Comprehensive Agreement to Deliver $300 Million in Customer Savings, Paves Way for a More Innovative Energy Future
March 12 2015 - 9:19AM
Business Wire
Eversource to sell PSNH power plants,
protect employees and communities
As a result of months of negotiations with key state officials,
Eversource Energy has agreed to sell its “Public Service of New
Hampshire” (PSNH) power plants, resulting in at least $300 million
in savings to its New Hampshire customers. The agreement is focused
on providing customer savings and resolving other related issues
currently under review by state regulators. It also includes
important provisions reflecting the views of diverse parties in
those pending regulatory proceedings.
“This agreement represents an opportunity to create real savings
for PSNH customers, avoids protracted litigation with uncertain
outcomes for all parties, and moves the operation of PSNH
generating plants to competitive markets rather than remaining an
ongoing ratepayer obligation. Having participated in the successful
settlement with PSNH 15 years ago, I believe this settlement, while
challenging to achieve, will protect customers and enhance the
reliability of our electricity generating system,” said Senate
Majority Leader Jeb Bradley, who led the negotiations with the
Company.
Through this agreement Eversource agrees to sell its PSNH hydro
facilities and fossil fuel plants, including: Merrimack Station in
Bow, which has been in operation for 55 years; Newington Station in
Newington, which has been in service since 1974; and Schiller
Station in Portsmouth, which has been in operation since 1952.
The sale of the plants means that customers will no longer be
responsible for paying for the continued operation of the plants,
and will avoid potentially costly investments to meet environmental
standards. In addition, customers will no longer pay the existing
regulated rate of return on the plants. Instead, upon the sale of
the plants, Eversource will purchase energy for its New Hampshire
customers in the market, consistent with all other utilities in the
state and across the region.
In addition to providing savings to customers, the agreement
will resolve three ongoing dockets at the N.H. Public Utilities
Commission: DE 11-250, regarding recovery of the cost of the
“scrubber” at Merrimack Station; and IR 13-020 and DE 14-238, which
focus on Eversource’s ownership of power generation and the impact
on customers and the competitive energy market.
“This agreement provides significant savings for residential
ratepayers and resolves outstanding disputes without protracted
litigation,” said Susan Chamberlin, Consumer Advocate. “I look
forward to working with Eversource and all stakeholders as we
transition to a more innovative and fully competitive electric
market that provides benefits to all ratepayers.”
The agreement contains important protections for current
employees:
- Buyers must honor existing Collective
Bargaining Agreements.
- Eversource commits to work in good
faith with the Union regarding enhancements to employee
protections.
- Buyers must agree to keep the plants in
service for at least 18 months following purchase.
- Eversource will provide employee
protections to non-represented affected employees.
“As New Hampshire transitions to a more competitive marketplace
for electricity, we must ensure we expand opportunity for everyone,
including residential ratepayers, municipalities, the business
community, and workers. This reasonably balances and recognizes all
of these very important interests,” said Senator Dan Feltes.
The agreement will also provide benefits for the cities and
towns where the PSNH plants are located, by providing the host
communities three years of property tax stabilization payments if a
plant sells for less than its assessed value.
According to the agreement, Eversource shareholders will also
provide $5 million to capitalize a clean energy fund which will
target investments in energy efficiency and distributed generation
projects.
“I thank all members of the state team and the company for
compromising to achieve a balanced agreement that provides
significant benefits to the state and puts us on a path to put the
current litigation behind us. This agreement allows us to complete
the electric restructuring process in a way that includes savings
for ratepayers, protections for workers, environmental benefits,
and stability for municipalities that host PSNH’s generating
plants. We hope that by incorporating the views of the diverse
parties in the pending PUC cases, the agreement will have the
support of a wide range of interests,” said Meredith Hatfield,
Director of the Office of Energy and Planning, who also led
negotiations with the company. “We have more work ahead of us to
develop a full settlement document that reflects our agreement, but
we begin it encouraged by the good faith that the parties have
shown and the strong contributions they have already made.”
“The benefits of this agreement for our customers are
substantial,” said Bill Quinlan, President of Eversource’s New
Hampshire Operations. “They include an estimated $300 million in
savings over the next five years due to the current availability of
low-cost refinancing; our agreement to forego recovery of $25
million related to the Merrimack Station emission reduction
‘scrubber’; and a two-year extension of our current distribution
rates, that still allows us to continue to make important electric
system investments. We are also committed to ensuring that our
employees are treated fairly during this transition.”
Agreement Highlights
- Sale of PSNH generation facilities:
three fossil fuel and nine hydroelectric power plants
- The Company’s agreement to forego $25
million in recovery related to the scrubber at Merrimack
Station
- Estimated $300 million in customer
savings over five years due to low-cost securitization of stranded
costs
- Continued operation of power plants for
at least 18 months following sale
- Employee protections for employees
affected by sale, including enhancements beyond current Collective
Bargaining Agreement, subject to federal requirements
- Employee protections for
non-represented employees affected by sale
- Three years of payments in lieu of
taxes to power plant communities if the purchase price is less than
the municipality’s assessed value of the asset
- Distribution rate freeze extension of
two years, until at least July 2017
- Continuation of PSNH’s “Reliability
Enhancement Program” and Enhanced Tree Trimming program, under
terms of existing Distribution Rate agreement
- Establishment of Clean Energy Fund with
$5 million capitalization by Eversource shareholders
- Recovery by Eversource of remaining
stranded costs following sale of assets
Requirements of Agreement
- Creation and execution of a final
formal settlement document, in consultation with parties to
existing PUC dockets
- NH Public Utilities Commission approval
of final settlement agreement
- Legislation authorizing low-cost
securitization/financing of any stranded costs remaining following
the sale of the PSNH power plants
PSNH Power Plants
Fossil Fuel:
- Merrimack Station, Bow. Coal. 439
MW.
- Newington Station, Newington. Oil
and/or natural gas. 400 megawatts (MW).
- Schiller Station, Portsmouth. Coal or
oil, two units; biomass, one unit. 150 total 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
Parties to the Agreement
- Eversource Energy
- NH State Senators Jeb Bradley and Dan
Feltes
- NH Office of the Consumer Advocate
- NH Office of Energy and Planning
- Staff of the NH Public Utilities
Commission
NH Office of Energy and PlanningMeredith A. Hatfield,
603-271-2155meredith.hatfield@nh.govorEversourceMartin Murray,
603-634-2228martin.murray@eversource.com
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