Distant Dome: Your Electric Bill Is About To Increase Substantially

By GARRY RAYNO, Distant Dome, InDepth NH

In an age of energy efficiency, global warming, weather extremes and tragically horrendous floods, you would think the world’s attention would turn to electricity, how it is produced, its transmission and distribution, and most importantly what it costs.

Unfortunately the vast majority of New Hampshire residents are about to be hit with a very different scenario for their energy costs or rate shock.

Eversource customers, particularly residential consumers, are about to experience much higher electric bills.

According to information on the Public Utilities Commission website, Eversource currently has the most expensive monthly bill for the average consumer, which is $207.34, while Liberty’s average customer pays $205.80 and Unitil’s $165.52 as of June 1.

The PUC just released its final order on Eversource’s request for a rate increase as well as adjusting rate design and regulatory changes going forward that will set rates based on a formula and not the current methodology of cost-of-expense requests with off base rate expenses to be determined by regulators.

The order issued last week has not pleased many advocacy organizations and as costs will increase for everyone, they will increase far more percentage wise for residential consumers as opposed to commercial and industrial customers.

One organization raising its voice in opposition to the PUC’s order was AARP New Hampshire.

Christina FitzPatrick, AARP NH State Director, said the decision was a blow to transparency and accountability.

“Residential customers have been ill-served by the Public Utilities Commission,” Fitzpatrick said. “The decision approves several aspects of the Eversource (plan) that place an undue and disproportionate burden on residential customers, while also replacing traditional regulatory oversight with formula rates that will result in less scrutiny and accountability.”

The issue of who should pay for what among the different classes — residential, commercial and industrial — is not new and has been a very costly battlefield over the years for all concerned.

One of the big issues in the rate case is the fixed monthly charge for residential customers.

The fixed monthly charge is paid before a customer uses even a kilowatt of electricity.

Many things are included in that charge but it is essentially supposed to be the utilities’ cost of serving that customer outside of the cost of energy, and its transmission and distribution.

Currently the charge for residential customers is $13.81 but will increase to $19.81 beginning Aug. 1 and will increase $2 per year thereafter so in five years it will be approaching $30 which would make it the highest in the country.

Eversource estimated its fixed cost charge was over $40 a month but the PUC did not have the stomach for that kind of jump and instead approved the step increases.

Another contentious issue during the proceedings was how much Eversource could collect from customers for its rate of return on equity or profit to simplify it too much.

Eversource’s hired financial expert, Vincent Rea, told regulators a “reasonable range” would be between 10.30 and 11.30 percent and the utility sought a ROE of 10.8 percent and then lowered it to 10.3 percent.

Compare that to mortgage rates on homes even today now that the rates have increased substantially since the COVID pandemic.

As the state Consumer Advocate Donald Kreis noted in one of his columns in InDepthNH.org, Power to the People, “The company seeks a bloated rate of 10.3 percent well in excess of anything you or I could possibly receive on even our riskiest investments. We think the right answer, erring on the side of generosity, is 8.1 percent.”

The PUC did not go as far as Kreis would like but they approved a ROE of 9.5 percent, which is still well above far riskier investments.

FitzPatrick criticized the PUC for approving rates through a formula instead of the current process.

“The PUC has granted Eversource’s request to fundamentally change the way the company will be regulated moving forward, allowing future increases to be determined by a formula each year without additional oversight from regulators,” she said in a press release. “While the exact structure is different than what Eversource proposed, the end result is the same: virtually automatic rate increases.”

Those increases would be tied to the rate of inflation and a 1.42 percent productivity factor, according to state regulators.

“This alternative regulation approach implements the axiom of simplicity by combining many components previously handled in numerous and complex Commission proceedings with a single revenue requirement adjusted annually, with only stranded costs, a temporary annual recovery mechanism, and major storm recovery outside of the Distribution Revenue Requirement,” according to the order noting they rejected the utility’s more complicated formula to set rates.

“This alternative regulation approach improves gradualism and reduces revenue lag by moving away from the traditional cost-of-service ratemaking which has historically resulted in large rate increases for each rate case. Using alternative regulation, the Company receives an annual inflation increase for capital and overhead so that periodic rate case adjustments are smoother and more gradual,” according to the order.

Regulators claim the new process will have real cost controls by requiring Eversource to meet aggressive capital and overhead targets to keep the alternative regulation in line with actual spending.

That will result in a streamlined process with costs reviewed only if spending is above the target, thus avoiding a “long, detailed, and arduous annual spending reviews,” regulators said.

Some of the major costs contained in your electric bill are outside of state control, such as transmission, which is regulated by the Federal Energy Regulatory Commission, and distribution, which is regulated by the regional system operator, ISO New England and includes Asset Condition transmission projects which drive up the costs for all New England consumers.

One such project receiving attention recently is one Eversource proposes for the western part of the state that would cost more than $400 million.

The political climate in Washington also is likely to increase electric rates for everyone across the country as tax credits disappear for alternative energy generation like off-shore wind, hydro projects and solar generation which will ultimately make the country and particularly the Northeast more reliant on fossil fuels for generating electricity which favors the fossil fuel conglomerates like the Koch Foundation and middle eastern countries and further impacts climate change.

New Hampshire did its part for the fossil fuel industry this session approving a new state energy policy that downgraded the value of alternative energy while giving a nod to more fossil fuels.

Some Republicans in the GOP controlled legislature are pushing for New Hampshire to be the New England home for the large data centers that have sprouted down south, fouling water and placing extremely large demands on the electric market.

If that happens here, expect to see even greater electric price increases as too many entities fight over too little electricity much as what happened worldwide in the pandemic.

Instead of counting on taxes going up in New Hampshire, you can count on electric prices going up, along with property taxes, while the taxes go down for large corporations and the wealthy who can afford to pay the increased electric costs.

Same old story.

Garry Rayno may be reached at garry.rayno@yahoo.com.

Distant Dome by veteran journalist Garry Rayno explores a broader perspective on the State House and state happenings for InDepthNH.org. Over his three-decade career, Rayno covered the NH State House for the New Hampshire Union Leader and Foster’s Daily Democrat. During his career, his coverage spanned the news spectrum, from local planning, school and select boards, to national issues such as electric industry deregulation and Presidential primaries. Rayno lives with his wife Carolyn in New London.

This article first appeared on InDepthNH.org and is republished here under a Creative Commons license.