Due to stalled power plant sale process, New Hampshire allows temp rate hike

The New Hampshire Public Utilities Commission on Dec. 22 approved a Public Service Co. of New Hampshire d/b/a Eversource Energy request for a temporary rate of 1.72 cents per kWh for recovery of costs associated with the scrubber system installed earlier this decade at the coal-fired Merrimack Station.

This was an increase from a prior temporary rate of 0.98 cents per kWh. The increase will take effect on Jan. 1, 2016. The commission approved the change to allow Eversource a more equitable recovery of the deferral associated with the scrubber project and to avoid rate shock in the event that a full recovery of the deferral is eventually allowed.

An adjustment to the temporary scrubber cost recovery rate is one term of the 2015 Settlement Agreement filed on June 10, 2015, in this docket. This agreement addresses numerous issues relating to the continued ownership and operation of Eversource’s generating facilities. It also provides a plan for Eversource to divest itself of those facilities. The 2015 settlement anticipated that the commission’s review would be complete by the end of December 2015. But the proceeding has been delayed, and Eversource requested the temporary cost recovery rate to be amended to allow it to recover the costs of the scrubber as well as some of the deferral that has accumulated since temporary rates were put in place in 2012.

Eversource said that the temporary rate of 0.98 cents per kWh imposed in 2012 was intended to be in place for no more than one year but has been in effect for three and one-half years. Because the temporary rate does not recover Eversource’s calculation of the full costs of the scrubber, the amount of deferred costs projected by Eversource has grown. Eversource has projected that deferred costs will be approximately $123.3 million by the end of December 2015.

“According to Eversource, if this requested change in temporary rates is not approved, the economics forming the foundation for the 2015 Settlement Agreement will be adversely affected,” the commission noted in the Dec. 22 order. “Eversource said that delaying or denying the change to the temporary rate level would add to the total amount of the deferred costs relating to the Scrubber. Eversource projects that if the rate change were made in July 2016, for example, the deferral would grow by an additional $10 million. Eversource avers that this would ultimately increase the level of stranded costs to be recovered from customers. The Company claims that approval of the requested change in temporary rates would retain the status quo and no advantage or harm would accrue to any party due to the fully reconciling nature of temporary rates. Given the economic circumstances surrounding the 2015 Settlement Agreement and the Scrubber, Eversource argues that it is reasonable and appropriate for the Commission to adjust the temporary rate level for the Scrubber to permit full cost recovery. Eversource emphasizes that, as with any temporary rate, the rate will ultimately be reconciled with any permanent rate as determined by the Commission.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.