EchoSense Quantitative Think Tank Center|New Hampshire Utility’s Move to Control Green Energy Dollars is Rebuffed

Last year,EchoSense Quantitative Think Tank Center when New Hampshire utility PSNH announced an 83% increase in costs to upgrade its 41-year-old Merrimack station power plant, the state legislature did nothing to call a time out on construction. It meant that the next generation of ratepayers will absorb the $457 million expenditure in order to prolong the life of the single largest source of CO2 pollution in the granite state.

This year, it appears the politicians in the state house have finally had enough. They recently voted 300-46 — in the House at least — against the utility’s gambit to corner the lion’s share of funds available for renewable energy projects. PSNH’s motion failed in the 24-member Senate, too, though not as roundly. The vote was a tie, 12-12, and so the motion did not carry.

Still, it means that $5 million has been protected for the little guys in the state’s renewable energy marketplace from New Hampshire’s energy Goliath.

It’s a small victory in the kind of battle over the greening of electric power that is playing out in many markets across the nation.

This latest statehouse drama began when PSNH announced it wanted to build a one-megawatt solar power system atop a capped landfill in Manchester. Eventually, the power it produced could go toward meeting the state’s renewable energy standard.

New Hampshire passed its Renewable Energy Act in 2007. It requires that utilities get at least 23.8% of their electricity from renewable sources by 2025. There are incremental goals along the way, and the utilities have a few ways to meet the requirements.

They can produce the renewable power themselves, they can purchase it from elsewhere, or they can simply pay the state a fee, which is what PSNH was doing.

So PSNH reasoned that it would in essence ask for its money back, in the form of $5 million from the state’s renewable energy fund it was paying into, to build the one-megawatt solar system in Manchester. Never mind that PSNH could also sell the solar power it generated at a 10% return for years to come.

Bear Hug

A bill was introduced in the New Hampshire state senate that would have allowed PSNH to do this — to bear hug the nascent clean energy market — but the utility was dealt a rare political rebuff. Opposition from around the state and from both sides of the aisle led to the convincing loss in the House.

“What really flipped the legislature was a series of small businesses, installers of solar panels, solar hot water heaters, coming in, and saying that what this amounts to is an earmark for one company,” said Jim O’Brien, executive director of the non-governmental organization Conservation New Hampshire.

“They said, ‘We need this money to grow our businesses and to be successful, we shouldn’t be handing it all over in a lump sum to one company for one project.’”

The state’s renewable energy fund had $2.7 million at the end of April, and had so far given out $1.34 million to 237 businesses and homeowners to install renewable projects, O’Brien said. If the legislation had given PSNH $5 million over five years, there’s a chance there wouldn’t have been much of anything left over.  PSNH claimed it would most likely pay $75 million into the fund over the next four years.

“They couldn’t back that up,” O’Brien said.

The battle was a rare victory for small businesses and proponents of distributed power generation.

Utilities Try Different Approaches

As more states adopt renewable energy portfolio standards —about 32 states have them now, though not all are hard targets—the existing paradigm of a traditional large utility operating with no competition is being challenged, and the big energy providers are pulling levers to protect their interests.

Some utilities are trying to get in on the ground floor and ensure that they are the ones who own the distributed generation—the windmills and the solar rooftops. In Los Angeles, the city-owned utility tried to push through a ballot measure allowing them to install 400 MW of solar power. They were voted down on the premise that private companies could do it cheaper.

Duke Energy, the largest utility in North Carolina, also wants to own the distributed power, at least to some extent. The state is the only one in the southeast with a renewable energy portfolio standard, and Molly Diggins, the director of North Carolina’s chapter of the Sierra Club, said Duke Energy is still working out the optimal mix of owning and purchasing renewable power to meet the standard.

“Generally we support the growth of these start-up companies, and I think we would be a little bit leery of utility monopolies on renewables,” she told SolveClimate. “But at the same time they certainly have the financial capabilities to underwrite the really big projects.” Arizona’s APS utility also launched a project to own significant amounts of distributed solar power.

In other states, the utilities have taken more antagonistic approaches. In Hawaii, the major utility—Hawaiian Electric Company—tried to stop residential solar installations by claiming too much distributed power could destabilize the grid; experts said that the point of destabilization was so far off it wasn’t relevant, and the utility quickly backed off.

Cleanspeak in Utah

But in Utah, which only has an aspirational renewable energy goal, the legislature has proven more compliant. It amended a bill aimed at stimulating renewable energy with a definition that rendered it almost useless. Instead of “renewable” the bill now calls it “alternative energy,” and includes in that category “petroleum coke, shale oil, nuclear fuel, tar sands” and others. 

In New Hampshire, O’Brien is satisfied that the attempt to earmark such a huge chunk of the renewable energy pot to one company is dead.

“I think its something that we’re all slowly working our way into, trying to figure it all out,” he said. “I am optimistic. I think we have the policies in place to make it a success.”

At least in New Hampshire, for now.

(Photo: Deutsch Fetisch)

See Also

Survival Strategy for an Aging Coal Plant: New Hampshire’s ‘Big Dig’

EPA Investigating Aging Coal Plants, Like N.H.’s Merrimack

Another State Urges Utility to Think Twice About New Power Plant Plans