The clock is ticking for Concord Steam Corp.
The struggling utility is running out of time to file a rate increase request with the Public Utilities Commission.
In the meantime, Merrimack County and the Concord Family YMCA have joined a growing list of clients that are switching to other heat sources. The state and the city also have one foot out the door. And a proposed contract with the Concord School District could be an expensive nonstarter.
“I keep sending them emails telling them how urgent it is to get this done,” said Stephen Frink, the assistant director of the PUC’s gas and water division. “They’ve got a lot going on, obviously.”
Concord Steam President Peter Bloomfield did not return requests for comment Wednesday.
The utility heats about 180 downtown buildings and schools. As its plant on Pleasant Street has degraded over the years, Concord Steam’s prices have risen higher than the rest of the market for steam and other heat sources. In hopes of dropping rates by 35 to 40 percent, Concord Steam has long been planning a sweeping renovation for at least $17 million.
But for some customers, that promise has been unfulfilled too long. In April, the Concord Family YMCA decided against renewing its 10-year contract with Concord Steam when it expires in September. Earlier this month, the Merrimack County delegation approved a sweeping package of energy improvements, which includes switching the existing superior court and an office building on Court Street off steam. Both will run by natural gas systems by this winter.
The YMCA estimated its savings would be $75,000 annually on heating costs. The county estimated that number would be $100,000.
“We tried to weigh heavily that we have a relationship with Concord Steam, and we didn’t want to make a rash decision,” Jim Doremus, CEO of the YMCA, said. “Ultimately it was an economic decision.”
County Administrator Stephen Marro informed Concord Steam of the delegation’s vote two weeks ago. A county administration building on North Main Street will remain on steam heat, but it is likely to be knocked down in the next couple years.
“There was a lot of disappointment in their voice,” Marro said. “I have to do what I have to do.”
The state and the city have also said they have no interest in a long-term contract with Concord Steam. Concord School District has proposed a special 10-year contract, but the PUC staff has recommended it be denied.
Under the proposed contract, Concord Steam has been charging the school district a deep discount on usage at Concord High School since 2014. The document also allows a number of escape clauses for the school district.
“Approving the special contract would have a material and negative impact on Concord Steam’s earnings and does not ensure that the Concord School District will continue service beyond 2017,” the PUC staff wrote in its report.
Because of the discount provided in the contract, the school district could be on the hook for more than $490,000 in back pay. Business administrator Jack Dunn did not return requests for comment. The commission has not yet voted on that contract.
In the meantime, losing clients will affect the rates Concord Steam needs to charge this winter. Any changes need to be okayed by the commission. That process has been delayed. Frink said an updated filing is expected in the next week or so. That document is expected to offer a clearer picture of the state of operations at Concord Steam, but it need to arrive soon to be approved.
“It’s going to be an expedited process,” Frink said.
The requested rates will likely be exacerbated by a number of problems, including an ongoing investigation into safety at the Pleasant Street plant.
“Your costs don’t change, you lose your customer base, you’re dividing those costs between fewer people, and then the rates go up,” Frink said. “If the rates go up, more people leave. That’s kind of where we’re at right now.”
Frink has a name for that cycle: “A death spiral.”
(Megan Doyle can be reached at 369-3321, mdoyle@cmonitor.com or on Twitter @megan_e_doyle.)