Letter: Undervalued

Last modified: 10/15/2014 9:15:07 AM
I understand the justification for the enormous rate increases at Unitil and Liberty Utilities – increased demand for natural gas combined with constrained supply has led to a spike in natural gas prices, the preferred fuel for most regional power generators. I also understand that these conditions are expected to remain in place for several more years, because new natural gas supply lines take time to develop.

In light of these circumstances, the assessment of the coal-fueled Merrimack power plant in Bow warrants revaluation. It was less than a year ago that the Merrimack power plant was devalued by $49.5 million. At that time, George Sansoucy, the assessor, calculated the value based on the forecast for both coal and natural gas prices. These forecasts placed coal at a competitive disadvantage, and predicted plentiful and cheap natural gas. Clearly, these forecasts were shortsighted and flawed, as is the assessment that was predicated upon them.

The Merrimack Station now has a competitive advantage. Evidence of this can be seen in the rates being charged by its operator, PSNH. The company is actually reducing its rate to 9.61 cents per kWh. Compare this with Unitil (15.5 cents per kWh) and Liberty Utilities (15.4 cents per kWh), and it becomes clear that the Merrimack Station is undervalued.




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