Concord Steam customers won’t get fund for conversion costs

  • A truck filled with wood chips pulls up to the Concord Steam plant off of Pleasant Street in Concord, July 2016.

Monitor staff
Published: 5/16/2017 12:23:12 AM

With Concord Steam shutting down in 2½ weeks, its non-profit and residential customers who must buy new boilers as part of conversion to natural gas won’t have a fund to help them, but they can get a break on future gas bills.

The Public Utilities Commission last week denied a proposal to create a $1 million fund to help customers pay transition costs. The PUC said this would create a “dangerous precedent” that would let utilities “benefit small groups of customers, granting them undue and unreasonable preference or advantage with relatively large ‘grant’ sums earning a regulated rate of return.”

Instead, the PUC said, Concord Steam’s customers can negotiate separate “special contracts” with Liberty Utilities as they hook up to gas, getting a discounted rate until some or all of the cost of their conversion was covered. Special contracts are an established procedure for regulated utilities in New Hampshire, used for such things as luring industry to the state, but the unique nature of the Concord Steam’s closure means this is almost certainly the first time they have been used to replace a district heating system.

Sen. Dan Feltes, D-Concord, who has been the public face of the push for a $1 million transition fund, was unenthusiastic about the special-contract proposal.

“While the May 11 decision provides some assistance, it may be too little, too late, and on June 1 some folks may be without heat or hot water,” he said in response to the ruling.

Among nonprofits affected by the Concord Steam shutdown is CATCH Neighborhood Housing, which this week will begin converting its Endicott Hotel to gas-fired steam, used both for heat and hot water. CATCH doesn’t meet the standards set up for the special contract, said the organization’s president, Rosemary Heard, and will probably go with private financing.

“With the payback threshold period – using 2015 rates – we don’t meet the payback threshhold. But that doesn’t mean that we don’t need that funding today,” she said.

“Thank God, we have Main Street banks like Merrimack County Savings Bank, which established low-interest conversion rate,” she said.

Caite Foley, vice president of real estate development for the group, said the Endicott Hotel conversion will cost about $125,000, whereas the building with 24 residential units and ground-floor commercial sites has an annual operating budget of $214,272. About one-seventh of the building’s operating budget this fiscal year was slated to pay for heat from Concord Steam, but because of rising rates caused by the loss of customers seeking cheaper deals from gas, the group has actually spent 60 percent more than anticipated this winter.

The current Concord Steam rate is $36.48 per 1,000 pounds of steam, almost 2½ times the rate charged two years ago – a reflection of the company’s spiraling financial problems as it lost customers to lower-priced gas heat.

Even without a special contract, future heating bills for gas-fired boilers are expected to be far below those for steam heat.

The PUC said a dozen nonprofit, nongovernmental customers are having to switch as Concord Steam closes, as well as two residential customers, and can negotiate special contracts. The contracts are not available to commercial customers.

Concord Steam has provided heat to a portion of downtown Concord, including the area around the State House, since the 1930s. After attempts failed a decade ago to finance a new facility that would replace the aging power plant on the state complex off Pleasant State, the falling price of natural gas lured away many customers, undermining Concord Steam’s business model.

Last summer the company announced that it would shut May 31, leading to a scramble to find replacement heat by some 160 customers. The Concord city government, which uses Concord Steam for city hall and four schools, as well as a number of downtown state buildings including the State House, were on the steam system. A temporary power plant is being installed in a parking lot opposite city hall to provide heat to historic state buildings while a permanent solution is installed, and the city is switching to gas-fired boilers for its buildings and schools.

Liberty Utilities is buying Concord Steam’s customer list and easements – but not the power plant or pipelines – for $1.9 million.

(David Brooks can be reached at 369-3313 or or on Twitter @GraniteGeek.)

David Brooks bio photo

David Brooks is a reporter and the writer of the sci/tech column Granite Geek and blog, as well as moderator of the monthly Science Cafe Concord events. After obtaining a bachelor’s degree in mathematics he became a newspaperman, working in Virginia and Tennessee before spending 28 years at the Nashua Telegraph . He joined the Monitor in 2015.

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