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

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

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

Eversource subsidiary Public Service Co. of New Hampshire completed the saleof its fossil-fuel powered generation facilities to Granite Shore Power, a50:50 partnership between Atlas Holdings, based in Greenwich, Connecticut, andCastleton Commodities International, headquartered in Stamford, Connecticut.The assets were sold at auction with a $175 million winning bid from GraniteShore.

Closure of the hydro asset sale is mostly a formality at this point andthe deal should be completed shortly, Eversource spokesman Martin Murray saidThursday. 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 deregulationsystem where customers have been able to buy power from suppliers that havebeen certified by state regulators since 2002. Eversource is the defaultprovider for its roughly 500,000 New Hampshire customers, so the sale of itspower generation assets will change its default energy price "in terms of howit is calculated and approved by regulators," Murray said.

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

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

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

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

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

The Eversource deal works out to $155/kW for the portfolio of just over1,000 MW of aging fossil-fueled units, with the oldest being the SchillerStation 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' newowners will be required to keep them running for at least 18 months.

Atlas and Castleton did not respond to requests for comment.

--Jared Anderson, jared.anderson@spglobal.com

--Edited by Jason Lindquist, jason.lindquist@spglobal.com