Bid By Resident Power for PSNH Customers Heats Up

Apr 17, 2012


For customers of the state’s largest electric utility, Public Service of New Hampshire, electric rates are going up this week. Resident Power, the new utility in town, is using that fact to beat the drums and let New Hampshire residents know they can save money on their electric bills.

That could mean trouble down the line for PSNH.

Hearing from Bart Fromuth, Managing Director of Resident Power, is a bit like hearing those car insurance ads. You know the ones: about what you can do in fifteen minutes or less.

"Resident power can save you a guaranteed five percent off that rate," goes Fromuth's pitch, "but that’s just the baseline guarantee our customers usually come in between eight percent and eleven percent for their overall savings."

But that’s not all, says Fromuth. You get all those savings and the same great service when storms knock out the power-lines, since PSNH still maintains the wires.

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.

Resident Power is the first company to get into the residential electricity market, but it may not be the last.

Dan Allegredi is vice president of energy policy for Constellation Energy, a company that already sells electricity to commercial customers in New Hampshire.

He says, "We’ve seen the residential markets take off in other states, and I think that there’s an opportunity here that interests a lot retail electric suppliers, including constellation."

Allegredi says his company is still weighing its options before deciding to jump into the residential 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."

So far less than one percent of PSNH’s residential customers have switched away. On Elm Street in Manchester, right in PSNH’s back yard, it’s clear how tough it is to get started as a new utility. Who’s even heard of Resident Power?

Carmen Gonzalez says she works twelve hours a day, and doesn’t have time to be checking out a new electric utility to see if it’s legit.

Gonzalez imagines what might happen if she switches. "I’m gonna be saving like five dollars a month but then I’m gonna be paying like ten dollars more because it’s a scam? How do I know?"

And even those who have heard of Resident Power are a little skeptical.

PSNH customer Greg Yulius says, "I’d have to be certain that the service level, especially in cases of emergency isn’t going to drop. That’s a big concern for me."

So Resident Power clearly still has work to do.  But, as Matt and Sarah Arpin from Nashua put it, if it’s cheaper why not switch?

"I’d be interested in paying less for anything," says Matt.

Sarah agrees, "if anything’s cheaper, why wouldn’t we?"

For most electricity customers, that’s what it comes down to: as long as the lights come on when you flick the switch, then the cheaper the better.

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.