Smart Grid

TMCNet:  Alternative electricity supplier may be barred from power grid; fate is unclear

[February 20, 2013]

Alternative electricity supplier may be barred from power grid; fate is unclear

Feb 20, 2013 (The Telegraph - McClatchy-Tribune Information Services via COMTEX) -- The new, fast-growing industry of deregulated electricity in New Hampshire may have hit a bump: One of the first companies to offer lower rates in New Hampshire, Resident Power, allegedly has been suspended by New England's power grid.
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The situation was unclear as of Tuesday evening.

ISO-New England, the entity that regulates the power grid, declined to comment on whether it has taken any action regarding Resident Power. Resident Power did not return The Telegraph's phone calls by press time Tuesday.

The New Hampshire Public Utilities Commission also declined comment.

PSNH claims in a state filing that many if not all of Resident Power's approximately 8,500 retail customers in New Hampshire would be transferred back to PSNH because Resident Power could not legally resell power.

PSNH said ISO-New England had sent it an electronic notice saying "Company PNE Energy Supply LLC has been suspended effective immediately." PNE is the parent company of Resident Power.

No matter what happens, Resident Power customers will continue to receive electricity. But it is possible that the next bill will have rates that are different -- presumably higher -- than those negotiated with Resident Power when they signed a six-month or one-year contract.

If any problems have arisen, this would be the first time an alternative electricity provider has transferred residential customer contracts without their consent, demonstrating a possible weakness in a market that has flowered for homeowners within the last year. Businesses have been buying cheaper power from competitors for several years.

Further complicating matters, some customers of Resident Power have received letters saying their accounts had been switched to FairPoint Energy, the electricity-selling subsidiary of phone company FairPoint Communications.

Among those customers are Chris and Julie Colotti, of Lyndeborough, who became Resident Power customers a year ago -- so early that they did TV news interviews about it.

The Colottis were surprised to receive a letter Monday saying they were now customers of FairPoint Energy.

"We've had no problems with them. I just looked at the last bill; we're still getting the lower rate," Chris Colotti said.

"My bigger concern is, kind of like old long-distance reselling, when you get moved from one person to another, you don't know what will happen," he said.

Still, he said, this uncertainty hadn't soured him on alterative power.

"I'm already looking into alternatives, like North American Power, out of Connecticut. And there's ENH Power," he said. "I think overall the concept of deregulation is fine; there's got to be more competition to drive some of the prices down." "I would like information on their financial stability, in light of this," he added. "But all these are private, so there's no way to know how one is financially stable compared to another." It is not known why ISO-New England might have suspended Resident Power. ISO-New England does not comment about "individual participants and their status," a spokeswoman said.

A major part of ISO-NE's job is ensuring that power-selling and power-generating entities are financially stable.

"All market participants who are active in the wholesale electricity markets in New England must maintain a minimum amount of collateral and comply with other financial assurance and billing requirements to participate in the markets," wrote spokeswoman Marcia Blomberg in an email response to queries.

Alternative electricity providers have been able to offer cheap power, undercutting PSNH and other regulated utilities by up to 25 percent because the low price of natural gas has led to a lower price of electricity from power plants that use gas as a fuel. This means alternative providers can buy cheap contracts for power from these plants and resell it to individuals at rates that are lower than PSNH -- whose rates are set in annual meetings by state regulators.

In recent weeks, however, the price of natural gas, and therefore electricity generated from gas, has risen sharply because of supply constraints caused by heating during a cold winter as well as a bottleneck of gas entering New England via pipelines.

Such price spikes eat away at the profit that resellers make by buying cheap contracts and selling electricity at lower-than-PSNH rates. Whether that situation contributed to any Resident Power issues is unknown, however.

Ann Ross, general counsel for the New Hampshire Public Utility Commission, which regulates electricity in the state, declined to comment on Resident Power's status.

When asked about the transfer of Resident Power customers to FairPoint Energy, she also declined to comment, saying only, "There is an investigation ongoing." The only official discussion of the situation is in a legal petition by PSNH to the state Public Utilities Commission. It concerns an ongoing dispute about what money PSNH and electricity resellers have to pay each other. PSNH is asking the state to remove PNE Energy, Resident Power's parent, from the case because it "no longer qualifies as a competitive electric supplier." "We don't know why PNE was suspended, but we do know that the regional marketplace is increasingly dependent on a single fuel, natural gas, and that dependence can be a real concern, especially during periods of high demand when the price is especially volatile," wrote PSNH spokesman Martin Murray in an email.

PSNH has long argued that competitors in the alternative-power field were too dependent on the low price of natural gas.

David Brooks can be reached at 594-6531 or dbrooks@nashua telegraph.com. Follow Brooks' blog on Twitter (@GraniteGeek).

___ (c)2013 The Telegraph (Nashua, N.H.) Visit The Telegraph (Nashua, N.H.) at www.nashuatelegraph.com Distributed by MCT Information Services

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