CONCORD – Proposed changes in a state program designed to encourage renewable energy would grease the path for the Northern Pass hydroelectric project and destroy the state’s small-scale wood and hydro power plants, according to testimony by opponents in Representatives Hall on Wednesday.
One measure, HB 143, would add large-scale hydroelectric projects outside of New England to the category of power supply eligible for support through the state’s renewable energy initiative.
The other, HB 234, would collapse four categories of energy supply, with varying degrees of subsidy, into a single classification of renewable.
“The effect of the bills is to destroy the renewable portfolio standards,” said Robert Olson, representing the owners of small biomass (wood) energy plants that rely on the RPS subsidies.
Sponsors of the legislation say their goal is to reduce the cost of electricity by attracting more hydro into the state and curtailing subsidies to renewable energy suppliers that ultimately are passed along to consumers.
The state’s renewable-fuels portfolio law, passed with near unanimous support in the House and Senate in 2007, requires all electric service providers to purchase a certain percentage of their electricity from in-state, renewable-energy sources, including wood-fired or small-scale hydroelectric plants.
A service provider has to prove it purchased the requisite amount of renewable energy by buying renewable energy certificates from the eligible suppliers. If the utility can’t find enough renewable energy to meet the requirements, it makes “alternative compliance payments” that go into a Renewable Energy Fund.
All of this forces energy suppliers to buy a small portion of their electricity at higher than market rates, or pay penalties, in the interest of fostering a renewable energy industry that might not otherwise evolve, and to reduce carbon emissions.
Mike Fitzgerald, head of the Air Resources Division in the Department of Environmental Services, testified that DES opposes both of the proposed changes.
He said the current law was developed over three years of negotiations with various stakeholders and struck what he called a “delicate balance” of interests. “These bills would upset that delicate balance,” he said.
The RPS program and the related Regional Greenhouse Gas Initiative are “insignificant” in terms of electricity costs, according to Fitzgerald. “Energy costs are high, but not because of RGGI or RPS,” he said.
According to the Public Utilities Commission, the renewable portfolio standards account for 3 to 5 percent of the energy service charge, or about $1.95 on a typical bill from PSNH.
That drew fire from House Majority Leader Jack Flanagan, R-Brookline. “That’s like saying ‘You have a stake in your heart that’s three and a quarter inches deep, but getting a quarter inch out isn’t going to help,’” he testified.
Flanagan said the program has created a slush fund used to balance the state budget, more than encouraging renewables. The state Legislature in 2013 grabbed more than $17 million from the Renewable Energy Fund to balance the budget and bail out the financially troubled Tri-County Community Action program in the North Country, leaving a balance of $7.8 million for renewable energy grants and rebates.
Flanagan’s bill, HB 234, would preclude such raids on the fund by requiring the PUC to use half for renewable initiatives and rebate at least half the fund’s value each year to ratepayers in the form of lower electric rates.
Opponents of the changes say that if they pass, there won’t be any fund to worry about.
If allowed to enter the RPS pool, a huge provider like Hydro-Quebec would be able to under bid all competitors, fulfill all the renewable purchase requirements for utilities, and essentially reduce the value of the compliance certificates to zero, since no one would need to buy any.
“Why would we want to privilege renewable energy from outside of New Hampshire?” said Nancy Martland of Sugar Hill, a prominent Northern Pass opponent. “Vermont allows big hydro to count in their RPS, and I don’t see it’s made an appreciable difference in their electric rates.”
Donna Gamache, head of governmental relations for Public Service of New Hampshire, said Northern Pass partners take no position on either bill, and that the project does not rely on large-scale hydro qualifying as renewable.
“We don’t need it, and we didn’t ask for it,” she said in a brief interview as the hearing got under way.
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