consider this and allow existing facilities,” said Stock.
“Why not?” Stock said.

Amendments were offered to refine the bill to maximize benefits to ratepayers, which is the goal of the bill.
The final bill might also consider “over-market energy cost caps” of purchase power agreements to protect ratepayers but some including Lacata said it might be difficult and ambiguous.
“I think the committee might want to be cautious,” he said.
The subcommittee will work on that, he was told.

Another work session is planned before a full recommendation to the committee, which will focus on RECs and over-market costs.

Below suggested the subcommittee work on the REC aspects leaving the details for future interpretation.
He suggested a new section would read: “To the extent any proposed agreement to purchase electric energy includes environmental attributes, including RECs, the Public Utilities Commission shall approve how such environmental attributes are used or disposed of in a manner expected to minimize costs and max benefits to ratepayers.”

And he also suggested “intervening parties that supply power to retail customers in New Hampshire shall be afforded an opportunity to evaluate and provide public comment” once the RFP has gone forward and is put before the PUC.

He said access to the data to have another set of eyes on the proposal would benefit the consumer.
But Phelan said it would be a massive confidentially issue of offering up competitive information to competitors.

Comments are closed.