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N.H. Alters Natural Gas Pricing

Concord Monitor
Published: 5/1/2018 11:44:49 PM
Modified: 5/1/2018 11:44:56 PM

In a move that the state Consumer Advocate calls a “decisive step forward into the 21st century,” the state wants to change the way Liberty Utilities gets paid for natural gas to make it easier to create energy efficiency programs.

The Friday ruling by the New Hampshire Public Utilities Commission — involving what is known as a “decoupling” — would allow monthly adjustments in Liberty Utilities gas rates for the first time in New Hampshire. The decision drew praise from Consumer Advocate Don Kreis, who said it improved on earlier attempts to compensate utilities for selling less of their product because of increases in energy efficiency.

“We need to design rates that encourage utilities, and encourage consumers, to do the things that are good for them to do,” Kreis said. “This is much more fair because the utilities have to actually prove what effect efficiency is having on their revenue — and the rate can be adjusted either up or down.”

Liberty Utilities is reviewing the ruling 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 that similar programs exist in a number of other states. They are designed to tackle the inherent conflict of interest when a gas or electric utility oversees energy efficiency programs, as is the case in New Hampshire.

Because utilities make their money by selling energy, they have little interest in helping customers use less of it. So utility regulators have instituted a variety of programs that pay utilities to compensate for at least some of that lost income.

New Hampshire’s version of this is called LRAM, for lost revenue adjustment mechanism.

But Kreis has argued, most recently in his regular column published by InDepthNH, that LRAM is bad for ratepayers because it “simply assumes the existence of lost revenue, based on predictions of how efficient the energy efficiency measures prove to be,” and makes payments even if there’s no drop in customer usage due to “an unusually cold winter, warm summer, or a booming economy.”

“In short, under the LRAM, the utilities get the revenue adjustment regardless of whether any revenues are actually lost,” he wrote.

The PUC ruling would remove LRAM as of November and replace it with monthly adjustments based on usage, determined separately for residential and for commercial customers, including an extra adjustment to factor in weather changes that may affect how much gas people burn.

“If decoupling is implemented successfully, customers should see enhanced opportunities for cost-effective energy efficiency measures to reduce consumption and lower their energy costs,” the PUC ruling says.

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