More on Energy

Another North Country reporter, the unstoppable Edith Tucker, said the other day that she’s learned more about energy than she’d ever hoped working in Coös County. I agree.

I just got off the phone with Martin Murray, the spokesperson for PSNH. There are recent developments at the federal level that affect the Clean Power/PSNH discussion at the PUC, and I wanted PSNH’s opinion.

Mr. Murray and I have talked several times now, since a significant portion of my reporting has covered energy and PSNH. Each time, somewhere either in the middle or near the end, we start to dance around as I try to pin Mr. Murray into a corner on just how it is PSNH decides who to negotiate with. Mr. Murray wordsmiths knowingly past my best jabs, never giving more than he intends. He has put up with my incessant questions a number of times, which come from different directions but always with the same target. I rephrase and reword, but we keep going in circles. It is a merry-go-round I have come to expect, at least until the PUC rules on the topic.

I understand the CPD complaint to be that PSNH has to negotiate with the company in order to determine if they are achieving the least expensive option for rate payers. If they don’t negotiate with CPD, the logic goes, then how do they know CPD isn’t offering a lower price than the competition?

Mr. Murray’s explanation into the question doesn’t go so deep. Is PSNH required to negotiate with CPD? is the question, he said, and PSNH believes the answer is no.

I must admit, I’ve had a lot of conversations with both sides of this discussion, and I have looked at lots of documents. I am also not particularly familiar with the PUC’s process, or just how in deep they delve into the logic and the arguments that constitute the reasons behind their dockets. But the way I see it, on the surface, both companies are right, if there’s is the question you’re asking.

PSNH is not required to negotiate with CPD, according to the letter of the law. They are (or would have been) required to buy CPD’s power at the market rate under the federal PURPA guidelines, but that wasn’t what CPD was requesting. They wanted to negotiate, not invoke the federal standards.

So PSNH is right, if the PUC is looking at the argument at that level. There is nothing that says they have to negotiate with anyone; CPD is in no way special.

It’s hard to imagine, however, how PSNH can decide what offer to go with if they are unwilling to listen to the various offer. How do they know one power producer will generate power at a lower cost to the rate payer if they don’t at least entertain all offers?

But that’s digging deeper. I’m not sure if the PUC does that. CPD is asking the PUC to look beyond the letter of the law to the reasons behind it. PSNH is looking for a requirement to negotiate, and not finding one, they feel they have done no wrong. That may be where the complaint lands. Alternatively, CPD is looking at what it takes to achieve a least cost option and making a leap to negotiation as a requirement. Perhaps that is where the PUC will look.

Either is right, when the argument is framed in their language, and either is wrong if it isn’t. Where the PUC will land in this conversation is still unclear, but the generalizations “right” and “wrong” clearly do not apply.

I do see something else, however: a possible design for this recent moves in this dance. You’ll need the upcoming copy of the paper to get this, but I think I’ve stitched a bit of strategy together.

CPD’s complaint is now protected by a recent FERC ruling, so any decision the PUC makes will be enforceable regardless of the exemption granted PSNH (Confused? Check out this Wednesday’s Reporter.) But should CPD’s complaint fall on deaf ears they will no longer be protected by the FERC exemption. The exemption is in regards to this one pending complaint, not to CPD in general. Should CPD go back to PSNH and demand they buy CPD’s power under PURPA guidelines PSNH can point to the FERC waiver and deny the request. PSNH closed one avenue CPD could have taken to sell their power, even if it wasn’t the one CPD was going for. What looks like a loss for PSNH may actually be a win, as long as the PUC uses PSNH definitions for the complaint.

That is, of course, unless CPD is producing less than net 20 megawatts. Their proposal will generate between 17 and 22 megawatts, which cuts close to the FERC ruling cutoff. Then it becomes a matter of skirting the line, something CPD did at the SEC already with the 30 megawatt cutoff.

FERC may have given PSNH an insurance policy, at least in this one regard, but the question remains just how deep the PUC will go into the obligation and logic for negotiation, and who will be vindicated as a result. Either CPD and PSNH would win the argument if it was their rules the other were forced to follow. Now the PUC has to choose which version to abide by, and then the matter will be settled.

I don’t imagine, however, this was the last story I’ll write or the last post I’ll put up on the subject. More twists than a North Country road. My energy education, it seems, is still underway.

3 thoughts on “More on Energy

  1. Eric,

    I think you are missing the most critical point. The PUC (or Public Utility Commission) has an obligation to protect the electric rate payers. Peel off all the layers of legal wrangling and you are left with this one important requirement. Nobody can deny that by failing to even talk to Clean Power PSNH is not ensuring to the electric rate paying public that the Laidlaw plant is the cheaper biomass alternative in Berlin. And, most experts agree that we can only have 1 of these 2 plants constructed given the constraints of the Coos loop and wood supplies. Hence, PSNH is severely harming the rate payer by their foolish stance. Again, this is why we have the PUC.

    In other words, if the PUC is doing its job properly then they will rule in favor of Clean Powers on this particular issue

    Once again it is very black & white (not gray like you claim). I’m glad I could enlighten you.

    1. Berliner –

      Thanks for you “enlightened” view and your comments. I didn’t miss the point, I’m waiting to see events play out. We all know the tact CPD is taking in the debate — they have been clear about their argument. And after protracted discussions with PSNH I have an idea what their strategy is, which is frustratingly shallow. I’ve tried time and time again to get PSNH to address those deeper issues, but they refuse to get beyond the negotiation question. You think you’re explaining an argument I haven’t heard. You’re wrong. But try to call PSNH and extract an explanation of how they meet that least cost obligation without negotiating with every company. I’m telling you it can’t be done.

      The question is, will the PUC do it?

      You may think CPD’s case a slam dunk, but PSNH’s tact suggests otherwise. Given their experience with the PUC over the years they may know what they’re talking about. They may know that the PUC never delves beyond the exact question it is asked. Maybe they do, but PSNH isn’t making arguments that will stand up to digging. They are arguing skin deep, and I’m interested to see how that does.

      I agree with your assessment, but I don’t know how the PUC will approach it. Is that “gray?” I don’t think so, but you are welcome to your opinion.

      Thanks for your comment.

      Erik

  2. PSNH is in the spotlight right now as is the PUC and the SEC. If the government entities don’t want to be accused of political bullying they will continue to do the right thing at this stage. They are finally distancing themselves from PSNH power plays by the PUC decision that is certainly in Clean Power’s favor. The city needs no plan for the Burgess mill when the stack falls. The owners, who are not Laidlaw, have the expertise with brownfield sites to move Berlin’s center to a new level. It’s looking as though Berlin isn’t going to have a boiler on the “River’s Edge” of the Burgess mill site after all, and that Berlin will benefit from an appropriately sized and positioned biomass facility model for this country to follow into a greener future. Congrats to Clean Power Development.

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