My Turn: PSNH official gets it backward
Competition and customer choice has emerged for New Hampshire electric consumers. In the PSNH territory, nearly 100,000 customers have switched their electricity supply service away to one of 15 authorized competitive suppliers, including my company, North American Power. PSNH still delivers the electricity, provides the bill and reads the meter, but customers are now free to choose a new supplier that buys electricity from power plants other than those owned by PSNH.
For most people, the primary reason to switch to a retail supplier today is a lower rate. Savings during 2013 have ranged from 10 percent to as much as 34 percent, depending on the supplier and changes in PSNH supply prices. The price difference is due to the fact that PSNH owns older coal power plants and that PSNH has a guaranteed profit, as a regulated utility, built into its prices. As a result, PSNH prices are above market and, in fact, are among the highest supply rates in New England.
Beyond attractive rates, electricity competition has led to new service options, rewards for customers and cleaner energy for New Hampshire consumers. However, the New Hampshire retail energy market remains at an early stage. Most importantly, like the growth of mobile phones and airlines before them, the new electricity competitors will provide consumers with more choices to better fit their needs and will incentivize all marketplace participants to improve customer service. Fully competitive states, such as Texas, are now seeing innovative offerings such as free Sundays, prepay plans and weekly emails that provide customers with up-to-date spending and usage information. Not surprisingly, JD Power has found that electricity customers in Texas are more satisfied on average than PSNH customers or customers of other electric monopolies.
But to achieve vibrant competition and truly unlock innovation and choice for customers, state energy policy needs to be improved.
In the July 24 Concord Monitor, former PSNH CEO Gary Long said the state has created an “uneven playing field” by requiring PSNH to handle billing and customer service for its competitors at “give-away” prices (“Northern Pass official optimistic,” front page). This is precisely backward. Competitive suppliers are currently charged fees by PSNH for switching customers, issuing bills and other fees that are not charged to the PSNH default service business. That is, PSNH gets to charge supply rates that don’t have any costs for billing, switching and other services while competitors must pay PSNH for the same services. More problematic is PSNH’s anti-competitive behavior, which is driven by its desire to hold on to their guaranteed profits. PSNH has publicly stated that it is the “safety net” for customers, it is here to “protect customers” and that it is “not here to compete.” Yet, if you check its website, you’ll see materials, including videos, that seek to make the customer choice experience look painful and risky.
PSNH has a guaranteed profit of more than $40 million in 2013 for its supply business, regardless of whether its generation plants actually produce electricity or not, and it has every incentive to protect those profits.
North American Power operates in more than 40 other markets with energy choice. In all those markets not one utility discourages customers from choosing, except PSNH.
A June staff report from the state Public Utilities Commission indicates PSNH rates will continue to be well above the market for the next several years, costing customers who don’t switch their utility hundreds of dollars a year. The report raises the issue of removing the plants from their current regulated status and requiring PSNH to have them compete in the open market, sell them or shut them down. The report represents an important first step in evaluating how the Legislature and PUC should change its energy policy. As long as PSNH receives a guaranteed profit from these plants, regardless of whether they operate or not, PSNH will be incentivized to limit competition.
We encourage the Legislature and the PUC to do the right thing for consumers and the state’s economy: end the guaranteed profits for PSNH plants, remove the protections for those plants and level the playing field for competitors. For those who want more choice, competition and greener options for your electricity service, we encourage you to contact your legislators.
(Kerry Breitbart is CEO and co-founder of North American Power.)