Overview of Energy Policy Act of 2005 A Review of Implementation issues in New Hampshire

Basic Federal/State Concepts: Constitutionality Enumerated Powers (Article 1, Section 8 – “Commerce Clause”) Savings Clause (10 th Amendment) Jurisdiction Pre-emption

Energy Policy Act of 2005 – Overview Repeal of the Public Utility Holding Company Act of 1935 (“PUHCA”) Tax incentives for new generation Repealed the utility ownership prohibition of PURPA Streamlined the application process for new liquefied natural gas ("LNG") facilities Incentives for nuclear generation advanced design Allowed FERC to impose mandatory reliability standards for transmission

Sections 1251, 1252 and 1254 of EPAct Required state commissions to consider five new federal (PURPA) standards and make specific determinations as to whether implementation of the standards is appropriate. Net Metering Fuel Sources Fossil Fuel Generation Efficiency Time-Based Metering and Communications or “Smart Metering,” and Interconnection.

Time Based Metering Whether it is appropriate for electric utilities “to provide and install time-based meters and communications devices for each of their customers which enable such customers to participate in time- based pricing rate schedules and other demand response programs.”

Historically, retail pricing is based upon an average price No incentive to use electricity based on the economic cost to provide it Customers of National Grid and Unitil pay “hedge premium”

NHPUC Docket DE Procedural Overview Commission issued its Notice April 24, 2006 Technical sessions, comments and discovery follow Commission Order issued June 22, 2007 PSNH Motion for Rehearing July 23, 2007 Rehearing held October 10, 2007 Final Order Pending

Commission 4/24/2007 Order “We find that time-based pricing that enables demand response can be a cost- effective alternative to adding new generation, adding to transmission and/or distribution capacity, or increasing electricity usage, provided that consumers reduce or shift their usage in response to changes in retail prices.”

Order, con’t: On this basis, required: a. All utilities to modify their tariffs to provide for fixed, time-based pricing of default service for all metered classes b. At some point in the near future will require real time pricing

PSNH Motion for Rehearing Challenges failure of Commission to hold a hearing Failure to abide by New Hampshire Rulemaking requirements Commission grants rehearing, held on October 10, 2007

Issues for Consideration Mandatory (?) What price differential is sufficient to cause a shift in usage Picking winners and losers Large vs. Small Customer concerns What are we trying to accomplish Other alternatives Decoupling

Suggested Readings See Handout