Public Service Co. of New Hampshire d/b/a Eversource Energy on Dec. 15 objected at the New Hampshire Public Utilities Commission to a Dec. 9 petition by three New Hampshire towns to delay the auction process for the utility’s power plants, including coal and hydroelectric plants.
The Dec. 9 request for delay was made by the City of Berlin, the Town of Gorham and the Town of New Hampton (collectively called the “Municipal Intervenors”). Said Eversource in its Dec. 15 objection: “The Motion is primarily a reassertion of prior arguments of the Municipal Intervenors that were considered by the Commission, and the arguments made therein that the Commission failed to properly address those matters both factually and procedurally is simply incorrect.”
On Nov. 10, the commission approved the design of an auction process for the power plants.
Eversource said the Municipal Intervenors’ 26-page motion may be reduced to three primary complaints:
- the auction schedule established by the Nov. 10 order restricts the Municipal Intervenors’ ability to reasonably participate in the auction;
- the approved auction process fails to ensure that prices bid for the generation assets will be maximized; and
- the commission failed to conduct an adjudicatory proceeding prior to issuing the Nov. 10 order.
“None of these complaints has merit,” wrote Eversource. “The Municipal Intervenors’ main complaint regarding the auction schedule centers on the need for the two towns, Gorham and New Hampton, to have Town Meeting approvals prior to participating as bidders in the divestiture process. As an initial matter, the Municipal Intervenors’ complaint is that it is now too late for the two towns to include the possibility of participating in the divestiture process on the agenda for their upcoming Town Meetings. If indeed it is now too late for the upcoming Town Meetings, as alleged in the Motion, that situation is due primarily to the two towns’ failure to act in a timely manner.
“Despite the urgency of the situation alleged by the Towns in their pleadings before this Commission related to what they regard as the acquisition of “major portions of the tax bases of the Municipal Intervenors”, they do not appear to have prioritized the scheduling of town meeting items over arguably more routine items such as “the acquisition of fire trucks, police cars, and other pieces of municipal equipment.” The Towns’ failure to act now forms the basis for their Motion. They seek to delay the expedited divestiture process in order to allow them to take actions they could have, and should have, taken months ago.”
Eversource said about a municipal argument based on the involved coal-fired capacity and the new Trump Administration in Washington DC: “In their Motion, the Municipal Intervenors speculate that delay of the auction “could” increase the assets’ value due to “the new federal administration coming into power.” That may, or may not, be true – and there is no way to know now what may happen. Indeed, delay “might” decrease the value of the assets. For example, intervenor Sierra Club has recently filed suit against the U.S. Environmental Protection Agency (“EPA”) seeking a Writ of Mandamus from the U.S. Court of Appeals for the First Circuit ordering the EPA to issue new NPDES permits for Eversource’s Merrimack and Schiller Stations by June, 2017. If Sierra Club is successful, the timing of the new NPDES permits could disrupt the auction process, as new permits would be issued within days of when final bids are expected (in May, 2017).”
Berlin is the host community for the PSNH Smith Hydro facility, which has a nameplate capacity of 15.2 MW. Gorham is the host community for the PSNH Gorham Station Hydro facility, which has a nameplate capacity of 2.1 MW. New Hampton is the host community for a portion of the Ayer’s Island Hydro facility, which has a nameplate capacity of 8.4 MW. These facilities are major portions of the tax bases of the Municipal Intervenors.
The auction process approved by the commission established a timetable that includes:
- Mid-to-late November, 2016: PSNH advisor J.P. Morgan (JPM) will initiate the “request for qualification process for Round 1 bidders.”
- Mid-December 2016 to early-January 2017: circulation of confidentiality agreements to qualified Round 1 bidders.
- Early January 2017: circulation of confidential information memorandum to qualified Round 1 bidders.
- Mid-to-late February 2017: Submission of preliminary non-binding offers.
- Early-to-mid March 2017: Selection of Round 2 bidders, with Round 2 bidders being given access to due diligence material and tours of PSNH’s facilities.
- Early-to-mid May, 2017: Submission of bids from Round 2 bidders.
The Municipal Intervenors are requesting that the commission modify the process to include a third round, whereby the first and second rounds would remain unchanged, but, as to timing, the second round would not necessarily be final, and an optional third round would exist. This would mean that If any early bid from a Municipal Intervenor is accepted, the Municipal Intervenors would call special meetings to ratify the sale and approve bonding for the acquisition. If necessary, JPM can delay announcing the winning bid to all other parties until the results of the ratification votes are received. “This procedure would ensure that these assets would go for the highest price, without associated stranded costs and without creating an environment where the Municipal Intervenors’ tax base will be destroyed,” the municipals said.
The PSNH power plants subject to this sale process are:
- Merrimack Station, Bow, Coal, 439 MW.
- Newington Station, Newington, oil and/or natural gas, 400 MW.
- Schiller Station, Portsmouth, coal or oil at two units; biomass at one unit, 150 MW total.
Hydroelectric – 69 MW total
- Amoskeag Hydro, Manchester
- Ayers Island, Bristol
- Canaan Hydro, West Stewartstown
- Eastman Falls, Franklin
- Garvins Falls, Bow
- Gorham Hydro, Gorham
- Hooksett Hydro, Hooksett
- Jackman Hydro, Hillsborough
- Smith Hydro, Berlin