BIA Business Perspective: To NH Lawmakers — Tread Carefully On Energy Legislation

Written by Andrew Curland, Vitex Extrusion CEO & President and incoming BIA Chairman-elect on May 11, 2019

This article originally appeared in New Hampshire Union Leader

Vitex Extrusion is one of many advanced manufacturing businesses in New Hampshire. At our 115,000-square-foot facility in Franklin, we have the capability to produce 30 million pounds of custom aluminum extrusions and components for industries including electronics, building products, automotive and sporting goods.

We manufacture 24/7, meaning we use a lot of power to run our industrial machinery, lights and HVAC equipment. One of the highest operational costs for Vitex is electricity.

This session, the New Hampshire Legislature is pursuing policies that will — alarmingly — add to the cost of electricity and require subsidies from businesses, including Vitex, and residential ratepayers like you. These policies make it difficult for manufacturers, who drive the state’s economy like no other sector, to grow our companies here in New Hampshire.

In fact, expanding in New Hampshire is a growing concern for some of us. New Hampshire individual and business electric ratepayers already absorb energy costs that are 50 to 60 percent higher than the national average — year-round! Still, many bills under serious consideration by legislators this session not only fail to lower electric costs, but instead add to them.

The legislation with the largest potential cost impact for businesses and all ratepayers seeks to increase the state’s minimum percentage obligation for New Hampshire’s Renewable Portfolio Standard, known as RPS. Many states around the nation have adopted RPSes of their own that require a portion of electric utilities’ mix of generation supplied to customers must come from renewable sources such as wind, solar, hydro and thermal.

New Hampshire currently requires that 17 percent of utilities’ energy must come from renewables; that percentage increases to 25 percent by the year 2025. Two proposals this session aim to raise the RPS percentage to 56 percent by 2040. The increase in the 21-year period between 2019 and 2040 called for in this legislation is estimated to add up to $5 billion in electricity costs for New Hampshire ratepayers — businesses, homeowners and renters alike.

With the region already hard-pressed to meet its current electricity demand (grid operator ISO New England predicts a high likelihood of rolling blackouts by the winter of 2024-25 if our regional energy situation remains unchanged), legislators should tread carefully with this legislation. Supporting clean energy and renewables as part of an “all of the above” approach is important in attempting to address high electricity costs. However, there needs to be a healthy balance between the pursuit of clean energy and the need to ensure reliable power at all times, and to do so at rates that are at least stable, if not declining.

In addition to RPS legislation, lawmakers are once again considering subsidizing biomass plants in New Hampshire by requiring utilities to purchase baseload renewable generation at above-market prices. This cost, estimated to be about $25 million annually for three years, would again be passed on to all ratepayers. This language follows a similar bill that was vetoed by Gov. Chris Sununu last year, then overridden by the Legislature.

Although this legislation would seek to protect jobs in the woods products industry, mostly in the North Country, it comes at the expense of energy users, particularly large ones like Vitex, which employ tens of thousands of people throughout the state. It is simply bad public policy for policymakers to choose winners and losers in various sectors of the state’s economy.

Finally, legislators are once again trying to raise the cap on net energy metering from one to five megawatts. Net metering allows consumers who generate excess electricity through their own solar arrays, wind generators or other means, to receive credit for energy sent back to the electric grid. Raising the cap on net metering isn’t the issue — and should, in fact, be aggressively promoted. The issue is the amount of credit those who generate excess electricity are given. The amount of credit in these bills is likely to fall above the “avoided cost,” a figure set by the state’s Public Utilities Commission. The “avoided cost” includes the wholesale cost of power and ancillary services related to generation. Anything paid to net metering customers above the avoided cost means other ratepayers are subsidizing them. That’s simply not fair.

Instead of protecting electricity customers to the greatest extent possible from the high cost of electricity, many policymakers seek to advance policies that will further burden electric ratepayers. If New Hampshire seeks to retain existing businesses like Vitex and enable us to expand, then policymakers should be working to lower electricity costs, not increase them.