Eversource begins setting new rates, says it's in an unprecedented position

Eversource begins setting new rates, says it’s in an unprecedented position

New Hampshire’s largest electric utility, Eversource, told state regulators late last week that failures in wholesale energy markets could make it difficult for them to secure enough electricity. energy for customers this winter using their normal process.

Because the utility only distributes electricity, instead of owning power stations that produce it, Eversource sources energy through a competitive bidding process. Twice a year, the company calculates how much electricity customers will need over the next six months and signs contracts for that electricity with energy providers. The price of this power then becomes sent directly to taxpayers in the form of a tariff adjustment. This is how the utility provides its default energy service, which is used by approximately 84% of residential customers.

The next auction date is scheduled for early December; these prices would fix the rate from February to next August.

But at a recent meeting of the state Utilities Commission, the company said it was concerned there weren’t enough bidders to supply all the power it needs to supply. And if there are enough bidders, the prices offered by those bidders could be “extraordinarily high”.

Eversource customers in New Hampshire are currently paying 22 cents per kilowatt-hour for default service, more than double the rate from the previous supply period.

This scenario has played out in other New England states where Eversource has held auctions in recent weeks, utility attorney Jessica Chiavara said.

She added that offers received in Massachusetts and Connecticut are concerning, “indicating a competitive market breakdown.” A similar experience in New Hampshire could hamper the electricity procurement process.

The warning comes as energy prices have already skyrocketed for many people in New England, following Russia’s invasion of Ukraine. This war is contributing to volatility in energy markets, Eversource said.

The company has proposed that the Public Utilities Commission, state Department of Energy and Office of the Consumer Advocate become more involved in the purchasing power process, saying market conditions are unprecedented and that how Eversource progresses is a matter that should include policymakers.

“It’s not an easy math problem anymore,” Chiavara said. “It’s the whole issue of the circumstances.”

Specifically, there is a four-hour window during the auction day scheduled for December 6 in which Eversource must choose which contracts to sign. The company wants state regulators and energy officials to be present during these hours to help them make decisions.

If the commissioners intervene on the day of the auction, Eversource argued, it could avoid a situation where state regulators reject a proposed rate increase after power contracts are signed. A rejection of a tariff increase would be unprecedented β€” and could have a chilling effect on energy markets, Chiavara said.

β€œThe market will not react favorably. Seeing these rejections will not encourage them to bid again and will likely not bid again. And that will put customers at greater risk,” she said.

But New Hampshire consumer advocate Don Kreis and the state Department of Energy say it’s not fair for them to collaborate. Kreis called the proposal “illegal and inappropriate” and said he would likely decline to participate.

Kreis noted that having utility commissioners in the room to help decide electricity rates would conflict with their role as regulators, who must review those rates and decide whether they are reasonable.

Additionally, the consumer advocate and the Department of Energy said they don’t have the staff to advise Eversource on the quality of the offerings and won’t have time to hire consultants. here December.

The UPC is currently investigating other options for the procurement process, and state officials said this could change their position – but on short notice, changing the process would be problematic.

“We don’t think regulators, including the DOE, OCA, or especially the commissioners, have a role to play in the room to give any level of assurance to the company based on the decision that ‘she takes,’ said David Wiesner, legal director at the Department of Energy. “It’s their decision to make.”

If Eversource cannot buy enough electricity to meet demand from competing suppliers, or if that electricity is too expensive, the company could source it directly from the wholesale market, committing to buy electricity. electricity every day for the next day. The company would set a stable rate for 6 months, but then reconcile the difference between that rate and what the electricity actually costs each day.

The state Department of Energy said this way of procuring electricity could expose ratepayers to even more price fluctuations and additional costs.

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