Power To The People: Annoying Questions About Electric Rates

By DONALD M. KREIS, Power to the People, InDepth NH

My staff is driving me crazy.

It’s not their fault, of course. Since I have the honor of serving as Consumer Advocate, tasked with defending the interests of the state’s residential utility customers in the face of the eternal quest by investor-owned utilities for lavish profits, I’ve had no choice but to hire smart analysts.

But then we get these rate cases and my analysts start asking all kinds of annoying questions. Most of them come down to some version of this meta-query: Are utilities like Eversource and Unitil gold-plating their electric distribution systems?

It’s a big deal because electric distribution rates – the charges you pay via your utility bill for the poles and wires that connect you to the grid – are increasing well ahead of inflation. It is generally agreed, here and almost everywhere, that we are in an electricity affordability crisis.

After eleven days of hearings before the Public Utilities Commission, a decision in the Eversource rate case is expected before the end of the month. The written testimony submitted by the utility in that case is riddled with references to “aging infrastructure,” and the self-proclaimed need to upgrade that infrastructure is the major force driving rates skyward.

Unitil filed its request to raise electric distribution rates in May, so that one is just getting started. According to Unitil’s filing, the company intends to invest approximately $58 million in new capital assets this year and in each of the two years following. The company wants the PUC’s blessing to put those investments straight into rates.

To put those numbers in perspective, note that Unitil – which serves electric customers in the seacoast and greater Concord areas – has about 79,000 distribution service ratepayers in New Hampshire. So, do the math: Unitil wants to invest about $734 per customer every year.

That’s our money, folks. Yes, Unitil and Eversource and every other investor-owned utility in the known universe talk about how great they are because they are deploying the capital of their loyal and stalwart shareholders. But what the utilities don’t say is that the shareholders are ultimately made whole by the ratepayers.

Let me put that another way: In the parlance of utility law, the shareholders get both a return on their investment (via garishly high returns on equity, consistently in excess of 9 percent a year, embedded in rates) and a return of their investment (via depreciation charges, also embedded in rates).

Hence the annoying questions I get from my two analysts, neither of whom is a lawyer but both of whom are always wondering: How the heck do we know whether these utilities are spending our money wisely?

Well, I am a lawyer and that’s why I find these questions so annoying. Because I have to admit that, as we litigate rate cases before the PUC, neither we nor the regulators truly know whether the utilities are making good choices as they invest in new infrastructure.

And, oh, by the way: The ever-increasing property taxes utilities pay to the towns in which that ever-improving electric distribution infrastructure is located? Those go into rates too.

Yes, during rate cases, investments are reviewed for what is known, in utility law parlance, as “prudence.” Yes, the experts and the auditors at the state’s Department of Energy are heroes for the work they undertake in putting the utilities through their prudence proof during rate cases.

But that’s a backward-looking exercise – almost everything looks justifiable in the rear-view mirror – and, in New Hampshire, prudence “disallowances” in rate cases are as rare as palm trees and beach umbrellas at the summit of Mount Washington.

Once upon a time – in other words, as recently as two years ago – we had a process for conducting a public, forward-looking review of how electric and gas utilities invested in new poles, wires, pipelines, and other toys. It was called “Least Cost Integrated Resource Planning,” or LCIRP.

But the LCIRP process never worked as intended; the PUC tended to focus on how the utilities planned, as opposed to what they planned. So the Legislature repealed the LCIRP statute as of October 2023.

Last year, the Legislature replaced the LCIRP statute with something new, called “Integrated Distribution Planning.” The idea was to narrow the planning review process before the PUC since electric utilities no longer own major generation facilities and high-voltage transmission planning takes place, more or less, under federal oversight.

So, under Integrated Distribution Planning, the PUC is supposed to focus on the annoying questions my analysts are asking, about all the poles, wires, transformers, substations, vegetation management programs, meters, billing systems, bucket trucks, capacitors, reclosers, communications infrastructure, and every other device necessary to keep the juice flowing to our homes and businesses.

Thus you might be wondering: How has Integrated Distribution Planning been going? Answer: It hasn’t.

The Legislature gave the Department of Energy five years – yes, five years! -- to establish a schedule for each electric and gas utility to start filing Integrated Distribution Plans. So far nothing has happened.

It’s hard to blame the Department of Energy for such inaction. The agency has been chronically under-resourced from the day of its creation in 2021.

But, the rate cases keep coming, and they are inadequate to the task of looking forward and assuring that utilities are spending our money wisely. Meanwhile, between now and the end of 2025, the leaders of both the Department of Energy and the PUC will be coming before the Executive Council for appointment or reappointment.

That means confirmation hearings. I’m hoping that at those hearings, executive councilors ask the nominees – whoever they are – the same kinds of annoying questions my analysts are asking me. Because the rate increases keep on coming.

Power to the People is a column by Donald M. Kreis, New Hampshire’s Consumer Advocate. Kreis and his staff of four represent the interests of residential utility customers before the NH Public Utilities Commission and elsewhere.

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