Sale by Eversource subsidiary nearly completes N.H. power deregulation plan

Washington (Platts)--11 Jan 2018 630 pm EST/2330 GMT

An Eversource subsidiary has closed the sale of 1,130 MW of fossil-fueled power generation assets in New Hampshire, which nearly completes the process of deregulating the state's power industry, the Public Utilities Commission said Thursday.

"Yesterday's closing was for Eversource's fossil generation plants; the sale of the hydro plants has not yet closed," NHPUC spokeswoman Amanda Noonan said in an email. "New Hampshire's process for restructuring will be complete once that closing occurs."

Eversource subsidiary Public Service Co. of New Hampshire completed the sale of its fossil-fuel powered generation facilities to Granite Shore Power, a 50:50 partnership between Atlas Holdings, based in Greenwich, Connecticut, and Castleton Commodities International, headquartered in Stamford, Connecticut. The assets were sold at auction with a $175 million winning bid from Granite Shore.

Closure of the hydro asset sale is mostly a formality at this point and the deal should be completed shortly, Eversource spokesman Martin Murray said Thursday. Electric industry-focused private equity firm Hull Street Energy is purchasing Eversource's nine hydro facilities totaling 68 MW for $83 million.

New Hampshire's power sector has operated under a hybrid deregulation system where customers have been able to buy power from suppliers that have been certified by state regulators since 2002. Eversource is the default provider for its roughly 500,000 New Hampshire customers, so the sale of its power generation assets will change its default energy price "in terms of how it is calculated and approved by regulators," Murray said.

The biggest change is the price of energy supplied to customers under default service will now be determined through a request for proposal process that will depend on the price of energy in the marketplace. Other utilities in New Hampshire have a lower default energy price than Eversource because they have already shed their generation assets.

Eversource's price is higher because it includes the cost of producing energy from the plants that were just sold and the company expects its default price will be closer to that of the other utilities once it fully exits the generation business.

"Proponents of deregulation have said for years that competition will lower prices. We expect, at least initially, our customers will benefit from the shift to a deregulated marketplace," Murray said.

Granite Shore picked up Eversource's fossil-fuel assets for a price much lower than constructing a new gas plant in the region. The cost of building an about 1,000-MW combined-cycle gas plant would be around $1,200/kW, according to PIRA Energy Group, a unit of S&P Global Platts.

The national average overnight capital cost to build a roughly 700-MW combined-cycle gas plant is $978/kW, according to a 2016 US Energy Information Administration study.

The Eversource deal works out to $155/kW for the portfolio of just over 1,000 MW of aging fossil-fueled units, with the oldest being the Schiller Station that entered service in 1952.

The asset sales grew out of a 2015 agreement between PSNH, state lawmakers, labor unions, generators and others. Under the agreement, the plants' new owners will be required to keep them running for at least 18 months.

Atlas and Castleton did not respond to requests for comment.

--Jared Anderson,

--Edited by Jason Lindquist,

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