New Hampshire's Governor Criticizes Utility Regulators' Decision On Eversource Rates

By GARRY RAYNO, InDepthNH

CONCORD, NH — The governor is not pleased with utility regulators approving a new process for the state’s largest electric utility Eversource that would allow automatic yearly rate increases.

The Public Utilities Commission’s order released Friday increases energy costs for energy, distribution and fixed base assessments, and establishes a new method to set electric rates using a formula based on the cost of living instead of its long-standing cost-of-services process.

Gov. Kelly Ayotte said Monday, she is disappointed in the commission’s order.

“I’m extremely disappointed in the recent decision by the Public Utilities Commission,” Ayotte said in a statement. “We should be ensuring the regulatory process is transparent, accountable, and protects Granite Staters from rate hikes.”

Eversource spokesman William Hinkle on Friday said: "We’re still reviewing the decision."

Donald M. Kreis, the state's Consumer Advocate said: "I share the governor’s disappointment. In its rate case decision on Friday the PUC gave Eversource 98 percent of what it asked for, and in some respects the PUC actually awarded the utility with more than it sought.

"Customers should be especially upset by the PUC’s decision to raise Eversource’s monthly fixed charge from $15 to $19, because no amount of conservation can do anything to control that particular item on the bill. And energy charges, whether paid to the utility or to a community power aggregation program, are going up at the same time! This is the perfect storm of bad regulatory outcomes, and I am glad to see the Governor mention potential legislative fixes. That’s one avenue we too are considering, the other being a request for rehearing followed by an appeal to the New Hampshire Supreme Court," Kreis said.

Past rate cases were determined by what the utility companies presented as actual operating and capital costs over the last six months as well as unique costs such as storm damage or recouping the loss of customers leaving the utility for aggregate organizations like regional electrical cooperatives, and then determine if the company’s spending was “prudent.”

The new system approved in the order setting the new electric rates for Eversource customers instead is 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,” the commissioners wrote in 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.

The head of AARP NH also denounced the order.

“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,” said Christina FitzPatrick, AARP NH State Director. “While the exact structure is different than what Eversource proposed, the end result is the same: virtually automatic rate increases.”

She also criticized the shift of greater distribution costs to residential customers and the rate of return on equity Eversource will receive.

“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.”

The company had originally requested a rate of return of 10.8 percent but later lowered its request to 10.3 percent. The PUC approved a rate of return of 9.5 percent.

Also at issue is the fixed monthly charge for residential customers.

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

The last approved fixed monthly charge is $13.81 but the commission allowed a temporary $15 monthly charge this spring until the PUC issued its order, which it did Friday.

The order sets the monthly charge beginning Aug. 1 at $19.81. The order allows the monthly charge to increase each year by $2 for five years which will bring it close to $30 a month at that time, which would make it the highest such charge in the country.

Eversource estimated its fixed cost charge was over $40 a month.

Ayotte said she will continue to work to bring electric costs under control.

“I will continue working with the Legislature to promote an all-of-the-above energy strategy so we can expand options for consumers and lower energy costs for working families,” Ayotte said.

If the governor wants to expand the options for consumers, she may want to veto House Bill 682 which has passed both the House and Senate and is making its way to the governor’s desk.

The bill would eliminate the Office of Wind Energy from the Department of Energy, repeals the offshore wind industry workforce training center committee and the offshore and port development commission, and moves the grid modernization advisory council and the hydrogen advisory council to the office of energy innovation.

The changes are designed to align with President Trump’s recent executive order to eliminate offshore wind and turbine development.

Ayotte has already signed House Bill 508 which updates the state energy policy with a more detailed plan promoting an all-of-the-above technology solutions approach with emphasis on affordability, reliability and security.

The plan ensures the state’s energy independence by removing regulatory barriers to innovation while emphasizing market driven sources supporters said during debate in the House, but opponents said the bill emphasizes “fossil fuels: over alternative energy sources, and favors large power plants over the 21st century innovation of smaller distributive energy generation."

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

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