SB 307-FN - AS INTRODUCED
2024 SESSION
24-2983
10/05
SENATE BILL 307-FN
AN ACT relative to electric transmission service agreements.
SPONSORS: Sen. Avard, Dist 12; Sen. Watters, Dist 4; Sen. Pearl, Dist 17; Rep. Vose, Rock. 5
COMMITTEE: Energy and Natural Resources
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ANALYSIS
This bill allows for electric transmission service agreements by New Hampshire electric distribution utilities with the developer of any New England transmission project which has been awarded a grant from, or entered into a transmission capacity contract with, the United States Department of Energy.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
24-2983
10/05
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Twenty Four
AN ACT relative to electric transmission service agreements.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Section; Electric Distribution Utilities; Transmission Service Agreements. Amend RSA 374-F by inserting after section 11 the following new section:
374-F:12 Transmission Service Agreements.
I.(a) One or more New Hampshire electric distribution public utilities, as defined in RSA 362:2, may recover through retail rates the costs incurred under, and in connection with, long-term transmission service agreements, with or without associated long-term agreements for energy purchases or storage services, entered into with the developer of any New England transmission project which has been awarded a grant from, or entered into a transmission capacity contract with, the United States Department of Energy, subject to the following conditions:
(1) Such agreements shall not exceed a total of 240 megawatts of transmission capacity in the aggregate.
(2) Each electric distribution utility shall not contract for more than its pro rata share of the total capacity amount, based upon its kWh sales to retail customers as reported on FERC Form 1.
(3) No such agreement shall exceed 40 years in length.
(4) Any such agreement shall meet the requirements of RSA 374-F:12, II.
(b) Electric distribution public utilities shall review and respond to proposals for long-term transmission service agreements, with or without associated long-term agreements for energy purchases or storage services, from any such transmission project developer, within 3 months of receiving such proposals.
(c) No later than 3 months after entering into such an agreement with a transmission developer pursuant to this section, the electric distribution public utility shall petition the public utilities commission for authorization to recover the related costs through retail rates.
II. Electric distribution public utilities shall recover any prudently incurred costs related to the solicitation, review and negotiation of such agreements through retail rates. Costs associated with the administration of any agreements shall be recovered pursuant to RSA 374-F:12, III if the public utilities commission finds such agreements to be just and reasonable and in the public interest. The commission shall review and render a decision on any proposed agreement no later than 6 months after submission of the agreement to the commission.
III. Upon receiving commission approval of cost recovery for any such long-term transmission service agreement, and any associated long-term agreement for energy purchases or storage services, the electric distribution public utility shall sell such services and associated energy to third parties in a manner to minimize costs and maximize benefits to ratepayers. Upon sale of the transmission service and any associated energy or storage services purchased, the electric distribution public utility shall:
(a) Calculate the net cost of payments made under the agreement, including all costs incurred by the utility to administer the agreement, against the proceeds obtained from such sales.
(b) Credit or charge all of its distribution ratepayers through a uniform, fully-reconciling annual factor in retail rates the difference between (i) the agreement payments and utility costs to administer the agreement, and (ii) the sale proceeds. Any Federal Energy Regulatory Commission (FERC)-jurisdictional agreements entered into pursuant to paragraph I shall be filed with or reported to FERC, consistent with FERC regulations and Section 205 of the Federal Power Act.
2 Effective Date. This act shall take effect upon its passage.
24-2983
Revised 1/2/24
SB 307-FN- FISCAL NOTE
AS INTRODUCED
AN ACT relative to electric transmission service agreements.
FISCAL IMPACT: [ X ] State [ X ] County [ X ] Local [ ] None
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Estimated State Impact - Increase / (Decrease) | ||||||
| FY 2024 | FY 2025 | FY 2026 | FY 2027 | ||
Revenue | $0 | Indeterminable Increase | Indeterminable Increase | Indeterminable Increase | ||
Revenue Fund(s) | Utility Assessment | |||||
Expenditures | $0 | Indeterminable | Indeterminable | Indeterminable | ||
Funding Source(s) | Utility Assessment | |||||
Appropriations | $0 | $0 | $0 | $0 | ||
Funding Source(s) | None | |||||
• Does this bill provide sufficient funding to cover estimated expenditures? [X] N/A • Does this bill authorize new positions to implement this bill? [X] No | ||||||
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Estimated Political Subdivision Impact - Increase / (Decrease) | ||||||
| FY 2024 | FY 2025 | FY 2026 | FY 2027 | ||
County Revenue | $0 | $0 | $0 | $0 | ||
County Expenditures | $0 | Indeterminable | Indeterminable | Indeterminable | ||
Local Revenue | $0 | $0 | $0 | $0 | ||
Local Expenditures | $0 | Indeterminable | Indeterminable | Indeterminable | ||
METHODOLOGY:
This bill allows for electric transmission service agreements by New Hampshire electric distribution utilities with the developer of any New England transmission project which has been awarded a grant from, or entered into a transmission capacity contract with, the United States Department of Energy.
The New Hampshire Public Utilities Commission (PUC) indicates there are currently three regulated electric distribution utilities to which this legislation would apply: Public Service Company of New Hampshire d/b/a Eversource Energy; Liberty Utilities (Granite State Electric) Corp. d/b/a Liberty; and Unitil Energy Systems, Inc. The Commission would be required to open the following new types of dockets under this bill:
- A docket to review each proposed long-term transmission service agreement filed by an electric distribution utility, with a decision required within a 6-month period.
- Dockets to develop a uniform reconciling factor for each electric distribution utility and subsequent annual dockets for each electric distribution utility to adjust rates based on this reconciling factor.
The PUC states additional staff would be required to implement this legislation, which would obligate the PUC to review and approve long-term transmission service agreements and related costs. The additional staff include one additional Attorney, one Senior Advisor, and 2.5 Utility Analysts. The PUC estimates the annual cost of these positions would be $605,000 beginning in FY 2025. The source of funding for the positions would be utility assessment revenue. The PUC indicates the effect of this bill, if any, on utility rates and on state, county and local government expenditures for electricity is indeterminable.
The Department of Energy indicates at this time, there is one proposed transmission project that would meet the qualifications. National Grid’s Twin States Clean Energy Link is a proposed transmission line that would connect New England and Quebec’s electrical grids. It would cross the Canadian border and run underground through Vermont before upgrading existing overhead transmission lines through New Hampshire, ending in Londonderry. It would have a capacity of 1,200 megawatts (MW). The total investment cost is estimated to be roughly $2 billion. The proposed in-service date is 2031.
The Department of Energy assumes there would be no fiscal impact to the Department in fiscal years 2024 through 2027. A transmission service agreement entered under this bill would not require payments until the commercial operation of the line, expected to be in 2031. The Department would review any proposed agreement and would participate in regulatory proceedings to determine its prudency. This would require resources to be committed and may result in an inability of existing staff to complete other work. Since the bill does not mandate that an agreement be entered into by a certain date, the Department is unable to estimate when the additional resources would be needed.
The Department states the long-term fiscal impact of the bill is indeterminable. 240 MW would be 20% of the Twin State line’s 1,200 MW capacity. Thus, the cost to New Hampshire’s ratepayers could be up to 20% of the $2 billion, or $400 million. The actual contracted quantity, if less than 240 MW, would determine the final cost. The Department notes the annual cost would be subject to a variety of factors including the length of the agreement; a shorter agreement may result in higher annual costs, while a longer agreement may result in higher overall costs. The discount rate applied to the agreement would significantly contribute to outcomes. The Department states benefits associated with a transmission services agreement are similarly complex. The additional energy provided over the transmission line may reduce electricity prices within New England. Savings would be calculated by the difference between energy prices with and without the line. That calculation would be subject to, among other factors: retirements of existing electric generators, deployment of new resources, transmission system upgrades, energy prices in Quebec, weather variability, load growth, energy efficiency, technology developments, wholesale market rule changes, and federal policy requirements.
Office of the Consumer Advocate assumes that the cost of our participation in such proceedings could be absorbed into our office’s caseload without requiring us to add resources.
It is assumed that any fiscal impact would occur after FY 2024.
AGENCIES CONTACTED:
Department of Energy, Public Utilities Commission and Office of the Consumer Advocate