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PSNH Seeks Approval of Long-Term Contract With Hydro-Quebec, What's The Impact On Default Service?

June 30, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Public Service of New Hampshire has petitioned the New Hampshire PUC for approval of a long-term PPA with Hydro Renewable Energy Inc., an indirect wholly-owned subsidiary of Hydro-Quebec

Under PSNH's proposal, energy from the PPA would not be used to serve PSNH default service load, and would instead be sold bilaterally or into the wholesale market. Costs would be recovered through the current nonbypassable stranded cost surcharge, with no impact on default service rates.

Under the PPA, PSNH proposes to purchase approximately 400,000 MWhrs/Year of firm, on-peak energy equal to approximately 100 MW, to be delivered over the to-be-constructed Northern Pass Transmission line. The energy supply is on-peak, Monday through Friday, from hour-ending 8 am through hour-ending 11 pm (67% of weekday hours), every week of the year for the 20-year term of the PPA.

PSNH’s entitlements to the energy and environmental attributes under the PPA would be sold bilaterally or into the wholesale market, with the net proceeds credited to the Stranded Cost Recovery Charge (SCRC).

The PPA products would not be used to supply default service, and the competitive procurement of default service contemplated under PSNH's pending divestiture settlement would not change as a result of the PPA.

"[T]he flow of net benefits through the SCRC serves to eliminate any adverse effect to the competitive electric market that might otherwise occur if such net benefits were to flow through PSNH’s default energy service rate," PSNH said

If revenues under the PPA sales were credited to PSNH’s default service instead of the SCRC, "the revenues might distort PSNH’s default service price and the competitive market, because competitive suppliers could find it difficult to compete with the default service rate. Since the restructuring policy principles in RSA 374-F:3 call for full and fair competition, as well as avoiding harm to competitive markets, it is PSNH’s assessment that the net benefits of the PPA should flow through the SCRC to avoid impacting the default energy service price either positively or negatively," PSNH said

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