What is the scrubber and how does it affect you?
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.
In 2014 the PUC evaluated whether PSNH could recover the cost of the Scrubber through ratepayer increases. PSNH argues that the legislature clearly mandated the Scrubber's installation, so ratepayer increases are fair. Opponents argue that PSNH should have returned to the legislature and/or shut down the Bow plant when the cost of the Scrubber increased. In January 2015 the PUC agreed to let PSNH negotiate a settlement over scrubber costs with the legislature. Sen. Jeb Bradley (R-Wolfeboro), who is part of the negotiation team, is sponsoring SB 221, a 2015 bill that says the state may only authorize securitization of stranded costs resulting from the scrubber after the parties have reached a settlement.
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. The PUC is now deciding whether PSNH should be forced to sell its power plants.
Rep. David Borden (D-New Castle) sponsored 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 Gov. Hassan signed the bill into law August 1, 2014.
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.