Thank you Mr Speaker, and “Thank you!” to you my colleagues in the House for your continued attention and patience during a long legislative day. I will be brief. Let me tell you an entertaining story about electricity in New England, and why passing SB168 is a good idea for the people and the industries of New Hampshire.
Briefly, SB168 increases the Class 2, or solar portion of the Renewable Portfolio Standard from 0.7% to 5.4% by 2025. The motive for increasing the Class 2 RPS is not merely environmentally appealing, it is vitally important to head off a steep increase to NH electricity customers, as our neighboring states develop their own renewable generation, and become less dependent on ISO. The three-tiered system through which electricity is (first) generated, (second) purchased in the wholesale market and transmitted across the New England region by the “Independent System Operator”, known as ISO-New England, then (third) distributed and metered by your local utility is a complicated network of monopolies regulated by the Public Utilities Commision, who protects the ratepayers from monopolistic price gouging.
Here’s an analogy to where electricity comes from, and how we are charged for it:
Let’s pretend that electricity is pizza. THIS “energy pie” is plain “tomato pie”, but it’s served in an unusual restaurant called “The Deregulated Electricity Pizzeria”. It’s the best electricity pizzeria around; in fact, it is the only pizzeria in New England! The restaurant is run by three brothers, and a sharp-eyed codger (the PUC) who sits beside the cash register and makes sure the brothers figure the bill out according to the following rules, so their customers pay the lowest possible amount for their energy-tomato pie. This restaurant only has six enormous tables, and each table is occupied by one of the six New England states. It’s hard to imagine, but there is a chair at each state’s table for every home or business owner in the state. The States have a voracious appetite for pizza. They consume and pay for each slice of energy pizza as it is served to them.
The first brother is called “the Generator”, and he grows the “energy-tomatoes” by a variety of different methods. He writes the agreed-upon auction price for the generation of ingredients on the bill. The second brother seems to be the brains of the operation and he is called “ISO-New England”. He selects and collects the best energy-tomatoes from the field and transforms them into “energy pie”. He charges a flat rate because it doesn’t matter to him if it’s a large or small pie, it’s a fixed cost to drive around to the fields to collect tomatoes, to mix up a batch of dough and to fire up the ovens to bake the crust. He adds his flat rate to the bill (and it is a considerable amount - billions of dollars!), and that flat rate is divided proportionally among the six tables. The third brother is called “the Utility”. His job is to cut the pizza into uniform slices, bring the slices to the table and collect the money. He charges by the kWh slice, and adds his charge to the bill and presents separate checks to individual customers in their chairs (under the watchful eye of the PUC) and collects the end users’ money.
So that’s how our electricity grid operates: Since deregulation, generators “grow the groceries” by converting some form of energy into electricity, ISO-NE makes it into a uniform product while precisely matching interstate demands, and the local utility completes final delivery of the product to our homes and businesses. The PUC ensures they don’t collude to the disadvantage of the end users. SB168 focuses on ISO-New England’s flat-rate part of the process, and instructs the sharp-eyed PUC to pay attention to solving a problem that is currently outside its scope.
Here’s the problem that SB168 addresses. The “Deregulated Electricity Pizzeria” is no longer the only place in town to eat. NH took 9.6% of ISO’s pie last year. Over the past couple years, our percentage seems to be increasing far faster than NH’s appetite! How can that be? We have noticed that other states at the table are “cheating on their diets”, stepping outside of the pizzeria and getting energy from sources other than ISO’s energy pie. Where are they getting it? From in-state renewable energy! Those states are pushing away from ISO’s table, their demand has dropped, so ISO makes next year’s pie smaller. If New Hampshire goes ahead and buys the same number of slices next year, it will be an even bigger portion of a shrinking pie, so NH will be on the hook for a bigger portion of ISO’s fixed costs. It is projected that by 2025, on our present course, New Hampshire ratepayers will be on the hook for a $300 million dollar increase!
The biggest electricity market in New England is Massachusetts, of course. As of 2018, Massachusetts had 2000 MW of solar installed, compared to NH’s 85 MW. By 2021, just two years from today, Massachusetts’ goal is to have 3500 MW online. There is already a solar installation in virtually every town in Massachusetts. Like the solar arrays in New Hampshire, these facilities are privately or municipally owned, not utility owned. (In fact, regulated utilities like Eversource, Unitil and Liberty may not own generation facilities, under the current rules.) The cost of building these arrays has been shouldered by private investors or by municipal energy groups, not by ratepayers. The cost of electricity generated by solar amortized over the 25 year warranties on solar panels and inverters, is only 1.8¢ per kilowatt hour. Compare that to 2.5¢/kWh for nuclear and 3.5¢/kWh for fossil. Only hydro is cheaper at 1¢/kWh, but we can’t build more rivers! Our hydro capability is essentially fully developed. Solar is nowhere close to fully developed!
To meet the goals of SB168, to grow solar to 5.4% of the energy consumed in our state in five years, NH needs to add about 680 MW of solar by 2025. So how big an array would that require? Solar technology is rapidly improving. Using the technology that is for sale today, we need about 900 acres of rooftop solar, or roughly twice that space for a ground-based solar park. Solar generation doesn’t need to be concentrated in one place, like a nuclear reactor or natural gas-fired turbine power plant. In fact, there are great advantages for grid operations and energy security offered by distributing solar generators over rooftops and vacant lots like closed landfills across the state. For comparison, the rooftop acreage required will be smaller than the total acreage of rooftops found on mobile homes sprinkled across the state. The solar field space is comparable to the acreage devoted to high school ball fields scattered across the state.
This 5.4% is an attainable goal, and a goal we should meet to avoid increasing electricity costs for all NH ratepayers. I could go on and on about the environmental benefits solar offers, about the economic advantages of providing good NH jobs in the solar installation industry, and the economic advantage of NOT spending NH dollars out of state year after year to import fossil fuels into our state. But I won’t go on & on. I hope I have helped you understand, as I do, how supporting SB168 will help NH develop its energy future.
Ken Wells represents Andover, Danbury and Salisbury in the New Hampshire House of Representatives during the 2018-2020 session.