Home to some of the nation’s highest electricity rates, it was not surprising that New Hampshire was on its way to becoming one of the first states in the nation to deregulate its electric utility industry in 1996. As one of the first states to deregulate its electricity market, it would not have the benefit of learning from the experiences of other states, so the New Hampshire Public Utility Commission (NHPUC) initiated a pilot program to explore various technical and regulatory hurdles that may exist in a restructured electric utility industry.
Not only did lawmakers and electricity consumers in New Hampshire learn lessons from pilot program implementation; regulators, utilities, electric service providers and other interested parties across the nation also learned from their experiences. The predominant message resonating from New Hampshire was not one related to technical or regulatory matters; it was that customers needed to be educated. They were being inundated with offers from electric service providers offering to give them everything from bird feeders to ice cream in exchange for their electricity generation business. Customers had little substantive information to weigh their claims against and virtually no frame of reference for understanding them. This lack of information has been the basis for required and voluntary deregulation information programs throughout the nation.
The pilot program, which began in June 1996, gave approximately 15,000 customers from all parts of the state the ability to choose from one of about 30 power suppliers registered with the NHPUC. Of the 15,000 customers eligible to take part in the project, 9,000 selected a new electricity provider.
The Result - Customer Satisfaction
According to Hart’s Energy Markets, an industry publication, most participants in the New Hampshire pilot program reported being pleased with the results, largely because they automatically received a mandatory 10 percent reduction in their utility rates. Other benefits resulting from pilots were provided by electric marketers. Overall, there were few glitches and customers reported that service continued as usual.
The Next Step
As a result of the pilot program, the Legislature passed an electric utility restructuring law which required the NHPUC to implement a plan enabling all customers in the state to purchase their electricity from competitive suppliers by July 1, 1998. However, those efforts were stalled by the Public Service Company of New Hampshire (PSNH). The utility has a rate agreement with the state that allows full recovery of stranded costs. NHPUC's plan only allows utilities to recover approximately half of those costs. Utilities asked the courts to "maintain the status quo" until a scheduled trial in November has been completed.
The NHPUC's Reaction
The NHPUC filed a motion asking the court to dismiss the lawsuit. The motion to dismiss contests the federal court’s jurisdiction and seeks a dismissal on all counts of PSNH’s complaint. U.S. District Judge Ronald Lagueux rejected a request for delay by State officials, and instead expanded a preliminary injunction against the state’s restructuring plan to cover all utilities in New Hampshire. Under the ruling, the NHPUC cannot begin retail choice until Lagueux hears arguments about stranded cost issues in November.
Pilots - Moving Forward
The NHPUC held a hearing on May 12 to determine whether to continue the retail electric competition pilot program. The program was due to end after two years of operation, and the customers were expected to transfer into the state’s full retail choice program at that time. Despite dwindling interest in program, the NHPUC agreed to extend the state’s retail wheeling pilot program until PSNH’s legal disputes are settled. Of the 31 companies that registered in May 1996 to market electricity to 15,000 residents in the two-year pilot, less than half remain.
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