Agency steers through high-profile transformation

On Nov. 12, the NH Public Utilities Commission issued what Robert Backus called the “most disastrous decision in its history” — one made by the outgoing chairman and the incoming chairman, both with no utility or energy experience — that was overturned unanimously three months later by the NH Legislature.

The decision dramatically rolled back the state support for energy-efficiency projects, despite support from both clean energy advocates and the state’s electric utilities themselves. The decision ground the utilities’ energy-efficiency programs to a halt and threatened hundreds of jobs and thousands of projects.

So why did the PUC, which once set the state’s Energy Efficiency Resource Standard (EERS), seek to dismantle it? And why did it decide to scrap a seven-year effort to modernize the state’s electric grid, a decision that state Consumer Advocate Don Kreis called an “epic fail.”

In other words, what is going on at the PUC? That question doesn’t have one answer but many.

First, the changes at the PUC happened for many reasons, and they seemed to all happen at once. Normally, the PUC doesn’t completely turn over for at least six years, since each of the three commissioners serves sixyear terms and are appointed two years apart. Last year, they turned over in six months. None of the sitting commissioners have been there before May 2021 and two were added since November.

This has happened when the PUC was stripped of much of its staff, most of which have headed off to the new Department of Energy. The commission, which used to have nearly 80 staffers, was down to 13 as of March 2, including the new commissioners. The PUC no longer has an executive director, a general legal counsel, a communication director. It is trying to fill three positions.

This transition took place in less than a month, from the time the legislation was passed to when the new department was created. Kreis called it a “dark-side-ofthe-moon transition.”

The commission refuses to communicate with the media in any way. When this reporter asked Chair Daniel Goldner to comment for this story — making it clear that it would be about the workings of the commission and not any specific case — Goldner replied in a form email addressed to “Granite Stater” to explain that “the Commission is prevented by convention and the law from engaging in any communication about the matters before it outside of a formal proceeding.”

When asked about the number of staff it currently had, a lawyer treated the question as a right-to-know request, though he did point to a state government website staff directory.

Some observers were uncomfortable with the role of the former PUC staff who testified as expert witnesses in a formal hearing and then returned to work behind the bench in the same offices as the commissioners making the decision. Now the Energy Department staff gives the administration’s position and is treated as everyone else. But all this formality has its drawbacks.

“My worry is that the PUC will become imperial,” said Kreis. “The best way to do utility regulation is that it is more collaborative, more informal back-and-forth, with more opportunities between regulated and regulator to work on a solution, rather than all on the outsiders waiting for the PUC to issue an edict.”

Even Rep. Michael Harrington, R-Strafford, a former PUC commissioner who generally likes the recent changes, had problems with the way the reorganization was tucked into the budget. He has introduced a bill to fix some of the resulting problems, and expects lawmakers to come up with more “tweaks” in the future.

Many energy advocates backed a more independent Department of Energy, including Backus, a retired attorney who once chaired the House Science Technology Committee when it was in Democratic hands. In fact, he led a study committee that culminated in the department’s creation.

“Be careful what you wish for,” said Backus, though he still supports the department, which he envisions — under different leadership — as being an advocate for clean energy. The key is who the government appoints to the DOE and the PUC.

System Benefits Charge

That brings us to another reason behind the change at the PUC.

For years, the PUC members have been appointed by a string of Democratic governors, all of whom were strong believers in clean energy, and the commission reflected that. For instance, the commission downplayed the concern — among conservatives, utilities and businesses — about cost-shifting when it came to setting the net-metering rate for large projects, approving a deal that partially took into account the claims of clean energy advocates. The PUC said that more evidence would be needed to nail down the correct rate in the future but insisted that there wasn’t any evidence of cost-shifting.

Similarly, in 2016 the commission approved the EERS standard. The standard set a goal of cutting energy usage for both electricity and natural gas, and increase the System Benefits Charge, or SBC, to pay for it.

Previously, proceeds from the SBC — then about a third of a cent per kilowatt-hour on a ratepayer’s bill — were mainly used to help low-income people pay their utility bills through the Energy Assistance Program, though some of the money went to the NHSaves energy conservation program, which involves the state’s utilities.

The new EERS increased the SBC by another half a cent, tripling the amount spent on energy efficiency. The PUC made the move without consulting the Legislature, maintaining it had the ability to set rates in the public interest, and since it concluded that the money saved would exceed the money spent, it was in the public interest.

Many legislators disagreed, including Harrington, who thought, and still thinks, that it amounted to a ratepayer subsidy for people to insulate their homes, which may save oil and gas, but, for the most part, not electricity.

“The SBC is a tax, but they don’t call it a tax,” he said. Harrington was one of those who called for reining in the PUC, by giving lawmakers the final word on the SBC rate. The debate grew more heated as the PUC prepared to set the next three-year SBC rate proposed by the utilities in September 2020.

As proposed, the rate increase would be separate for residential and commercial customers, and businesses would pay a higher rate, especially those using Eversource, where the commercial SBC would have quadrupled from a half a cent to more than 2 cents. This got the attention of larger businesses and many conservatives like Harrington, who urged the PUC to reject the proposal, or at least delay it.

The commission did the latter on Dec. 29, 2021, three days before the EERS was supposed to go into effect, and the docket was reopened in February 2021.

‘We were stunned’

Meanwhile, things at the PUC were beginning to change.

In late 2019, Gov. Chris Sununu opened up a slot by appointing its then-chair, Martin Honigberg, a Superior Court judge, and replaced him with Dianne Martin, chief of staff for Attorney General Gordon MacDonald in late 2019.

By all accounts, Martin was good at handling complex issues, such as telecommunications and Medicaid managed care, but she admittedly knew little about energy, even telling one executive councilor that “I think frankly it is fair for people at first glance to be concerned because it’s an area that has a lot to it,” according to an article published in the NH Union Leader.

But Martin didn’t seem eager to learn, according to several accounts of people who asked that their names be withheld, because they have been representing entities before the PUC for years and clashed with other commissioners and longtime staff.

“Martin wants energy policy that saves the ratepayers dollars, but that is as deep as it goes. Unfortunately she didn’t understand how to do that,” said one person who represents a utility before the PUC.

“She just didn’t collaborate with me,” said Kathryn Bailey, who was a commissioner with Martin. Bailey said she found out about the reorganization creating the Energy Department along with everyone else, when Martin announced it the day before the legislation was introduced. Bailey, whose term ended the day the department was created, had concerns about the whole thing because it left inexperienced commissioners without much staff support.

“I’ve had years of analytical experience, and I think I needed help from staff, and now there is no staff. If you have less experienced commissioners, you have less informed decisions. You have folks who have little experience with energy and regulation making decisions about energy and regulation, and they were not making the decisions very well.”

In any case, Martin resigned to take a position as the director of the Administrative Office of the Courts, and on her last day she signed that controversial order that not only denied the utility’s SBC proposal but rolled the program back to 2017, before there was any energy-efficiency standard. Rather than triple energy-efficiency spending, it was cut to a third of the amount it was.

“We were stunned,” said one utility representative. “It was as if they’d gone rogue.”

Martin didn’t return requests for a comment by deadline.

Goldner, who would replace Martin the next day to chair the commission, also signed the order.

Sununu had appointed Goldner to the PUC back in May. Referred to nearly everyone as smart, Goldner, an engineer, had 32 years’ experience at Texas Instruments. TI does more than make calculators. Its semiconductors are used to manage electric power equipment, and it is involved in some battery management solutions. Goldner was the controller of TI’s storage product for a couple of years, product line manager for low-power RF (which increases battery life) in Norway, and for the last 10 years managing director of research and development at the company’s Manchester facility.

“He prides himself as being an iconoclast,” said Kreis.

“He wants to rethink an assumption, and that’s been a challenge, because what may look to an outsider as a bad habit might be result of legal requirement.”

“Dan Goldner has shown himself willing to question everything,” said Sam Evans-Brown, executive director of Clean Energy NH. “I mean, he wanted to dig into the Energy Assistance Program. Should we be helping poor people?”

‘Righting the ship’

Sununu nominated two other commissioners in October: Carleton Simpson, a Unitil attorney who often appeared before the PUC, and Pradip Chattopadhyay, a staff member at the PUC who worked at the Office of the Consumer Advocate. Simpson was approved in November and Chattopadhyay in December.

“I’m pretty thrilled about both appointments,” said Brown.

At Unitil, Brown said, Simpson had been an advocate of clean energy, and “Pradip — he has a Ph.D. I might not agree with him about everything, but he knows his energy policy.”

The appointments would “make this the best PUC I have seen in my 22 years of utility regulation,” said Kreis at the time. “The PUC ... will have an engineer, in the form of Chairman Goldner, it will have a lawyer in the form of Commissioner Simpson, and it will have an economist in the body of Pradip.”

Others, like Backus, said the latter two commissioners were “righting the ship.” And Harrington, who on the whole likes the direction of the PUC, remembers Chattopadhyay from his time as commissioner, and praised his “free-market” thinking.

But it will take a bit of time for the new commissioners to get up to speed.

For one, Simpson has to recuse himself from issues he was involved in at Unitil. For instance, he didn’t participate in the PUC’s decision in January to double-down on its energy-efficiency decision. But on Feb. 11, the PUC heeded the writing on the wall, and reversed itself, restoring funding to 2020 levels. By that time, House Bill 549 was sailing through the Legislature. The bill not only restored those levels to 2020 but pegged the SBC to the consumer price index, plus another quarter percent.

To Kreis, this was a happy ending. “The PUC went too far, and it was overruled by the legislature, and that’s the way the system works.”

To Harrington, who would have preferred less money spent on energy efficiency, the important thing is that the “decision was returned back to the Legislature, where it belongs.”

Sununu also was happy to sign the bill into law on Feb. 24. “By having the Legislature set the energy-efficiency budgets, we are providing greater certainty and protection to those involved in energy efficiency — both for those paying for and benefitting from the programs,” he said.

Despite the lack of staff, the PUC has been effective since the reorganization. It has issued more orders in the eight months after reorganization than before, though that was a time when it was short one commissioner.

The PUC’s latest order, issued March 2, is one of the biggest so far. It is on the state multiuse energy data platform, which would enable customers and third-party energy providers to access in real-time data to more efficiently use the grid. A request for proposal still has to be issued to pick a vendor to set up the platform, but it is an important step in modernizing the grid.

It’s not the comprehensive overhaul that the PUC had been studying, but even those who mainly agree on energy issues can disagree on whether ditching that study was an “epic fail.”

“That’s a bit of an overstatement,” said Brown, who thought that the previous investigation wouldn’t necessarily lead to action. “We’d rather have them open a new docket that has some teeth in it.”

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‘If you have less experienced commissioners, you have less informed decisions. You have folks who have little experience with energy and regulation making decisions.’