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New Hampshire PUC Orders Eversource to Sell Plants, Settle on Costs of Merrimack Scrubber

July 6, 2016 By Cheryl Kaften

The New Hampshire Public Utilities Commission (PUC) approved a comprehensive settlement agreement (Order No. 25,920) on July 1 that mandates the “expeditious” sale of Eversource-New Hampshire’s nine hydropower and three fossil fuel plants still operating in the Granite State – and paves the way, the PUC predicts, for long-term customer savings and rate stability.

The settlement calls for the divestiture of the power plants, using an auction process to be designed at a future date, as well as for the adoption of a competitive procurement process for default service.

Eversource Energy, a subsidiary of Northeast Utilities, serves 510,000 electric customers, or about 70 percent of the retail customers in New Hampshire.

The settlement was prompted by the utility’s construction of a mercury emissions scrubber at its utility’s coal-burning plant, Merrimack Station in Bow – the cost of which, Eversource recently reported, had risen over time to about $450 million.

Under the terms of the new agreement, Eversource customers would shell out $415,000 of the spiraling price of the scrubber under the utility’s default service rate – until closing on the Rate Reduction Bonds outlined by the commission. The utility also would relinquish a remaining $25 million in payback.

The deal was backed by New Hampshire Governor Maggie Hassan (D), who stated, “As we work to provide our businesses and families with the reliable and affordable energy that they need to grow and prosper, we know that we must continue to work to reduce energy costs while also diversifying our energy sources and protecting our natural resources. Last year, we worked together across party lines to pass bipartisan legislation that facilitated the divestiture agreement with Eversource. I welcome [the July 1] order by the Public Utilities Commission to approve the settlement, as it reduces costs to ratepayers and helps avoid costly litigation.”

For its part, the utility believes that the pact will avoid “protracted litigation in the commission proceedings related to the prudency of the Merrimack Station Scrubber and the investigation into [Eversource’s] owned generated fleet.”

In addition, the utility said, the settlement will resolve “long-standing issues regarding the restructuring of New Hampshire’s electricity market; and [mitigate] the financial impacts of the stranded cost recovery charge on large commercial and industrial customers” by using securitization bonds.

Terms of the settlement agreement include:

  • Scheduling of an auction to conduct the sale of Eversource generation facilities in New Hampshire;
  • Implementation of a tax stabilization plan for generation facility communities;
  • Creation of a comprehensive employee protection plan; and
  • Formation of a $5 million clean energy fund by Eversource.

Under the settlement, New Hampshire power plants to be divested include the following:

Fossil Fuel:

  • Merrimack Station, Bow – Coal (439 MW);
  • Newington Station, Newington – Oil and/or natural gas (400 MW); and
  • Schiller Station, Portsmouth. Coal or oil, two units; biomass, one unit. (150 MW.

Hydroelectric Plants (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

“This agreement provides substantial benefits to our customers, while also ensuring our employees are treated fairly during this transition,” said Bill Quinlan, president of New Hampshire Electrical Operations for Eversource. “Our customers will enjoy substantial savings as we divest our generating plants due to the current high capacity value for generation, the availability of low-cost financing of any remaining costs and our agreement to forego recovery of $25 million related to the Merrimack Station emission reduction ‘scrubber.’ Additionally, an extension of our Reliability Enhancement Program will allow us to continue to make important electric system investments.”

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