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Castleberry Fairs

PSNH seeks federal waiver, CPD cries foul


February 17, 2010
CONCORD — Public Service of New Hampshire filed paperwork for a waiver from the Federal Energy Regulartory Committee, reigniting the debate in Concord between Clean Power Development and PSNH.

"It's pretty apparent PSNH now recognizes its existing responsibilities and is trying to have them waived," said Bill Gabler, project manager for CPD.

CPD is in an ongoing dispute with PSNH that is before the Public Utilities Commission regarding PSNH's refusal to enter negotiations with CPD on forming a long-term power purchase agreement.

The FERC waiver would release PSNH from the obligation to purchase power from cogeneration facilities and small power producers that produce more than five megawatts of electricity but less than 20 megawatts. PSNH applied for the waiver in early January.

The CPD facility is slated to be a 29 megawatt plant, but they told FERC their electricity production will be between 15 and 22 megawatts, while the rest of their capacity will produce heat and steam.

"There are certainly related issues here," said Martin Murray, spokesperson for PSNH, but the CPD complaint did not figure into PSNH's decision to go after this waiver. "It's really directly related to Concord Steam."

Concord Steam operates a biomass cogeneration facility in Concord. Their facility powers a district heating system in downtown Concord, and they generate two megawatts of electricity. They are expanding to produce 15 megawatts of electricity, and they have been trying to negotiate a long term purchase power agreement with PSNH.

They joined the CPD complaint against PSNH at the PUC because they said PSNH also rebuffed their attempts to negotiate a long-term contract for power.

Concord Steam has other connections to CPD as well—Concord Steam's president Peter Bloomfield is vice president of CPD.

The size of the Concord Steam project, and arguably the size of the CPD project, are what matter in the debate.

Federal energy rules require utilities, like PSNH, purchase power from certain sized small producers. The rules serve as safeguards for independent power producers. If a company generates below 20 megawatts of electricity utilities are required to buy their power. It ensures small producers have access to energy markets and aren't squeezed out of business by larger companies.

The rules differentiate between energy producers that generate five megawatts and below and companies making between five and 20 megawatts. They allow utilities the opportunity to apply for a waiver from the obligation to purchase electricity from the larger companies, as long as it can be shown the small power producers have adequate access to the open market.

That waiver is what PSNH is seeking.

"We've made what is really a first in the nation filing," Mr. Murray said, something no other utility has done. They are looking to get rid of the requirement that the company purchase electricity from these small producers, he said, which resulted in $2 billion in additional costs since the rules were instituted in 1978.

But CPD has questions about the timing of the effort.

"It's been 12, 15 years, and they haven't done anything about it," Mr. Gabler said, referring to the length of time PSNH has had to apply for this exemption. Now, a month after CPD told the PUC that PSNH had a requirement to buy CPD's power, he said, they are seeking the waiver. "I think it's pretty clear it's a direct reaction."

But whether CPD is even eligible under the federal rule is in question. PSNH believes that CPD's project, at 29 megawatts, is outside the scope of the requirement.

CPD argues their project will produce about 17 megawatts of electricity and therefore falls under the guidelines.

CPD submitted their request to be an intervener in the waiver process to FERC along with a number of small independent producers and the coalitions that represent them. They also submitted a copy to the PUC to support their complaint against PSNH.

There CPD requested the PUC investigate PSNH's refusal to discuss long-term power purchase agreements last April. They are now calling this waiver one more indication PSNH is in the wrong. It proves PSNH does have a requirement to negotiate on the purchase of CPD's power, CPD's letter to the PUC said, and now PSNH is looking for federal authority to circumvent that requirement.

PSNH still argues they have no obligation to talk with CPD, and the size of the plant nullifies any implication of their FERC filing.

The PUC has not made any announcements on the issue since a hearing in early November.

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