News and Views

Before The SENATE ENERGY, ENVIRONMENT AND ECONOMIC DEVELOPMENT COMMITTEE
Testimony of Harold Judd

My name is Harold Judd and I am here to speak in opposition to Senate Bill 152. A statute of this nature is unnecessary, and I believe ill-conceived.

By way of background, I have been a Selectman in Bow for seven years and a resident of the Town for nearly twenty years. I am well acquainted with Public Service Company of New Hampshire and the electric utility industry generally having been involved with utility regulation for thirty years. I began my career as the NH Consumer Advocate in the 1970s and after serving at the US Department of Energy in Washington I returned to NH as a Senior Assistant Attorney General where I was the lead counsel in the PSNH bankruptcy and the NH CO-OP bankruptcy. Presently, I am a principal of a consulting firm advising regulators and utilities in many states, including the siting and development of new generation. In the past five years my firm has participated in many regulatory proceedings and has evaluated proposals for the acquisition of over 60,000 MW of energy and capacity.

This is the equivalent of 48 plants the size of Seabrook or over 100 Merrimack Stations. The units we have evaluated range from two 1,000 MW nuclear stations to 1.5 MW wind turbines. Fuel types include nuclear, wind, solar, wave action, natural gas, bio-mass, hydro, and coal. We do no work for PSNH. Our current work for the State of NH is limited to advising on the design and financing of the decommissioning of the Seabrook Station.

I urge this Committee to find the bill Inexpedient to Legislate for the following reasons. First, the legislation is unnecessary. The PUC will conduct a full audit and prudence review, before the cost of the improvements at Merrimack Station are permitted in PSNH’s rates. This is a standard procedure before any significant capital addition is approved and it is sure to be done for this project. I have been involved in numerous prudence reviews, and seen significant cost disallowances due to imprudence, construction of unneeded assets, and waste. I have no doubt the PUC will be thorough and aggressive in conducting a prudence review of the Merrimack Station.

Second, the effect of delay could result in abandonment of the project, which would result in the closing of the unit. PSNH is mandated to have the scrubber technology operational by July 1, 2013, and the delay proposed in this bill would most likely make that an impossibility. Without scrubbers the plant will not meet EPA standards, and will be forced to close.

Third, regulated entities are entitled to regulatory certainty. The relevant provisions of RSA 125-O were enacted after thorough vetting with all parties of interest. I believe that if the state reneges on the regulatory compact established in RSA 125-O it would face serious consequences. In the near term, it is likely PSNH’s ability to gain financing would be adversely effected. At a time when obtaining credit is a major challenge for businesses I think it ill advised for the state to make it even harder for one of our major businesses to get financing. In the long term, this legislation could make it more expensive for all regulated companies, and could well adversely affect the way credit markets view the state government as well.

Fourth, if delay results in closing the plant, the reliability of energy supply in NH will be jeopardized. Diversity of generation is essential to prudent utility planning and for cost control. For example, natural gas today costs around $4.00/mmBtu, but last September it was closer to $13.00. The fact that the price of coal and the cost of nuclear and hydro-electric generation have remained relatively stable and predictable as compared to the costs of oil and natural gas, makes each a reasonable part of a well balanced generation portfolio. In turn, avoiding this uncertainty contributes to a utility’s ability to predict future rates, which benefits all customers, but especially business customers. Elimination of a generation type will expose NH to greater rate swings driven by fuel price market forces.

Fifth, the Merrimack Station is a baseload unit. It is dispatchable, meaning it will be on-line when needed to meet demand. Evolving technologies, such as wind and solar, have yet to evolve into dispatchable generation.

Sixth, PSNH is a good corporate citizen, both in Bow and in NH. The current management has demonstrated a recognition of the need to be responsive and accountable to customers and to the areas in which it operates. It appears the company pursued that approach when working with this body to craft RSA 125-O. As a matter of public policy, I believe all citizens, including corporations, should be encouraged to work with the state to address our collective needs, and in turn be respected by all parties standing by their commitments.

For these reasons I urge you to find this Bill to be Inexpedient to Legislate, honor the commitment the State made to PSNH and its customers to see the Merrimack project through to completion, and then permit the PUC to compete the prudency review that will determine the portion of costs to be included in rates.

Harold T. Judd
Accion Group, Inc.
244 North Main Street
Concord, NH 03301
603-229-1644
hjudd@acciongorup.com