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Another: State Opens Investigation to "Ameliorate" Adverse Impacts from Broken Wholesale Market

April 20, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The New Hampshire PUC has opened an investigation into potential approaches to ameliorate adverse wholesale electricity market conditions in the state (IR 15-124).

The PUC noted that, "Until recently, market competition at the wholesale and retail levels has tended to keep electricity prices at reasonable levels for New Hampshire consumers."

"The past two years, however, have seen significant transitions in New Hampshire's wholesale and retail electricity markets, and those of the New England region generally. ISO-New England (ISO-NE), the regional electricity market administrator, has pointed to an increasing dependence on natural gas-fueled generation plants within the region over the past two decades as aging coal, oil, and nuclear plants have been retired. During recent winters, significant constraints on natural gas resources have emerged in New England, despite abundant natural gas commodity production in the Mid-Atlantic States and elsewhere. These constraints have led to extreme price volatility in gas markets in the winter months in our region, which, in turn have resulted in sharply higher wholesale electricity prices. Correspondingly, rates charged for Default Service to certain EDCs' customers have escalated sharply in New Hampshire for winter period service," the PUC said.

"The Commission has a fundamental duty to ensure that the rates and charges assessed by EDCs are just and reasonable," the PUC said, citing RSA Chapter 378

While the PUC discusses the benefit of a "targeted" investigation to examine the gas-resource constraint problem, while also noting it is generically addressing potential changes to default service in response to wholesale market conditions in a separate docket (IR 14-338), the PUC in opening its new investigation under IR 15-124 broadly cited two statutes which could implicate retail electric market design; specifically, RSA Chapter 374-F, the restructuring statute, and RSA 374:57, which governs the utilities' purchase of generation capacity.

New Hampshire's new investigation is the latest potential restructuring of retail market designs prompted by FERC's broken wholesale market designs, following a new review of Massachusetts default service structure first reported by EnergyChoiceMatters.com earlier this month.

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