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PUC Staff: Selling Eversource Power Plants Bad for Ratepayers

Sam Evans-Brown
Eversource's Merrimack Station running on a cold day last winter.

Staff at the Public Utilities Commission say a grand bargain struck earlier this year to sell Eversource’s New Hampshire fleet of power plants may not be in the best interest of rate-payers.

When the deal to sell Eversource’s aging power plants was announced in March, it was declared that it would save customers more than $300 million, but expert staff at the Public Utilities Commission asked to review the deal have concluded otherwise. One estimated the deal could cost ratepayers more than $600 million dollars, and another recommended delaying the sale by five years until more natural gas pipelines are built and power markets stabilize.

Republican Senator Jeb Bradley, who helped broker the deal, says Eversource – formerly Public Service of New Hampshire – will be the benefactor of that plan. “I think that they’ve got the math wrong,” he said in a telephone interview, “The winners here if staff gets their way is PSNH shareholders, who’ll be laughing all the way to the bank that we’ve turned down such a great deal.”

Meredith Hatfield, director of the Office of Energy and Planning and a former ratepayer advocate who was also involved in settlement talks, says that the staff analysis seems to not consider the key argument for selling the plants quickly.

If the plants sell for less money than Eversource has invested in them, the company will recoup those “stranded costs” through a securitized market rate loan, and currently such loans have around an interest rate somewhere around 3 or 4 percent. However, if Eversource is allowed to keep the plants, it gets a guaranteed 9.8 percent rate of return on the cost of operating them.

The staff analysis “doesn’t seem to be looking at all of the costs that rate-payers pay to run the plants,” says Hatfield. Noting that the staff’s analysis doesn’t consider the risks posed to the plants by upcoming EPA regulations on coal-fired power plants.

After taking into account all testimony, including that from its expert staff, it will be the politically appointed PUC commissioners who have the final say over whether the deal gets approved.

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