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Editorial: State has options to cut energy costs

Last modified: 11/26/2014 10:16:10 PM
New Hampshire residents and businesses face a budget-busting increase in natural gas and electricity prices this winter. The price of natural gas, which heats about a quarter of the state’s homes and produces more than half of its electricity, spikes on the coldest days because the region’s antiquated pipeline system can’t meet the demand. At such times, heat takes precedence over light, the price electric utilities pay for natural gas soars and rates skyrocket.

More and bigger pipelines are years away and may, if ultimately used to export normally cheap natural gas through Canada to Europe and beyond, raise rather than lower prices in New England in the long run. New Hampshire shouldn’t sit back and wait to see what happens. There are things that other states have done that could be done here to reduce energy use and demand when natural gas supplies are tight.

Many states, but not New Hampshire, have reduced electricity demand at peak periods with “time of day” pricing. Customers would pay a per kilowatt premium, for example, for doing laundry or running factory machinery when usage peaks in late afternoon and early evening. Off-peak rates would drop. Customers would save by running dishwashers and dryers overnight. Reducing spikes in demand, by making it less necessary to fire up coal and oil plants held in reserve, would benefit the environment. Smart meters make such pricing possible. The transition away from fixed prices should be made ASAP. Utilities should be encouraged to enter long-term contracts to lock in gas supplies and stabilize prices.

New Hampshire lags behind other states when it comes to providing incentives to use energy efficiently. The state placed last in New England in a recent analysis by the American Council for an Energy Efficient Economy. The same analysis awarded the top spot to Massachusetts and placed Connecticut, Rhode Island, Vermont and Maine at 5, 6, 7 and 16, respectively. New Hampshire ranked 21st. Moving up in the ranking means providing more incentives to replace power-hungry appliances, lights, heating and cooling systems, and machinery. It means enacting building codes that require that all new structures meet higher energy efficiency standards. It means replacing plants that sell power but waste heat with plants that sell both. It means better education efforts and infrastructure investments that make the electric grid more efficient and resilient.

To help customers deal with monthly bills that could be up to 50 percent higher because of the gas shortage, utilities should allow them to spread the cost of a price spike over the course of a year. Long-term energy planning on the part of the state and its regulators, which has long been an afterthought, should be an ongoing, and specific, process.

To encourage energy efficiency, New Hampshire should follow the lead of every other New England state – and half of the nation – and decouple utility distribution revenues, the money earned by transmitting power from plant to customer, from sales volumes. Currently, the more power a utility with a fixed cost of distribution sells a customer, the more money the utility makes. That’s a disincentive to conservation.

To use energy wisely and combat climate change, the incentives have to be reversed. Regulatory schemes should reward utilities that help customers use less power. That happens when utilities help with the upfront cost of insulating homes or installing a solar array, for example. The utility recoups its investment, with interest, by sharing in the customer’s savings. If the customer’s bill goes down by, say, $50 per month on average, the utility takes $30 until its investment, plus interest, is recouped. After that, all the savings go to the customer.

There are many things New Hampshire could do, and should have done long ago, to reduce the high energy costs threatening the state’s economy.


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