New Hampshire energy regulators have rejected a proposal from Unitil to charge all customers in their area for the additional costs incurred by their own electricity supply programs, instead of just the customers enrolled in those programs.
State officials, community power advocates, and commercial suppliers had opposed that plan, saying it would harm competition in the energy industry and could violate state law.
The Community Power Coalition of New Hampshire called the rejection a “significant victory for consumers, municipalities, and the competitive energy market.” The change could have raised prices for their customers, who rely on utility companies to deliver power but get their actual supply of electricity through their town or county.
Unitil, one of the state’s three main utility companies, made the proposal after the Public Utilities Commission directed the company to submit a filing with a position on how reconciliation charges should be managed.
But what is a reconciliation charge? And why does it matter? Let’s break it down.
When you get an electricity bill, you’re paying a rate that your utility company estimates will cover their costs for buying you that electricity.
But in New Hampshire, rates are set twice a year, and in that time period things can change. So rates also include reconciliations from the previous time period – added charges if the company underestimated costs, or reimbursements if the company overestimated.
Those reconciliation charges show up on the bills of people who use that electricity: utility “default supply” customers. That doesn’t include those enrolled in community power, who are charged for their electricity supply through their town or county’s program. And it also doesn’t include anyone using a competitive energy supplier.
Two changes have shifted the dynamics of utility rates in recent months and put reconciliation charges front and center.
First, more and more customers are moving to community power programs, leaving utilities with fewer people using their default service. Sixty-four municipalities and four counties are enrolled in community power programs with the Community Power Coalition of New Hampshire, with other communities using contractors like Standard Power.
And second, New Hampshire state regulators have directed the state’s investor-owned utilities – Unitil, Eversource and Liberty – to use a new process for buying power. Instead of locking in prices for six months, they’re now expected to buy some power from a shorter-term “spot market.”
That introduces more uncertainty to utility costs, said New Hampshire’s consumer advocate Don Kreis, and exposes customers to more risk.
That makes the question of reconciliation charges more pressing. Who should foot the bill if a heat wave or a cold snap makes prices skyrocket in the middle of a rate period, and the cost of electricity is much higher than what a utility predicted?
That’s where this decision comes in. Unitil asked regulators to approve a plan to collect those costs from everybody they deliver power to, even people buying their electricity from other suppliers. The company argued that was an equitable solution. Their default service is considered a last resort for customers who may not wish to join an alternative supplier – a “safety net” of sorts.
Additionally, Unitil said, the increasing popularity of community power programs has caused their own programs to take a major hit. That means, the company says, that customers using the “safety net” electricity supply are paying higher rates to reconcile underestimated costs.
Unitil proposed adding reconciliation costs to a part of the electric bill everyone pays, including people who have their power delivered by Unitil but provided through a different supplier.
In the order regulators issued this week, the Public Utilities Commission directs Unitil to keep collecting reconciliation costs only from customers signed up for their utility’s default energy supply.
But, the commission left the question somewhat open, saying they may explore changes to reconciliations in the future. Other utilities have similar questions still pending with the commission.
