New Hampshire Approves Continued Divestiture

New Hampshire Public Utilities Commission has authorized Public Service Company of New Hampshire (d/b/a Eversource Energy) to proceed with its planned sale of the facilities remaining in its generation portfolio.

The commission noted that divestiture requirements were a cornerstone of New Hampshire’s electric restructuring initiative, upon which the state first embarked 20 years ago. According to the commission, once these last sales of generating units are complete, the two-decade process of restructuring New Hampshire’s electric industry likewise will be complete.

At the center of the commission’s decisions were two parallel proposals from Eversource to divest itself of several thermal generation plants as well as nine hydropower facilities. The thermal units include the Newington, Schiller, and Merrimack stations, plus two combustion turbines, all of which the utility intends to sell to Granite Shore Power for $175 million. The hydroelectric plants, which are on the Connecticut, Pemigewasset, Androscoggin, and Merrimack rivers, are to be conveyed to HSE Hydro NH AC LLC for $83.3 million. All sale prices were determined in accordance with an auction process. The portfolio of assets included in the auction consist of approximately 1,200 megawatts (MW) of energy production capacity, primarily located in New Hampshire, including both coal-fired and oil- and natural gasfueled plants, plus biomass-based generation assets and hydroelectric generation assets.

The utility averred that the thermal assets total slightly more than 1,130 MW of capacity while the hydropower assets consist of 68.2 MW of capacity, for an overall total of just short of 1,200 MW of capacity covered by the auction. In reviewing the proposed sale terms, the commission stressed that the only matter under consideration was whether the proposed sales and associated sale proceeds were the market-based result of an appropriate competitive bidding protocol. That is, the commission clarified, it was deferring to a future separate proceeding any final decision on the treatment or recovery of stranded costs related to the sales.

As to the sale prices Eversource’s auctions produced, the commission was careful to point out that such were not necessarily tantamount to a statement of the fair market value of the facilities for purposes of any state and/or local property taxes. Nevertheless, the commission ruled that the bidding process used by Eversource was fair and yielded reasonable prices for the assets being sold. In evaluating the propriety of the auction model used by the utility, the commission observed that the purchase and sale agreements had resulted from a competitive bidding process that was administered by an independent auction advisor and overseen by commission staff.

The commission reported that the buyers had made representations concerning protection of most existing local jobs at the various generation facilities while Eversource had attested that it would purchase insurance to cover retained liability for most unknown environmental conditions related to the purchase of the assets. Such factors militated in favor of declaring the planned sales to be in the public interest, the commission said. In addition, the commission related that its examination of the bidding process, inclusive of the selection of winners and the drafting of accompanying sales agreements, revealed no evidence of collusion or unequal treatment of any bidder. Consequently, the commission declared that the auction process had been conducted in a fair and open manner. The commission drew attention to the fact that the successful bidders for both the thermal and hydropower assets had offered the highest prices for those assets, such that the commission concluded that Eversource had been successful in obtaining the highest overall transaction value for the sale of its generation portfolio.

The commission commended the utility for conducting an auction whose results reflected an appropriate market determination of the value of the assets as a fleet, offered for sale under the terms of earlier commission rulings in the divestiture/ restructuring proceeding. Re Public Service Co. of New Hampshire d/b/a Eversource Energy, DE 17-124, Order No. 26,078, Nov. 28, 2017; Order No. 26,080, Nov. 29, 2017 (N.H.P.U.C.).