By William Opalka
State regulators on Friday approved Public Service Company of New Hampshire’s divestiture of the Merrimack Station and other generation assets, ending a 20-year odyssey that began with the state’s Electric Utility Restructuring Act of 1996 (DE 11-250, DE 14-238).
The New Hampshire Public Utilities Commission’s order approves a settlement negotiated last year between the utility and regulators in which PSNH, a subsidiary of Eversource Energy, would recover $415.5 million from ratepayers for the cost of a scrubber at the 439-MW coal-fired plant.
Eversource shareholders would forego $25 million in deferred equity. (See Eversource to Sell New Hampshire Plants.) The order also said the company “prudently incurred” the costs associated with the installation of the scrubber, which was approved by legislators in 2014.
The order also approves the sale of all Eversource generation assets in the state through an auction, which is expected to net $165 million in customer savings from 2017 through 2021.
More than a year ago, a state report said the Merrimack plant sale could net $225 million. In the meantime, however, cheap natural gas has strengthened its position as the dominant fuel source in ISO-NE and power prices have dropped dramatically. (See ISO-NE: Power Prices Fell by One-Third Last Year.)
In addition to Merrimack, and nine hydroelectric plants totaling 69 MW, the sale includes the 400-MW oil-gas Newington Station, built in 1974, and the 63-year-old, 150-MW Schiller Station, which burns coal, oil and biomass.
The plants are the last utility-owned generators in the state. PSNH challenged the 1996 restructuring law, which required retail choice and the divestiture of all utility generation, resulting in years of litigation. In 2003, the state legislature approved a bill delaying PSNH’s sale of its fossil or hydro assets until 2006.
Eversource must transition to competitive procurement for default energy service within six months of the sale of the assets. The agreement also calls for the company to provide tax stabilization to the host communities of the sold plants for three years if the plants sell for less than their assessed values.
The settlement also approves the sale of rate reduction bonds, which will finance the stranded cost balance at a lower interest rate lower than the return on equity that Eversource would receive if its generation remained in rate base. Eversource shareholders will also contribute $5 million to establish a clean energy fund for initiatives throughout the state.
The PUC said the settlement “involved a balanced compromise and resolved technically complex issues arising from the divestiture of Eversource’s generation assets.”