EagleTribune.com, North Andover, MA

July 2, 2013

PSNH reduces rates 5 percent

Loss of 50K customers played a role in decision

By Doug Ireland
direland@eagletribune.com

---- — Public Service of New Hampshire customers will see a 5 percent drop in their monthly bills.

The state’s largest utility announced Sunday the New Hampshire Public Utilities Commission approved its rate reduction request. It was effective yesterday. PSNH serves approximately 430,000 customers statewide, according to spokesman Martin Murray.

“Everyone will see some form of rate reduction,” Murray said.

PSNH has been asked to spend millions of dollars on infrastructure improvements, but reductions in some standard charges means customers would still save money, Murray said.

For a homeowner who uses 500 kilowatt hours a month, the bill would drop $4.68 — from $92.43 to $87.75, he said.

PSNH’s rate reduction comes at a time when many of its customers have opted to switch to other electric suppliers.

Approximately 50,000 of PSNH’s residential customers have switched, Murray said. A sharp drop in natural gas prices in recent years has spurred the change, according to industry experts such as Bryan Lee of the Retail Energy Supply Association.

Thomas Frantz, director of the PUC’s electric division, said the loss of customers had a big impact on PSNH’s request for lower rates.

“The decrease in load and obligations by PSNH to meet that load drove the cost down,” Frantz said.

Former PSNH customers from Southern New Hampshire, including Peter Langlois of Derry, have said they have seen major cost savings because of the switch. Langlois said in April he saved 20 percent on his monthly bill.

Londonderry School District Superintendent Nathan Greenberg said PSNH’s high costs prompted his district to switch to another supplier a few years ago, saving $80,000 annually.

The New England Power Generators Association criticized PSNH for its rates in an announcement yesterday. The association asked the to PUC stabilize New Hampshire’s electrical market.

“Allowing for PSNH to continue to receive guaranteed profits and cost recovery while consumers bear increased costs is a fundamentally flawed business model,” association president Dan Dolan said. “We call on policymakers to immediately begin the process to transition to the competitive model every consumer in New Hampshire deserves.”

Perhaps the most significant factor affecting the rate decrease is a drop in the utility’s energy service charge, Murray said, which constitutes more than half of a customer’s bill, he said.

That charge will decline 10 percent — from 9.54 cents to 8.62 cents per kilowatt hour.

A key reason is a reduction in the cost to produce electricity, Murray said.

“Our plants are operating more efficiently and economically,” he said.

That saved customers more than $45 million in the first quarter of the year, according to PSNH.

Recent changes in state regulations also make it cheaper for PSNH to provide electricity, Murray said.

Another key factor is that PSNH has made its last payment on a series of “stranded cost” bonds it’s been paying for the last 12 years as part of a restructuring of the electric industry, he said.

That cost has dropped from $3.92 to 67 cents per 500 kilowatt hours, Murray said. PSNH also is saving money through the expiration of contracts with small independent power producers, he added.

PSNH’s lower costs also come at a time when the utility been asked to invest in regional power grid improvements, increasing its monthly transmission charge for customers. Homeowners will see their cost per kilowatt hour rise from 1.84 cents to 1.86 cents.

PSNH must also increase the amount of money its puts in a reserve fund established to fund the restoration of power during serious storms.

Several ice and snowstorms have left Southern New Hampshire residents without power for days and required out-of-state utility crews to help restore electricity.

“We have had a slew of them in the last couple of years,” Murray said. “We had been putting $7 million a year in and now we’re going to be paying $12 million a year.”

That cost per month, based on 500 kilowatt hours, rises from $11.96 to $12.44 a month for residential customers, he said.