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PSNH Seeks PUC Approval For Treatment Of Biomass Energy Purchase Requirement

December 10, 2018

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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Public Service Company of New Hampshire (Eversource) has filed with the New Hampshire PUC a proposal for how it will comply with Senate Bill 365, which requires the solicitation for the purchase of output from various biomass electric generation facilities, with Eversource stating that it executed the solicitation pursuant to the statutory mandate contained in SB 365 and not as the company’s voluntary act.

SB 365 does not explicitly require that any biomass procurement be used in the default service portfolio, but does link such biomass procurement to the time periods of the default service procurement and, potentially, the default service rate.

Specifically, SB 365 states that, "The solicitation shall provide that the electric distribution company’s purchases of energy from the eligible facility shall be priced at the adjusted energy rate derived from the default service rates approved by the commission in each applicable default service supply solicitation and resulting rates proceeding."

Eversource informed the eligible facilities that it did not intend to enter into formal, bilateral power purchase agreements (PPA) with these facilities, but, instead, would make the purchases specified by SB 365 if and to the extent that this Commission orders it to do so. This process is akin to the "rate orders" issued by this Commission in the 1980s, under the Public Utility Regulatory Policies Act (PURPA). Eversource decided not to enter into any formal PPAs under SB 365 in order to preserve rights under the Federal Power Act (FPA) and PURPA in the event that the legality of SB 365 was challenged.

If Eversource is required to purchase the output of the eligible facilities under SB 365, Eversource said that it would not use such output to provide default energy service to PSNH's retail customers

"Inclusion of the output from eligible facilities as part of Eversource's default energy service would be inconsistent with the energy service procurement protocol approved by the Commission in Order No. 26,092 (December 29, 2017)," Eversource said

Eversource's recent solicitation for default service, for the period beginning February 1, 2019, did not include the use of any purchases under SB 365 to provide default energy service.

Eversource said that SB 365 itself appears to contemplate that the costs of complying with SB 365 would be monetized and recovered via a nonbypassable charge similar to the SCRC (stranded cost recovery charge). RSA 362-H:2, V states, "The electric distribution company shall recover the difference between its energy purchase costs and the market energy clearing price through a nonbypassable delivery services charge applicable to all customers in the utility’s service territory."

Eversource said that, "As 'the market energy clearing price' changes every five minutes, and the output from multiple eligible facilities will each be continuously variable, the only practical way of establishing 'the difference between its energy purchase costs and the market energy clearing price' is to monetize the purchases from the eligible facilities by instantaneously selling that output into the ISO-NE marketplace. Had the legislation contemplated using the energy purchased under SB 365 to be used to serve default service load the legislation would have logically required the costs of the purchases to be recovered from default service customers."

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