It’s Lonely in Hearing Room A
Guest Blog by D. Maurice (“Don”) Kreis Consumer Advocate, NH Office of the Consumer Advocate
Think of this as an on-line personal ad, or maybe an OK Cupid profile.
Handsome, articulate, charming and principled fellow (please excuse the self-aggrandizement; the genre requires it) seeks partner of either gender, with similar qualities, to share intrigue and adventure in pleasant, naturally lit setting on Fruit Street in Concord. Frequent jaunts to historic downtown setting also required, plus occasional interludes at hotels.
The “pleasant setting” is Hearing Room A at the Public Utilities Commission (PUC). By “historic downtown setting” I mean the State House. The reference to hotels is an allusion to the fact that meetings of key regional bodies like the New England Power Pool and ISO New England tend to take place in windowless ballrooms in generic hostelries in Massachusetts. There’s no point in sugar-coating this; as anyone who has ever experienced online matchmaking can testify, the truth comes out sooner or later.
So, you may be wondering, why am I trolling for partners on this blog in my capacity as New Hampshire’s Consumer Advocate, tasked by statute with representing the interests of residential utility customers at the PUC?
The answer is twofold. First, to state the obvious, energy is the lifeblood of the economy that sustains us as individuals. Second, in discharging its role as the primary regulator of the public utilities that provide us with so much of our energy, the PUC has an explicit statutory mission to be the arbiter between the interests of utility owners and utility customers.
My office plays a critical role in helping the PUC do that; we assure there will be some weight on the “customer” side of the scale. But here’s a critical point: Our job is to represent the interests of residential utility customers; we cannot and do not advocate on behalf of commercial and industrial users of energy.
One might think the relationship I seek is doomed. In a market economy, aren’t consumers and businesses natural enemies, at least when the question is how to regulate business?
Nope. Residential customers and business customers of public utilities have vastly more in common than they might think. In particular, we have a shared interest in keeping each rate-regulated utility’s revenue requirement as low as possible, which means making sure utility investments are prudent, least-cost, and meet the so-called “used and useful” test – i.e., are actually used to provide the service covered by the rates.
The interests of all customers, of whatever rate class, are likewise united when it comes to getting more work from each kilowatt-hour or dekatherm of energy consumed. The ineluctable reality is that when it comes to squeezing the next unit of work out of the electricity grid or natural gas pipeline network, megawatts and ‘negawatts’ (i.e., savings from energy efficiency) are fungible. According to a recent joint utility filing at the PUC, the negawatts are the cheapest option for electric consumers – four cents per kilowatt-hour compared to six cents for natural gas generation, nine cents for renewables and ten cents for nuclear or coal-fired electricity.
Hence the fervent commitment of my office, on behalf of residential customers, to the Energy Efficiency Resource Standard (EERS) approved by the PUC last year. An EERS means New Hampshire is committed to “all cost-effective energy efficiency,” which in this instance means a 3.1 percent reduction in electric sales in between 2018 and 2020 (and a slightly smaller reduction in natural gas sales) achieved via programs funded by ratepayers through charges on their electric and natural gas bills. We agreed to leave the utilities in place as program administrators for at least those three years, rather than replace them with a third party as has happened in Maine, Vermont and elsewhere.
The math is the same whether you’re a residential ratepayer or a large commercial customer. Cost effective energy efficiency reduces everyone’s energy bills – that’s the reason for subsidizing them via nonbypassable charges – at the same time individual customer co-pays make economic sense because of the individual bill savings they produce.
One could make similar points about grid modernization, currently on hold at the PUC while the agency ponders the report submitted in March by the stakeholder working group convened to ponder these issues. All customers would benefit from aggressive efforts to take full advantage of emerging technologies, but the utilities resist these efforts because they inevitably involve opening up the distribution system to solutions and investments made by third parties and even customers themselves.
Additional examples abound – everything from the need for time-varying rates (because appropriate price signals could help reduce costs for all) to the deployment of utility-scale battery storage to the question of whether electric utilities should be allowed to invest in natural gas pipeline capacity, sell the capacity to unregulated merchant generators that are mostly outside New Hampshire, and force all Granite State customers to guarantee the cost recovery.
My point is not to paper over the legitimate differences of opinion that exist, in all quarters, about these questions. Rather, my contention is that non-residential utility customers are too often absent from the conversation – perhaps based on the mistaken assumption that what’s good for investor-owned utilities is good for investor-owned businesses generally.
Consider that the push to restructure the electric industry – a successful initiative by most accounts, and something the utilities resisted via litigation and otherwise – was driven in the first instance by commercial and industrial customers of the utilities. Sadly, these days the only non-utility businesses that participate directly in PUC proceedings are not there as customers. They intervene as subsidy seekers, would-be competitors of utilities, or potential providers of services to them.
New Hampshire needs an alliance of commercial and industrial utility customers that can help the Office of the Consumer Advocate do right by all ratepayers. It may not be the most romantic of partnerships, but it has every prospect of producing longterm happiness – or, in other words, safe and reliable service at the lowest possible cost.
Maurice (“Don”) Kreis, head of New Hampshire’s Office of the Consumer Advocate, is a former general counsel of the New Hampshire Public Utilities Commission who has also served as a hearing officer at the Vermont Public Utility Commission and a professor at Vermont Law School. He writes a regular column for the news web site indepthnh.org called Power to the People.