Power to the People is a column by Donald M. Kreis, New Hampshire’s Consumer Advocate. Kreis and his staff of four represent the interests of residential utility customers before the NH Public Utilities Commission and elsewhere.
DONALD M. KREIS, Power to the People
Timing is essential to success in comedy, and comedy is important to the success of ratepayer advocacy. So, in the waning days of 2023, here for your edification is a reminiscence about my best comic moment of the year.
“I’m from New Hampshire,” declared yours truly, back on June 20, in yet another of those windowless and charmless hotel ballrooms in which so many regional issues critical to the success of reliable and affordable electricity play out. Before me – at the Hilton Doubletree, out by the Maine Mall in South Portland – sat the four members of the Federal Energy Regulatory Commission (FERC) then in office.
“So let me remind you of our state motto,” I continued. “Here it is.” I paused for comic effect knowing what everyone expected to come next. The phrase I actually uttered? “Used and useful.”
Everyone laughed. Even the regulators.
Of course I know, and everyone gathered for the FERC forum on winter electric reliability in New England knew, that our state’s motto is actually “Live Free or Die.” But “used and useful,“ a phrase familiar to everyone involved in utility regulation, also looms large in the history of the Granite State.
One of those perennial ‘terms of art’ that crop up in legal contexts, “used and useful” refers to the idea that ratepayers should only pay for utility assets that are actually involved in providing them with service.
A corporate helicopter, used to fly the CEO to golf outings or Billy Joel concerts? Not used and useful. Neither is a nuclear power plant that is still not in operation after a decade of construction. None of that belongs in electric rates.
Loyal readers of this column will recall why this is a big deal in New Hampshire. Since 1979 the “used and useful” principle has been enshrined in statute via our so-called “anti-CWIP” law. CWIP is an acronym for “construction work in progress” and the anti-CWIP statute is what drove Public Service Company of New Hampshire into bankruptcy almost 36 years ago – two years before the $7 billion Seabrook nuclear power plant finally went on line.
What prompted me to wave the “used and useful” flag in front of the FERC commissioners? They were pondering whether to force electric customers to pay for something unrelated to electric service – the liquified natural gas terminal in Everett, Massachusetts that will, as of next June, no longer be needed to help produce electricity.
Right now the facility – known as the Everett Marine Terminal – is supplying fuel to the region’s biggest generation facility – the adjacent, gas-fired Mystic Station. Though Mystic Station is scheduled to shut down in May, no more liquified natural gas arriving by boat to Everett has a lot of industry insiders and energy regulators feeling nervous.
So far, nobody has asked FERC to approve a scheme to sneak the cost of keeping the Everett Marine Terminal open into electric rates – but it could still happen, as the shutdown of Mystic Station approaches. Meanwhile, we have another potential “used and useful” problem, right here in Concord.
Check out Senate Bill 307.
The purpose of SB 307 is to cause the customers of New Hampshire’s electric distribution utilities – Eversource, Liberty, Unitil, and even the New Hampshire Electric Cooperative – to pay for the Twin States Clean Energy Link.
That, of course, is the 1,200 megawatt transmission line that the multinational utility conglomerate National Grid is proposing to construct across most of the length of New Hampshire. The idea is to add another path for electricity to flow into New England from the vast provincial electricity empire known as Hydro-Quebec.
If the idea sounds familiar – triggering, even – it’s because you remember Northern Pass, the failed Eversource scheme to cut a different north-south transmission line through our state. State regulators rejected the project, the New Hampshire Supreme Court affirmed their decision, and Eversource wrote off more than $200 million four years ago when forced to abandon the plan.
National Grid has learned from Eversource’s mistakes.
Northern Pass would have required the development of a new transmission corridor. Twin States would run through an existing corridor, in most instances even relying on existing transmission towers.
Eversource did little to win over the communities through which Northern Pass would have run. National Grid has conducted extensive outreach and had proven itself willing to share income from the Twin States project with host communities and public benefit projects.
Northern Pass was intended to serve only Massachusetts, by importing hydro-electricity utilities there must acquire pursuant to state law. Twin States would allow for the bidirectional flow of electricity and serve the entire region, including New Hampshire.
Northern Pass had no federal tax money at its disposal. National Grid, with the support of Governor Sununu and lots of other state and federal officials (including me), has secured a promise of a so-far-unspecified amount of federal Infrastructure Act funding.
But, in one critical sense, Northern Pass had an advantage over Twin States. The cost of Northern Pass would have been borne, 100 percent, by Massachusetts ratepayers. National Grid wants New Hampshire electric ratepayers to guarantee they will foot the bill for up to 240 of the project’s 1,200 megawatts.
That’s where SB 307 comes in. And why it’s a “used and useful” issue, at least potentially.
The bill authorizes our electric distribution utilities to seek approval by the Public Utilities Commission of “transmission service agreements“ with Twin States. But we have long since restructured our vertically integrated electric utilities and turned them into mere providers of low-voltage distribution service – not high-voltage transmission service that falls under FERC regulation.
In other words, transmission service agreements are not, strictly speaking, “used and useful” from the perspective of the utilities that sell us distribution service. So we need to have a discussion about whether we’re keeping faith with our historic niche as the “used and useful” state if we opt to fund transmission projects, however necessary and desirable, in such a fashion.
If the other New England states step up to promise their fair share of the cost of the Twin States Clean Energy Link, SB 307 or something like it might be okay. Otherwise, what goes into non-bypassable electric distribution rates should only be costs associated with providing electric distribution service.
New Hampshire represents, at most, around 10 percent of New England’s electric consumption. So if we are going to promise to fund a 1,200 megawatt transmission project intended to benefit the whole region, our fair share is, at most, 120 megawatts.
In other words, it looks like 2024 will be another big year for the “used and useful” concept. And that’s no joke.