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Final Settlement Regarding Divestiture of PSNH Utility Power Plants Filed

June 11, 2015

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

A final settlement among Public Service of New Hampshire (Eversource), New Hampshire PUC Staff, the Office of Consumer Advocate, the state's Office of Energy and Planning, retail suppliers, and other parties has been reached and filed with the PUC

Under the settlement, Eversource's New Hampshire generation facilities will be divested and stranded costs remaining from the sale will be financed using a low-interest securitization method recently approved by the legislature and awaiting the governor's signature, Eversource said.

With respect to default service, the settlement provides, "Default Service will provide a safety net and assure universal access for customers who do not receive energy from a Competitive Supplier. Default Service shall be acquired and provided in accordance with RSA Chapter 369-B until divestiture of PSNH's generating assets. No later than six months after the final financial closing resulting from the divestiture of PSNH's generating assets, PSNH will transition to a competitive procurement process for default service. The competitive process utilized shall be consistent with the process determined by the Commission in its Docket No. IR 14-338, 'Review of Default Service Procurement Processes for Electric Distribution Utilities,' as may subsequently be modified by the Commission."

Additionally, the settlement provides that, effective January 1, 2016, the temporary rate for recovery of costs of the Merrimack scrubber shall be changed to reflect recovery of all costs of the scrubber incurred by PSNH, along with its allowed return on those costs. Upon approval of the settlement agreement by the Commission, that rate shall be placed into PSNH's Default Energy Service rate for recovery as a permanent rate pursuant to RSA 378:28 and :29 until closing on the Rate Reduction Bonds contemplated under the settlement. PSNH's Scrubber costs include the capital and operations and maintenance expense costs of owning and operating the scrubber, the previously-deferred costs resulting from the temporary scrubber rate, and final contractual costs upon payment, among others. The previously-deferred costs resulting from the temporary rate level shall be included in rates based upon an amortization period of seven years.

Pursuant to RSA 125-O:18 and RSA 369-B:3-a, subsequent to divestiture of its generating assets, PSNH shall be allowed to recover through securitization financing all remaining scrubber-related costs, including any remaining deferred equity return in excess of the $25 million in equity return which PSNH has agreed to forego. Upon closing on the Rate Reduction Bonds, all costs of the scrubber will be removed from Default Service.

PSNH would divest its utility generating assets via auction, including:

Fossil Fuel

• Merrimack Station, Bow. Coal. 439 MW.

• Newington Station, Newington. Oil and/or natural gas. 400 (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

PSNH's minority ownership interest in Wyman Unit 4, located in Yarmouth, Maine, will be offered for sale and may be sold outside of the auction process or dealt with as deemed appropriate by the Commission.

PSNH shall retain its existing PPAs and sell the energy and capacity from those agreements into the market, with the difference between the contract costs and the market revenues associated with the PPAs' energy and capacity to be recovered through the Stranded Cost Recovery Charge. RECs from such PPAs will be managed prudently to benefit customers.

The settlement provides for a nonbypassable charge to recover stranded costs associated with divestiture. The agreement shall not alter any currently existing opportunities for retail customers to generate or acquire electricity for their own use, other than through retail electric service, without an exit fee.

The settlement is contingent on PUC approval and enactment of enabling legislation

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