New Hampshire to Engage Consultant to Provide Detailed Analysis of PSNH Generation Ownership

The New Hampshire PUC has voted to proceed with a competitive bidding process to, "obtain a valuation expert to perform a more detailed analysis of the value of PSNH's generation assets and entitlements, which will help to inform any adjudicatory or legislative analysis of divestiture, possible stranded costs and their rate impacts."

The PUC's decision to retain a consultant to review, in more specific detail, the value of Public Service Company of New Hampshire's generation assets follows a Staff report which had recommended that the PUC direct PSNH to submit proposals addressing the transfer of its utility generation assets to an affiliate, given the "optimistic" value placed on the assets by PSNH. The PUC did not immediately direct PSNH to file such a proposal.

The PUC did "accept" Staff's report on PSNH's generation ownership (in which Staff found PSNH's fossil assets to have minimal value), though the PUC stressed that, "[b]y accepting the Report we do not adopt all of its assumptions or conclude that the information contained therein is necessarily proven as fact."

"We do, however, find that the Report demonstrates a credible risk of harm to PSNH and its customers if circumstances were to continue unchecked," the PUC said.

"We find it necessary to further analyze the economic and regulatory pressures facing PSNH. Even as we consider the various recommendations for next steps offered by stakeholders, we know that a threshold question for many discussions will be the value of PSNH's generation assets and the rate impacts if those assets were retired or sold. Towards that end, we direct Staff to engage a valuation expert, through a competitive bid process, to determine the value of PSNH's generation assets and entitlements," the PUC said.

"This information, which will be more precise than the general assessment of value in the [Staff] Report, will be of use to the Commission and the Legislature, both of which are likely to consider further action in these matters, as well as PSNH and the many stakeholders affected by PSNH's operations," the PUC said (Docket IR 13-020).

Separately, in a proceeding reviewing costs of the scrubber installed at PSNH's Merrimack station (DE 11-250), the PUC in an order clarifying the scope of the proceeding said that it would consider, as part of its prudence review, whether it would have been most appropriate for PSNH to divest the Merrimack station, rather than continue ownership (with such ownership requiring costs to be recovered through default service rates).

The PUC clarified this issue by noting that while retirement of the Merrimack station was not an option for compliance with legislation relating to the scrubber, such legislation did allow divestiture as an alternative.

"[A] public utility that is required to comply with the Scrubber Law retains the management discretion to divest itself of an affected source, where appropriate," the PUC said.

"While, under RSA 125-O, PSNH had no discretion, and continues to have no discretion, whether to install and operate the Scrubber if it remains the owner and operator of Merrimack Station, the Scrubber Law does not allow PSNH to act irrationally with ratepayer funds. RSA 125-O:18 makes clear that PSNH retained the management discretion to divest itself of Merrimack Station, if appropriate," the PUC said.

Although the PUC will take into consideration this divestiture option in considering whether PSNH's prior actions regarding the scrubber were prudent, "[w]e caution the parties that, although the prudence inquiry necessarily implicates PSNH's discretion and the Commission's decision making authority under RSA 369-B:3-a, this docket is not held pursuant to RSA 369-B:3-a and it will not determine whether PSNH must at this time divest itself of or retire Merrimack Station."