Tuesday, December 18, 2012

New Hampshire Electricity Monopoly Gouges Captive Customers: A Reminder Why Power Competition Benefits The Public

The electric generation industry across America is neither fish nor fowl.  It is neither fully competitive nor monopolist.  In different parts of the country like Pennsylvania, it is competitive or "deregulated."

But the biggest electricity generation company in New Hampshire retains monopoly power.  And the results for its customers are ugly.

Public Service of New Hampshire is raising substantially electricity generation prices, even though they are already about 30% or more above market rates.  PSNH is using its state-granted monopoly power to pay for inefficient, old fossil fuel plants that the competitive market would close.

While the plants are dirty and expensive to consumers, monopoly power makes them cash cows for PSNH, which earns a near guaranteed 10% return every year on investment made in those plants, no matter how little they operate.

This New Hampshire electricity horror tale also reminds how the old monopoly system pours huge subsidies into many fossil fuel and nuclear plants, while providing much less capital for new renewable energy or cleaner modern natural gas plants.  Pennsylvania got it right when it ended electric generation monopolies in 1996!

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