EagleTribune.com, North Andover, MA

April 28, 2013

PSNH loses customers to startups

Startups grabbing PSNH's customers by the thousands

By John Toole
jtoole@eagletribune.com

---- — New Hampshire residential customers by the thousands are unplugging from the state’s largest power utility, Public Service of New Hampshire, in favor of supplier startups.

Maine-based ENH Power, which has offices in Portsmouth, has picked up 54,000 customers from established New Hampshire utility companies, primarily PSNH, since last summer, owner Kevin Dean said.

“We’re going to do another 50,000 this year,” Dean said. “This time next year, I would be happy with 150,000.”

PSNH estimates 50,000 residential customers from a 500,000 customer base are now using so-called competitive electric power suppliers.

More than a decade after the state moved to deregulation, industry executives and observers attribute the surge in competition to many factors. Those include cheaper natural gas, new customer service technology, even social media spreading a gospel of savings.

But mostly it’s the price of natural gas that’s enabling the startups — for the moment — to supply power more cheaply than PSNH.

“What has changed is the economics,” PSNH spokesman Martin Murray said.

Call it competition.

“Now that natural gas is at historical lows that has created a lot of opportunity for competition,” said Bryan Lee, spokesman for Retail Energy Supply Association.

“The simple answer is natural gas,” said Dennis Delay of the New Hampshire Center for Public Policy Studies, an economist who used to work for PSNH. “The cost of producing power is lower.”

Dean estimates the average PSNH residential customer saves 24 percent by moving to ENH Power.

Jay Forgione of Derry said he made the move from PSNH to ENH Power more than a year ago. He’s glad he did.

“I did notice the monthly bills were a lot lower than before,” Forgione said. “I’d say, like, $5 to $10 a month.”

Peter Langlois of Derry switched at the end of last year.

“I’m saving around 20 percent,” Langlois said, reviewing his bills. “Any chance to save money is a good thing.”

There have been no problems for Forgione or Langlois.

“Everything has been exactly the same,” Forgione said.

But that’s not always the case.

The state Public Utilities Commission last week approved a settlement with one supplier, PNE Energy Supply and its Resident Power affiliate, ordering payments of $9.50 each to about 7,000 customers.

Those customers automatically returned to PSNH, their default supplier, when PNE was suspended from the New England power market last winter for financial reasons.

There was a buyer-beware message from regulators to consumers in the settlement order.

“Customers do bear a burden of due diligence in selecting a competitive supplier, with the understanding that such suppliers are subject to a much lighter regime of regulatory oversight and can, as recent events show, encounter financial difficulty,” the commission said.

The PUC lists 14 competitive electric power suppliers on its website.

More are on the way.

Minnesota-based Town Square Energy is before the PUC for licensing.

“We are confident we can provide a better price point to customers going forward,” Town Square president Randal Miller said.

The company aims to be operating in the state within months.

“Hopefully, sooner than later,” Miller said. “We are excited about New Hampshire.”

Suppliers acknowledge, as the PNE case shows, customers must do their homework.

“You need to understand how a company operates and how large they are,” Dean said.

Considerations include when a company purchases power and whether pricing is fixed or variable.

“If the product changes every month, they need to know that,” Dean said.

Miller advises consumers to look at the length of their contract, whether there is a cancellation fee and pricing.

“What am I actually paying for the electricity I am purchasing?” is a question to ask, he said.

PSNH plays a role in this, too. The utility educates customers about their options.

“We urge them to carefully read the fine print of the agreement they are signing,” Murray said. “It’s really up to the customer if they are going to deal with an unregulated energy supplier.”

Customers may even have to consider incentives.

Lee said suppliers in many states are offering deals that include free electricity one day a week or frequent flyer miles.

“Competition drives innovation,” Lee said.

PSNH, which has prices set by regulators, had the advantage through the first decade of deregulaton, thanks to its power plants that helped keep bills lower for customers.

Other New Hampshire utilities, such as Unitil, don’t have the same generational capacity, so PSNH is bearing the brunt of the impact from shifting market forces.

No one, including those new competitors, expects PSNH to go out of business. Those 50,000 customers who switched? They still rely on PSNH to restore power when it goes out and pay for that service.

PSNH is raising a couple of concerns with regulators and policy makers in Concord.

While rival Dean maintains PSNH should adapt to the market and sell power plants, Murray said those plants help assure diversity in the regional power supply.

Murray points to limitations in natural gas infrastructure and the potential for fluctuations in gas prices.

“There is a real possibility of concern in terms of reliability and price,” he said.

PSNH estimates $42.5 million in savings for customers because of the power plants in the first quarter of this year.

“We think they have a tremendous amount of value,” Murray said of the plants.

There is also a matter of fairness.

Murray said some PSNH costs, such as power plant pollution controls, are borne by PSNH customers, not shared by those who defect to other suppliers.

The PUC is studying the emerging competition issues, but has not announced a timeline for findings.

Unitil, which serves customers in Plaistow and Atkinson, has not seen the customer drain of PSNH.

“There has been no impact to Unitil,” from competition, spokesman Alec O’Meara said.

O’Meara concedes Unitil does not own the power generating assets that burden PSNH.

The company does not perceive the new suppliers as a threat.

“We are supporters of a competitive option for customers,” O’Meara said. “Customers are being smart and doing the right thing for them.”