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PSNH Sees Little Need for Supplemental Energy, Capacity Purchases in IRP due to Migration

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October 7, 2010

Given Public Service of New Hampshire's current level of migration, PSNH is not proposing any additional supply resources in its integrated resource plan, except for small scale renewable distributed generation resources, if found to be economic (DE 10-261).

At 31% migration, approximately the current level, PSNH forecasts needing to purchase about 500 to 1,000 GWh of supplemental energy annually through 2015, reflecting a range under high and low load conditions.

Should migration increase to 40%, PSNH would not require any supplemental purchases for nearly all years under the planning horizon, except for 2013 where minimal purchases (200 GWh) would be required due to a slight decrease in expected generation.

PSNH said that the current paradigm where its default service energy rate it unattractive for larger commercial customers, "may persist for the next few years while the country and state work their way out of the recession and demand for energy commodities gradually increases."

PSNH said that it will base any requirement for forward supplemental purchases on current and expected migration levels (under which few supplemental purchases are needed), and would manage any remaining default energy service supplemental energy purchase needs through bilateral and ISO New England administered energy markets during the delivery period.

"If market conditions change again and PSNH is confident that its future needs are highly predictable it could move back to its earlier approach of locking in prices and volumes for upcoming periods," PSNH said.

With respect to capacity, PSNH requires about 300 to 400 MW of supplemental capacity under 31% migration, and less than 200 MW under 40% migration.  

"Given this situation, PSNH has no incentive to hedge its short-term capacity deficiency, but instead will address any capacity shortfall by paying ISO-New England for PSNH's net requirement at known capacity market prices which will be reflected in the default energy service rate," PSNH said.

PSNH said that it will be increasingly short in its supply of certain classes of RECs to meet New Hampshire's Renewable Portfolio Standard requirements and will be required to either purchase RECs from qualified facilities or make Alternative Compliance Payments to the state for the renewable resource deficiency.

"With a large number of PURPA rate orders expiring in the next couple of years, a vibrant REC market developing in New England, federal and state incentives for developers of renewable projects, and a state law allowing PSNH to invest in small scale distributed renewable energy resources, PSNH sees renewable power as a viable strategy to help keep energy prices stable over the long-term," PSNH said.

Specifically, PSNH is looking into developing its own solar photovoltaic program under RSA 374-G which allows utilities to invest in distributed generation up to 5 MW per site.

   
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