The New Hampshire Public Utilities Commission (PUC) has denied Eversource Energy’s (NYSE:ES) petition for reconsideration regarding the PUC’s March 27 order, in which the PUC dismissed the company’s petition requesting approval of a proposed power purchase agreement (PPA).
As noted in the PUC’s April 20 order denying the petition, Public Service Company of New Hampshire d/b/a Eversource last June filed the petition for approval of the proposed 20-year PPA between Eversource and Hydro Renewable Energy (HRE), which is an indirect wholly-owned subsidiary of Hydro-Quebec.
Under the PPA’s terms, HRE would sell, and Eversource would buy, about 100 MW of firm, on-peak electric energy delivered to Eversource’s Deerfield substation over the proposed Northern Pass Transmission line.
Under the terms of Eversource’s proposal, the order added, net gains or losses from the purchase and subsequent resale of the energy would be accounted for through the Stranded Cost Recovery Charge (SCRC) rate established by the 2015 Restructuring Settlement Agreement and approved by the PUC in a July 2016 order.
An Eversource spokesperson told TransmissionHub on April 25 that the PPA is not a requirement of the Northern Pass Transmission project state permit process.
The spokesperson added, “The PPA was proposed as a response to many, including business leaders and policy makers, who asked for a guarantee that New Hampshire, as host state of the Northern Pass project, will receive its fair share of energy from the project and economic benefits above and beyond those received by other New England states.”
As TransmissionHub reported, the PUC said in its March 27 order that “the proposal cannot be approved because it is inconsistent with New Hampshire law, specifically the Electric Utility Restructuring Statute, RSA Chapter 374-F.”
The PUC also said in its March order that the basic argument of Eversource is that RSA Chapter 374-F was intended to lower energy prices and that Eversource’s entering into the PPA with HRE could further that intent, and would further the statutory directives to ameliorate stranded costs – if the PPA were to be below market and the SCRC were to receive an offset through Eversource’s proposal.
Eversource also relied on its general corporate authority under RSA Chapter 295, and the specific statutory provisions of RSA Chapter 374:57, which sets forth Eversource’s obligations when it “enters into an agreement with a term of more than one year for the purchase of generating capacity, transmission capacity, or energy.”
The PUC added in its March order that Eversource pointed to the experience in another docket, which related to certain PPAs entered into by Eversource with small wood-fired energy producers under the federal Public Utility Regulatory Policies Act and RSA 374:57.
The PUC noted that regulatory staff, NextEra Energy Resources, the New England Power Generators Association (NEPGA), Conservation Law Foundation (CLF), and Society for the Protection of New Hampshire Forests – collectively, referred to as the opponents – disagreed and focused on what, in their view, is the primary intention of RSA Chapter 374-F: separating the functions of generation, transmission, and distribution for electric distribution utilities (EDCs) in New Hampshire to enhance competition and to prevent EDCs from shifting the risks of generation and transmission investments to distribution customers through distribution rate recovery, as they had done in years past.
The opponents argued that recovery of PPA-related losses through the SCRC would serve as an impermissible intermingling of generation and/or transmission activities on the one hand, and distribution activities on the other, and an impermissible shifting of related financial risks to Eversource’s customers, the PUC added in its March order.
In its April 20 order, the PUC said that it concluded as a matter of law, in its March order, that Eversource’s proposal conflicted with the principles and requirements of the Electric Restructuring Statute, RSA Chapter 374-F.
Eversource on April 3 filed a timely motion for reconsideration of the PUC’s decision to dismiss the petition, and on April 10, NextEra, NEPGA, and the CLF each filed objections.
The PUC also said that in its motion for reconsideration, Eversource made reference to the advisability of the PUC suspending its March order in light of recent legislative developments in the New Hampshire General Court and Eversource’s pending appeal of an October 2016 order issued in another docket, in which the PUC dismissed an Eversource petition to acquire gas capacity for resale to electric generators based on a determination that it violated the Restructuring Principles of RSA Chapter 374-F.
Among other things, the PUC noted that the company pointed to the recent passage of Senate Bill 128 through the New Hampshire Senate on March 30 as offering the potential, if enacted, for fundamentally changing the law (RSA Chapter 374-F) on which the PUC relied when it issued its March order.
According to the text of the bill that is posted on the General Court’s website, Senate Bill 128 modifies electric utility restructuring policy principles by permitting the commission and electric utilities to pursue measures to mitigate the cost of electric service, reduce the price volatility of that service, and reduce the potential for disruptions in electricity supply, subject to the commission’s determination that such measures are in the public interest.
The PUC said in its April 20 order that Eversource reiterated the core arguments it made in its previously filed legal briefs, which are centered around the company’s position that the PUC erred in failing to adopt the position that the objective of “lower energy costs” presented by the Legislature within the terms of RSA Chapter 374-F enabled the PUC to approve the PPA proposal. The company claimed that there is no prohibition against New Hampshire EDCs like Eversource owning generation facilities under the terms of the Restructuring Statute, the PUC said.
NextEra supported the PUC’s legal conclusions presented in the March order, arguing in opposition to Eversource’s motion for reconsideration – while not opposing a suspension of the March order pending the outcome of Senate Bill 128, the PUC said. NEPGA opposed the request for reconsideration, stating that there was no basis for the PUC to reconsider its decision. The PUC added that the CLF expressed its opposition to the Eversource motion for reconsideration, and opposed the concept of a “stay” presented by Eversource.
In discussing its analysis, the PUC said that Eversource’s motion for reconsideration does not present any new information regarding the merits of the PUC’s decision, nor does it establish that the PUC overlooked or misunderstood issues in connection with its dismissal of the company’s petition.
Eversource has simply reiterated its arguments that the goals of RSA 374-F override the requirement to maintain functional separation of distribution from other EDC activities, the PUC said, adding, “Restating prior arguments and requesting a different outcome is not grounds for rehearing.”
The PUC said that in light of its precedent – under appeal by Eversource before the New Hampshire Supreme Court – it has concluded that RSA Chapter 374-F prohibits Eversource from entering into the proposed PPA, and that it affirms its conclusions that the proposal “goes against the overriding principle of restructuring, which is to harness the power of competitive markets to reduce costs to consumers by separating the functions of generation, transmission and distribution.”
The PUC continued: “Allowing Eversource to use the SCRC mechanism as a ratepayer financed ‘backstop’ for its proposed 20-year PPA would serve as an impermissible intermingling of a generation activity with distribution rates. … We have no more authority to approve such an agreement today than we did when we issued the initial order. Therefore, Eversource’s motion for reconsideration is denied.”
The PUC also said that it does not find reference to an “unenacted” bill in the Legislature, or a pending appeal of a prior order, grounds for a stay in the proceeding or for not ruling on Eversource’s motion.