N.H. PUC Adopts Lower Default Service Rate at PSNH

The New Hampshire PUC has approved a lower energy service (default service) rate for Public Service Company of New Hampshire, denying PSNH's motion to keep current rates in effect until the PUC adjudicates temporary rates to recover scrubber costs.

However, the PUC did adjust the proposed rate, without scrubber costs, to lessen potential rate shock should the temporary scrubber rates later be approved.

The energy service rate, without the temporary scrubber costs, was proposed at 7.90 cents per kWh starting January 1, 2012. However, if the temporary scrubber rate were approved, the energy service rate would then increase to 9.08 cents per kWh

The 2011 energy service rate had been 8.89 cents per kWh, which PSNH had proposed to maintain until the PUC set the temporary scrubber rates to avoid rate volatility (see 12/20).

While the PUC did express concern about the potential volatility in rates, the Commission said that, "we are not inclined to maintain ES [energy service] rates at their current level because they would be substantially in excess of actual costs and could arguably be construed to include costs of the Scrubber Project, which have been expressly reserved to Docket No. DE 11-250."

The PUC adopted an alternative approach that establishes a cost-based rate at a level that can mitigate the effects of potential rate volatility.

Specifically, the energy service rate effective January 1, 2012 was set at 8.31 cents per kWh. This rate is intended to be in effect for the months of January and February 2012, but will remain in effect until altered by the PUC.

The PUC reached the 8.31 cent rate by starting with the average forecast cost of PSNH for providing energy service in January and February, which is 8.07 cents per kWh. The PUC then added to that rate the entire cost of an under-collection in recovery of default service costs in 2011.

While such under-recovered costs would normally be recovered over a long period, to avoid potential rate shock in the future, the PUC elected to recover the $2.155 million under-recovered in 2011 during the two month span of January and February 2012 (thereby removing these costs from future energy service rates in future months). This action added 0.24 cents per kWh to the average energy service rate of 8.07 cents per kWh, resulting in a total energy service rate of 8.31 cents per kWh.