March 4, 2016
Debra A. Howland
Executive Director
New Hampshire Public Utilities
Commission
21 S. Fruit Street, Suite 10
Concord, NH 03301
Dear Ms.
Howland,
I’m writing with
regard to DE 16-241 and to challenge the misinformation that is being spread regarding
our high electricity prices by various groups such as the BIA’s EnergizeNH, Kinder
Morgan, and the Coalition to Lower Energy Costs (CLEC) energycostcrisis
campaigns.
The
following is an ad that appears on sites for online access to magazines and
newspapers,
This is, in
fact, not true. Please refer to the
eia.gov website and download the 2014 Average Monthly Bill-Residential in
table5_a_2014AveBill.pdf. Actually,
the average monthly residential bill is $108.57 in New Hampshire, while in
Virginia the average monthly bill for residential customers is $130.04. If Ms Tewksbury lived in Virginia, her
annual electric bill would be $257.64 higher than it is in New Hampshire. The national average was $114.19 per
month. So, New Hampshire residential customers
actually have lower monthly electric bills than the national average and are at
least 20% lower than VA.
It IS true
that residential customers in VA pay only 11.10 cents per kWh and NH pays 17.53
cents per kWh, but while a VA household’s average usage is 1172 kWh per month,
a NH household only uses 619 kWh! VA
customers may use more electricity because of warmer summers or perhaps it’s
because they haven’t invested in energy efficiency and weatherization projects
as the RGGI states have.
"New Englanders could have saved approximately $3.7
billion in wholesale electricity costs during the 2013-2014 ‘Polar Vortex’
winter had the proposed
Northeast Energy Direct Project (NED) been in service,
according to an independent
study by
ICF International, commissioned by Tennessee Gas Pipeline
Company, L.L.C. (TGP), a Kinder Morgan, Inc. (NYSE: KMI) company. The study
also concluded that the additional gas capacity that NED would provide could
generate $2.1 billion to $2.8 billion in annual savings going forward for New
England electric consumers under normal weather conditions."
and later,
"Further analysis by Kinder Morgan finds that the
estimated energy cost savings for 2013-2014 would equate to $578 if spread
across each of New England’s 6.4 million households, and average $437 per
household over the next 10 years assuming normal weather conditions."
The $578 is the number I get when I divide $3.7 Billion by
the 6.4 million households. $437 is what I get if I divide the $2.8
billion mentioned in the first paragraph by 6.4 million households.
There are two MAJOR problems with this. These numbers
are not based on the number of kWhs used. If you divide those numbers up
into market share, residential customers account for only 40% of sales.
So the advertised savings are already less than half their claims. Instead
of $578 and $431; the numbers should be $231 and $174.80 and even the premises
for these savings should be suspect.
The second problem is that the $3.7 Billion is for savings
on wholesale prices. "Average households" pay the retail rate
which is some multiple of wholesale prices.
Let’s look at the impact of wholesale electricity prices on
retail rates. The graph below shows data from 4
spreadsheets for wholesale electricity prices from ISO-NE for 2009, 2013, 2015
and 2016.
New Hampshire wholesale prices are converted to cents/kWh
from the ISO-NE spreadsheets
Month-Year
|
Wholesale All
|
Wholesale off pk
|
Wholesale on pk
|
Retail residential rate (1)
|
January 2009
|
7.42 cents/kWh
|
6.99 cents/kWh
|
7.94 cents/kWh
|
16.30 cents/kWh
|
January 2013
|
9.42 cents/kWh
|
8.62 cents/kWh
|
10.2 cents/kWh
|
16.33 cents/kWh
|
January 2015
|
7.34 cents/kWh
|
6.59 cents/kWh
|
8.25 cents/kWh
|
18.52 cents/kWh
|
December 2015
|
2.98 cents/kWh
|
2.32 cents/kWh
|
3.72 cents/kWh
|
18 cents/kWh
|
January 2016
|
4.34 cents/kWh
|
3.76 cents/kWh
|
5.11 cents/kWh
|
Not yet available
|
The Eversource proposal in DE 16-241 claims the ANE pipeline
will reduce wholesale prices by somewhere between 0.8 cents and a little over 1 cent per kWh. These savings are forecast against 2013-2014
wholesale prices. Yet, milder weather
and adding LNG contracts to the Winter Reliability Program have reduced
wholesale prices significantly more than those expected from building the ANE pipeline
without any evidence of a similar reduction in retail prices. Moreover, wholesale prices haven’t exceeded
5.62 cents/kWh (peak) since April of 2015.
Where are the savings on our retail rates from the dramatic reductions in wholesale
electricity prices?
Please keep in mind that any of these pipeline projects can only
reduce wholesale electricity prices with a (hopefully) consequent reduction in
the default retail energy supply charges.
The pipelines can’t reduce delivery (transmission or distribution)
charges or stranded costs from the coal plant scrubber or the 20 year contract
with the Berlin biomass plant. In fact,
according to the Eversource proposal, any tariffs or fees to cover the 20 year
capacity contract will be assigned to the delivery portion of the bill.
In the case of ratepayers who have signed contracts with
competitive suppliers (I have a 20 month contract at 8.9 cents/kWh of 100%
Green electric supply with Fairpoint), we will see no reduction in the energy
supply charge, but will see an increase in the delivery (transmission and
distribution) charges from the utility to cover the tariff.
I believe the BIA, the business community, and the general
public are being misled about the positive impact that nearly doubling the
supply of natural gas into New England will have on electric rates. Investing in additional energy efficiency,
demand response, renewable energy sources, and maintaining supply diversity
with dual fuel generation and LNG contracts are all much better ways to address
natural gas shortfalls during the winter.
Despite a number of “open seasons” by the pipeline
companies, power generators have failed to contract with them for capacity.
The utilities have no existing mechanism for
selling pipeline capacity to power generators.
Yet, we are asked to believe that
somehow power generators are going to buy capacity from the utilities.
Today’s price for natural gas was about
$1.70/DTH.
The capacity contract would
add at least $1.50/DTH to the delivered price.
We also learn from the Kinder Morgan/TGP objection to
Eversource’s request for confidentiality of financial information in DE 16-241 that
an Eversource entity has a 40% interest in the Algonquin/Spectra pipeline
company. We already know from IR 15-124
that the parent company of Liberty has a 10% stake in the NED project. We are being asked to become unwilling and
voiceless investors in a new business venture for the utilities.
The Federal Energy Regulatory Commission is investigating
“unfair and unreasonable” transmission charges by the utilities of ISO-NE. The results of that investigation are due out
this month. If we are going to be
concerned about high electricity prices in New England, we should really be
examining why our transmission charges are so much higher than the other
Regional Transmission Organizations. The
following chart is from a NESCOE presentation about ISO-NE being the last RTO
to adopt FERC rules for competitive transmission.
Why were the high transmission and distribution charges in
New England never even mentioned in all the consultant reports on how to reduce
electricity prices? How will the public
feel about New Hampshire’s government officials when, after sacrificing their
land, safe air and water, and taking on a 20 year contract, our electricity
prices go up with the increases in forward capacity payments in 2017 and
2018? Why, when the utilities in our
state are not competitive with other regions for transmission charges, would we
bankroll them for a brand new business venture with ratepayer funds? Why
hasn’t the decoupling of the gas and electric utilities proceeded?
Thank you for the opportunity to comment and ask questions
on this important matter.
Pat Martin
