Scrubber - Issue Summary

What is the scrubber and how does it affect you?

Issue Facts

By: Ken Colburn, Symbiotic Strategies, an independent consultancy providing assistance to states on issues relating to climate change, and Mary Beth Walz, state Rep. from Bow

This issue has been updated by LFDA editors.

In 2006, after negotiations among representatives from the Legislature, PSNH and various environmental groups, New Hampshire enacted a law requiring PSNH to install pollution control technology known as a scrubber to reduce by 80% emissions of mercury at its coal-burning Merrimack Station in Bow, NH. In 2006 the cost of the scrubber was estimated to be $250 million.

By late 2008, however, the cost had nearly doubled to $457 million. There is the prospect of federal requirements to reduce climate-altering carbon dioxide emissions through some form of carbon pricing during the expected life of the plant. Some people estimate that carbon fees could significantly increase the cost of electricity from Merrimack Station during its projected life. Also, it is possible that additional pollution abatement requirements will be mandated in the future.

State authorities approved the scrubber project and construction began in March 2009. In 2009 certain commercial ratepayers asked the N.H. Public Utilities Commission (PUC) to review the scrubber cost increase. The PUC’s authority is established and limited by state law. The PUC declined to review the costs of the scrubber before the project was completed. The PUC based its decision on the basis that state law mandated that the scrubber be constructed. The commercial ratepayers appealed the PUC’s decision to the NH Supreme Court. In August 2009 the court rejected the appeal on the basis of standing; ratepayers hadn’t yet been charged for the scrubber. The commercial ratepayers also advocated for a law requiring a far-reaching study related to the scrubber, but the law was not enacted. Challenges by environmental advocates and merchant power generators, some of whom would like to see the plant retired, have subsequently been lodged under federal and state statutes and regulations. 

In November 2011, PSNH said the scrubber would come in $35 million under budget, chalking up the savings to a dip in the cost of materials and lower-than-anticipated construction costs. The total estimated project cost shrunk to $422 million for the scrubber, which started operating in September 2011. New Hampshire Business Review in November 2012 called the scrubber "a major contributor to PSNH's preliminary estimate of a January rate increase from 7.11 cents per kWh, to 8.97 cents." The sentiment was subsequently confirmed by PSNH spokesman Mike Skelton, speaking with New Hampshire Public Radio. 

In April 2012, PSNH announced that the Scrubber had cut mercury emissions by 98 percent, though the announcement has hardly mollified critics of the company and its coal-fired plant in Bow.

2014 Legislation

The PUC is now evaluating whether PSNH can recover the cost of the Scrubber through ratepayer increases.  PSNH argues that the legislature clearly mandated the Scrubber's installation.  Opponents argue that PSNH should have returned to the legislature and/or shut down the Bow plant when the cost of the Scrubber increased. 

The PUC has also stated that PSNH will save customers money in the long-term by selling off expensive fossil fuel power plants, including the Bow power plant.  As the scrubber installation proved, it is costly to update fossil fuel plants to meet current environmental standards.  However, PSNH argues that its older fossil fuel power plants are necessary to maintain diversity in the energy market.  Without diversity, electricity rates will be at the mercy of natural gas price fluctuations.

Rep. David Borden (D-New Castle) is sponsoring HB 1602, a 2014 bill that explicitly gives the Public Utilities Commission the power to force PSNH to sell its power plants.  The House and Senate agreed on a final version of HB 1602 June 4, 2014, and that bill now heads to Gov. Maggie Hassan (D) for her signature.

Rep. Charles Townsend (D-Canaan) sponsored HB 1385, a 2014 bill that would require the Site Evaluation Committee to approve any changes or additions to energy facilities that include construction expenses of greater than 15% of an energy facility's value.  That bill passed the House but died in the Senate.

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Pros

Pro Issue Opinion by Mary Beth Walz, proceed with the scrubber and other changes at the Bow power plant:

The 2006 law requires PSNH to install the scrubber and PSNH must comply with state law:

 

Businesses and homes need electricity on demand:

  • Base load generation, such as coal and nuclear plants, provide the backbone of our energy supply because they run when we need them, and can be put in service on demand. Emerging technologies, such as wind and solar power, will play and expanding role in meeting energy needs, but until they can be dispatched on demand the reliable generation from Merrimack Station is needed.

The scrubber is state of the art technology that will create important environmental benefits:

  • Mercury, a dangerous neurotoxin, will be reduced by over 80%. Less mercury in the air and water will be safer for people, and especially for pregnant women and children. Sulfur dioxide will be reduced by over 90%. Less sulfuric acid in the atmosphere reduces acid rain. Reduced mercury and sulfur emissions will promote healthier bodies of water, plant life and wildlife.

The scrubber project will create jobs:

  • The project will generate over 300 temporary construction jobs. It will also create 5-10 new permanent jobs and preserve 100 existing jobs during a time of economic recession.

The plant will produce reliable electricity:

  • Even with the cost of the scrubber factored in, ratepayers can expect the plant to produce energy at competitive rates over its expected life. Coal is a low-cost fuel for electricity generation, enabling PSNH to keep its rates competitive. To ensure price stability, our power supply should include a mix of fuel sources. Coal is less vulnerable to spikes in prices and fuel shortage than other fuels such as natural gas and oil and a proven, economical source of power.

All sides were represented in the decision to build the scrubber:

  • The decision to build the scrubber was the product of a collaborative process with a diverse mix of interested parties. When the law mandating the scrubber was enacted, environmental groups, such as the N.H. Audubon Society and the N.H. Lakes Association, helped draft the law. They, along with the Society to Protection of N.H. Forests and the N.H. Timberland Owners, hailed the law as an example of the positive results that can be achieved when the environmental community and business interests work together to improve the environment.

Ratepayers could incur significant costs if the project is cancelled:

  • Ending the construction would leave ratepayers liable for claims by PSNH for costs incurred thus far, without receiving a corresponding benefit. Because law mandated that the scrubber be built, PSNH will seek to recover everything spent on the project. IF the project were shut down now, that claim would be for approximately $250 million. 
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Cons

Con Issue Opinion by Kenneth Colburn, to study alternatives before major investments are made in Bow power plant:
 
 

The Bow plant is about out of steam — and there are better solutions:

  • At 40 years old, the plant is nearing the end of its useful life. For the $457 million cost of the scrubber, a brand new, efficient natural gas power plant could be built instead; gas pipelines exist near the Bow site; and natural gas supplies are increasing and their costs declining. A mercury scrubber would be unnecessary, future carbon costs for a gas plant would be half those of burning coal, and future environmental risks would also be reduced.

There are ample and better alternatives to produce power:

  • There is ample available additional generation capacity in the New England region today (about 8-10 Bow plants) to supply power to PSNH’s customers.

Customers will potentially have to absorb more costs:

  • Competitive merchant generators are already under pricing PSNH in energy costs by 10-20%. If this trend continues (and/or is exacerbated by carbon costs), the Bow plant could become uneconomic to dispatch, saddling ratepayers with $457 million more in “stranded costs.” Commercial and industrial ratepayers are already starting to leave PSNH for other suppliers, loading greater fixed cost burdens on remaining companies and residential ratepayers.

Pursing alternatives will create jobs:

  • Energy cost savings to commercial and industrial ratepayers by avoiding excessive and/or stranded costs from the scrubber project can be expected to create or retain more NH jobs. Further, renewable energy and energy efficiency initiatives typically create about twice as many jobs as traditional fossil generation on a MWh-by-MWh basis.

What is the harm of a study?:

  • Nowhere is the juncture between past and future more evident than in the way we generate and consume energy. Careful study of all options is thus warranted before ratepayers are asked to bear new expensive, long-term energy infrastructure commitments.
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Scrubber Member Posts
Take Action

If you are interested in the scrubber issue and want to take action here are some choices:

  • If you are new to contacting your government, please visit our page on How to Take Action.
  • Contact one of the organizations listed in Learn More. These groups represent the pro or con positions of issues.
  • Contact a government official as follows:

1. Contact members of the New Hampshire House of Representatives or the New Hampshire Senate.

2. Contact the Committee chairperson or members of the House Science, Technology and Energy Committee or the Senate Energy, Environment and Economic Development Committee – these are the committees that oversee this issue.
 

3. Contact the head of the Public Utilities Commission.

4. Give your opinion to Governor Maggie Hassan

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Learn More/Take Action

What is the scrubber and how does it affect you? Whatever your thoughts are, we urge you to make your voice heard. See the "Learn More/Take Action" section on this page for more information.

Issue Status

According to PSNH, the scrubber has come in under budget and is successfully lowering toxic emissions.  However, the scrubber has contributed to a higher rate for PSNH customers.  The PUC is now evaluating whether PSNH can recover the cost of the scrubber through ratepayer increases.

Rep. David Borden (D-New Castle) is sponsoring HB 1602, a 2014 bill that explicitly gives the Public Utilities Commission the power to force PSNH to sell its power plants.  The House and Senate agreed on a final version of the bill June 4, 2014.  HB 1602 now heads to Gov. Maggie Hassan (D) for her signature.

News

July 17, 2014
NHPR: PSNH customers again trickling to competitors during spring months
July 11, 2014
NHBR: New PSNH president brings a different tone to the job
July 6, 2014
Seacoast Online: Region faces major spike in cost of energy
July 1, 2014
Nashua Telegraph: Panel discusses energy solutions in New England as extra winter costs are tallied
Seacoast Online: New England leaders take on impending electric crisis
June 24, 2014
Nashua Telegraph: With a murky energy future, where should New Hampshire go?
June 17, 2014
Union Leader: PSNH reverses prediction, proposes rate cut
NHPR: PSNH energy rates to rise, delivery rates to fall
June 16, 2014
Concord Monitor: PSNH expects overall rate reduction for customers starting July 1
June 5, 2014
Concord Monitor: House, Senate approve PSNH divestiture bill
June 3, 2014
Nashua Telegraph: NH coal-fired power plants may not be pressured by new EPA pollution limits
Union Leader: NH says it already meets EPA's lower emissions
May 28, 2014
NHBR: Conference panel OKs giving PUC power to order PSNH power plant divestiture
Concord Monitor: Committee combines bills on PSNH divestiture, wind farms
May 5, 2014
Concord Monitor: Air pollution ruling a victory for New Hampshire but more work ahead
May 4, 2014
Union Leader: PSNH rate-hike bid has customer of rival utility expecting trend
April 4, 2014
NHBR: Has a power crisis arrived in New Hampshire?
Seacoast Online: PSNH urged to divest its power plants
Concord Monitor: State panel says PSNH should drop power plants
April 3, 2014
Union Leader: PUC report says PSNH should sell its plants and the public should pay
March 26, 2014
Union Leader: House bill might help lower PSNH electric rates, supporters say
NHPR: Cold weather to boost PSNH bid to hang on to power plants
March 19, 2014
Union Leader: Report: Natural gas price hikes pushed electric rates higher in 2013
March 18, 2014
Union Leader: PSNH agrees to cut administrative charges to competing power vendors
March 1, 2014
WMUR: Independent power supplier customers get sticker shock
February 28, 2014
Union Leader: Hassan nominates special PUC commissioner
February 23, 2014
Union Leader: Surging demand strains power grid's reliability
February 21, 2014
NHPR: Groups Agree: Time To Decide What To Do With PSNH Plants
February 19, 2014
Union Leader: NHPUC Investigation of Scrubber Cost and Cost Recovery
February 18, 2014
Union Leader: Report: Gas pipeline not enough to avert New England energy crisis
February 6, 2014

Concord Monitor: New England power plant closings pinching supply
February 5, 2014
NHPR: New England payments to power plants to rise sharply
January 10, 2014
Union Leader: Opponents try to turn up the heat in Bow coal scrubber case
December 17, 2013
Union Leader: Public Service seeks rate hike; blames energy costs
December 11, 2013
Union Leader: PSNH on defense over scrubber cost 'escalation'
Nashua Telegraph: PSNH zapped by lawmakers for $172 million in extra scrubber costs at Bow power plant
December 10, 2013
NHPR: PSNH Scrubber investigation set to forge ahead
Union Leader: Lawsuit over Bow coal plant may proceed, judge says
December 6, 2013
NHPR: New England Governors agree on regional energy infrastructure 'mission statement'
November 21, 2013
Union Leader: Decision on merits of PSNH scrubber goes back to PUC
October 16, 2013
NHPR: Lawmakers look to keep the door open to PSNH action
October 15, 2013
Union Leader: Consumer advocate urges hearings on cost of environmental controls
October 10, 2013
Union Leader: Some business owners support shuttering of Merrimack station
October 7, 2013
Concord Monitor: PSNH to state Supreme Court: Was Bow plant's mercury scrubber mandatory?
October 3, 2013
Union Leader: Debate: Who covers loss if PSNH sells its plants
October 1, 2013
Union Leader: Environmental rules may drive some NH electric bills higher
Union Leader: PSNH may be mulling divestiture of coal-fired plants
September 30, 2013
NHPR: Outlines of plan for PSNH power-plants begin to emerge
September 27, 2013
NHPR: PSNH asks Supreme Court to weigh in on Scrubber costs
September 26, 2013
Union Leader: Panel listens to what would be outcome of selling PSNH plants
September 2, 2013
Valley News: Reality sets in for PSNH
September 1, 2013
Seacoast Online: PSNH power generation scrutinized
August 29, 2013
Union Leader: Former PSNH chief must answer questions on Bow scrubber
Concord Monitor: N.H. lawmakers indicate they won't push PSNH to sell plants, at least for now
August 28, 2013
NHPR: Any action on PSNH power plants remains distant
May 10, 2013

Union Leader: NHPUC grants PSNH a rehearing on Scrubber costs
February 13, 2013
Conservation Law Foundation blog: How NH can stay above water with PSNH's 'dirty coal' plants sinking fast (opinion)
January 6, 2013
Nashua Telegraph: PSNH rate hikes put NH advantage at risk (opinion)
December 26, 2012
Union Leader: PSNH told to turn over details of $422M project
December 14, 2012
NHPR: PSNH rates likely to rise
November 21, 2012
Seacoast Online: Unhealthy air quality levels ending in N.H.
November 16, 2012
NH Business Review: Battle over electricity customers turns to small business, residential users
April 12, 2012
Union Leader: Temporary rate hike OK'd to help with scrubber costs
April 11, 2012
Nashua Telegraph: Scrubber cut mercury emissions by 98 percent, PSNH says
April 9, 2012
Boston.com: PSNH says scrubber reducing most mercury emissions
February 22, 2012
Seacoast Online: PSNH official questions motives behind divestiture bill
December 23, 2011
Union Leader: PSNH: Scrubber already meeting environmental standards
November 11, 2011
Foster's Daily Democrat: PSNH says scrubber comes in under budget
October 20, 2011
Boston.com: PSNH seek rate hike for scrubber costs
July 15, 2010
NHBR: PSNH seeks ok to borrow up to $600 million for scrubber, emergencies

December 14, 2009
Nashua Telegraph: Council hires ex-PSNH worker

September 14, 2009
Concord Monitor:Petition seeks scrubber review

August 17, 2009
Concord Monitor: Scrubber springs into view