The good news: For the last 18 months, customers of New Hampshire electric utilities have paid bills that were significantly lower than the actual cost of power thanks to state regulatory changes. The bad news? Those customers are going to see their bills soar to cover all those months they underpaid — and the utilities even want to charge them interest.
The dominant utility in New Hampshire is Eversource. They have undercharged consumers about $38 million over the last year-and-a-half — and have told the Public Utilities Commission they want to charge consumers for that money on future bills, and they want consumers to pay them interest.
Liberty, the second largest utility in the state, undercharged $9 million, while the third utility, Unitil, undercollected $3 million in the same period. While it remains unclear if they will get to add interest to customer utility bills, it is certain they will all be hiking costs to cover the period when power actually cost more than they were billing.
As state Rep. Thomas Cormen, D-Lebanon, explained in a recent article, the undercharging is not really the fault of the utilities. Under new PUC regulations, the utilities set their rates based on estimated power prices at the time — but then unexpectedly, cold weather struck and prices for natural gas and other electricity sources soared, while consumers were still being charged the lower market rate. The underpayment ride, though, is ending as utilities prepare to hit their customers with higher bills to get back those 18 months of lower rates.
An unfortunate casualty of this situation has been the Community Power Coalition of New Hampshire (CPCNH). Because utilities have been temporarily undercharging consumers it makes it appear that CPCNH customers in more than 60 communities have been paying too much. They are not, they are simply paying the price that the power actually cost at the time they bought it.
Now some CPCNH customers, perhaps not aware that the discrepancy was temporary, are angry that a system meant to save them money seems to have instead charged them more. That temporary difference in bills has led some consumers to leave the CPCNH, and some communities to reconsider their participation.
The point of the five-year old non-profit coalition is to allow communities and counties to pool their resources and find the cheapest sources of power while also building up reserves that can be used for community solar projects and increased purchases of clean energy. For 200,000 consumers, that plan was working until the sudden artificial drop in utility bills.
Now, as non-CPCNH customers wait for their bills to soar so that utilities can recover costs of their previous artificially low rates, with interest added, it does seem apparent that the wise choice over the last 18 months was likely to stay with CPCNH.
One question for both the PUC and the utilities is whether the long period of misleadingly low electric bills — and the ensuing misunderstanding about the costs at CPCNH — has damaged the nonprofit unfairly, while helping Eversource, Liberty and Unitil retain market dominance. Simply put: Intended or not, the under-collection by the utilities is anti-competitive and deceptively distorts what are, in reality, competitive markets.
The situation in the last 18 months has allowed Eversource to lead customers to believe they are comparatively more affordable, at a time when affordability is the single most important word for customers. Why haven’t the PUC or the utilities clearly spelled out the likely temporary nature of that competitive advantage?
Finally, the worst outcome here is that investor-owned utilities convince the PUC that they should hand off this ballooning debt to all New Hampshire customers. Let’s be clear: The investor-owned utility customers are stuck with this growing bill, unfortunately, but they need to pay the bill — not communities that are not customers of Eversource, Liberty or Unitil.
New Hampshire’s energy restructuring law allowing the creation of CPCNH remains an innovative, creative way to help communities and consumers get more control of their electricity sources and reduce energy costs. It was and is a good idea. But it only works if the PUC establishes a regulatory structure that sends accurate price signals to let consumers know how much their electricity actually costs at the time when customers are getting billed, rather than delaying billing them for the full cost at a date in the future. That isn’t happening here.
Nick Krakoff is director of clean grid for Conservation Law Foundation.