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PSNH Seeks to Move $8.5 Million of Default Service Costs into Base Rates to Offset Above-Market PPAs

August  24, 2011
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Public Service Company of New Hampshire, New Hampshire PUC Staff, and several wood-burning generators have filed a settlement which seeks authorization for the recovery of above-market PPA costs through energy service rates, but with the movement of other energy service costs to distribution rates to blunt any pricing impact on default service (DE 11-184).

The PPAs with wood-burning independent power producers Bridgewater Power Company, L.P., Pinetree Power, Inc., Pinetree Power-Tamworth, Inc., Springfield Power LLC, and Indeck-Alexandria, LLC were facilitated by Governor John Lynch, and are above market to the tune of about $24 million.

Power under the PPAs would be used as part of PSNH's energy service portfolio to serve non-shopping customers.

Under the settlement, the, "PPAs are conditioned upon the Commission's approval of a ratemaking methodology which provides for full recovery of all costs of these transactions by PSNH without increasing the Company's Energy Service rate."

Specifically, the costs of the Wood IPP PPAs would be recovered as part of PSNH's energy service rate. However, to avoid any increase in the energy service rate that may result from these Wood IPP PPAs, the parties requested that the Commission authorize PSNH to transfer a liquidated amount of $8.5 million of costs associated with uncollectible and certain administrative expenses from its energy service rate to its distribution rate.

By doing so, up to $8.5 million of above-market power costs from the Wood IPP PPAs can be included in PSNH's energy service rate annually without adversely impacting that rate.

To the extent that the above-market costs of the Wood IPP PPA's exceed $8.5 million during any energy service rate year, the parties requested that the Commission authorize PSNH to defer for future recovery any such excess, with interest, to be recovered in future energy service rates.

Recovery of uncollectible expense through the energy service rate was required by Order 24,750 (May 25, 2007). PSNH is also recovering a portion of the PUC assessment through its energy service rate based on an adjustment made by Staff during an audit of the company's filing in DE 09-035.

 

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