In a move that the state’s Consumer Advocate calls “a breakthrough into the 21st century,” the state wants to change the way Liberty Utilities is paid for natural gas to make it easier to create energy efficiency programs.
Friday’s New Hampshire Public Utilities Commission decision – involving what’s called “decoupling” – would allow monthly adjustments to Liberty Utilities’ gas prices for the first time in New Hampshire. The move was praised by consumer advocate Don Kreis, who said it improved from previous attempts to compensate utilities for selling less of their products due to increased efficiency. energetic.
“We need to design tariffs that encourage utilities and consumers to do what’s right for them,” Kreis said. “It’s much fairer because utilities really have to prove the effect of efficiency on their revenue – and the rate can be adjusted up or down.”
Liberty Utilities is reviewing the decision and has not said whether it will appeal. The ruling applies only to their natural gas business in New Hampshire, not their electricity business.
Kreis said similar programs exist in a number of other states. They are designed to address the conflict of interest inherent when a gas or electric utility oversees energy efficiency programs, as is the case in New Hampshire.
Because utilities make their money selling energy, they have little incentive to help customers use less. So utility regulators have instituted a variety of programs that pay utilities to compensate for at least part of this lost revenue.
The New Hampshire version is called LRAM, for the revenue loss adjustment mechanism.
But Kreis argued, more recently in his regular column published by InDepthNH, that the LRAM is bad for taxpayers because it “simply assumes the existence of a loss of income, based on predictions of the effectiveness of the measures. ‘energy efficiency’, and makes payments. although there is no decline in customer usage due to “an unusually cold winter, a hot summer or a booming economy.”
“In short, under the LRAM, the utilities get the income adjustment, that income is actually lost,” he wrote.
The PUC’s decision would remove LRAM from November and replace it with monthly adjustments based on usage, determined separately for residential and commercial customers, including an additional adjustment to account for weather changes that may affect the amount of gas. burnt by people.
“If decoupling is successfully implemented, customers should see better opportunities for cost-effective energy efficiency measures to reduce consumption and lower their energy costs,” says the PUC decision.
The decision also allows for some cost lag from winter to summer, to reduce the effect of any adjustments when it’s cold and people’s natural gas bills are already rising. He adds that decoupling cannot be used to compensate Liberty if customers leave it and turn to competing energy providers.
The decision also reduces fixed costs, which are regularly applied to each invoice.
This case was sparked a year ago when Liberty filed for new tariffs. Liberty’s predecessor in New Hampshire, EnergyNorth, had proposed a similar decoupling several years ago, but it was rejected by the PUC at the time.
Friday’s move would give Liberty an increase of about 7.8%, increasing the annual bill for a Concord customer who uses 760 therms by about $ 85, according to staff estimates. He estimated Liberty Utilities would earn an additional $ 12.7 million per year in New Hampshire, plus a $ 2.4 million reduction in federal taxes due to tax reform, creating an overall annual return of 9.3 % on equity.
These numbers are slightly lower than the level Liberty Utilities had previously agreed to accept in a settlement with the Office of Consumer Advocate. Liberty can appeal the ruling, which would otherwise go into effect on Tuesday.
“We are still reviewing it and determining our next step,” said Emily Burnett, Marketing and Communications Analyst for Liberty.
Liberty Utilities has approximately 90,000 gas customers in central and southern New Hampshire, including a set of customers in Berlin. The decision also covers approximately 1,200 customers in the Keene area served by a self-contained propane / air system. Liberty purchased this system in 2014 and is in the process of upgrading it to natural gas.
(David Brooks can be reached at 369-3313 or email@example.com or on Twitter @GraniteGeek.)