Lights go out on Power New England as customers switched back to PSNH

Feb 24, 2013 (The Telegraph - McClatchy-Tribune Information Services via COMTEX) -- Roughly 7,000 electricity customers who switched from PSNH months ago are involuntarily back with that utility after the suspension of alternative provider Power New England, and there's disagreement about whose fault it is.

Customers who bought power from PNE through Resident Power, an "aggregator" that gathers customers for suppliers such as PNE, received an email Thursday telling them that the previously announced transfer to FairPoint Energy "has not gone through." They have been switched back to being customers of Public Service of New Hampshire, at higher rates.

The email said the transfer failed because "PSNH declined to make the switch. PSNH stated that although they had the ability to do the automatic transfer, they lacked the 'resources' to effect the transfer in the time provided." In a statement Friday, PSNH spokesman Michael Skelton disputed this description and pointed the finger at Power New England.

"PSNH was in the process of transferring customers from PNE to FairPoint in accordance with normal market rules when PNE made a business decision to walk away from its customers," he wrote in an email. "This was not our business deal, but we were left to clean up the mess." The issue is likely to be taken up by the state Public Utilities Commission, because Resident Power has asked for a judgment concerning the status of these customers. Among the questions is the process for transferring their accounts without running afoul of rules against "slamming," or switching customers without consent.

The situation has left some confused and annoyed customers.

"I was irritated, very irritated," Mark Levesque, of Hudson, owner of Studio Mark Emile Photography in Nashua, said about the announcement.

He said he was saving about $25 a month on the power bill of his home and business since switching to PNE, via Resident Power, last year.

"The reason that we signed up with Resident Power was to save money," Levesque said.

He has responded to Resident Power's email, asking them to switch him to FairPoint Energy.

Despite his irritation, Levesque said he would stay with a competitive provider.

"The important thing to me is that we really have only one bill, so we don't have to do a lot of chasing around," he said. "Then it totally makes sense for us to shop around." Levesque wasn't in danger of having his power cut off because actual electricity generation and transmission aren't affected by competitive markets; the local utility is always required to keep the lights on.

To a large extent, all that happens in a competitive power market when a customer changes providers is that his financial account is moved from one company's system to another company's system, usually after the next monthly reading of his electric meter.

This week's confusion brought attention to the relatively new field of deregulated residential electricity competition, in which companies other than utilities such as PSNH can also sell power, at rates up to 25 percent lower than the regulated rates charged by utilities.

The industry has been unsettled because the price of natural gas -- the most popular fuel for generating electricity in New England -- has soared this winter, undermining business plans that counted on being able to resell cheap power.

The situation began when PNE, one of several companies that have entered the New Hampshire market in the last year, negotiated the sale of its roughly 8,500 New Hampshire customers to FairPoint Energy, a year-old energy supplier that has little connection to FairPoint Communications other than name.

PNE says it was facing "cash flow" issues.

The transfer was agreed upon Feb. 6, according to Cami Boehme, senior vice president of marketing for Crius Energy, the holding company that controls FairPoint Energy.

But a few days later, PNE was suspended by ISO-New England, which oversees the region's power grid, because it couldn't meet financial obligations.

That stalled the transfer after about 1,200 customers had been switched over; accounts for the remaining 7,000 or so customers, whose monthly meter readings hadn't yet taken place, were returned to PSNH as the "default utility." "That's a very standard process -- they went to the default supplier in the market," Boehme said.

Why it took so long to transfer the customers from PNE to FairPoint Energy is the source of dispute.

"PSNH was approached about an off-cycle read to transfer all customers on one day. PSNH responded that, given the time constraints and resources needed, they were unable to meet the request," said August "Gus" Fromuth, managing director of Resident Power.

His father, who has the same name, is CEO of Power New England, but Fromuth said Resident Power and PNE aren't connected.

Customers who were switched back to PSNH can stay with that company or sign up for any alternative provider, just as they did when switching from PSNH in the first place.

Boehme said FairPoint Energy would accept PNE customers at the same power rate they were getting before PNE was suspended -- usually 6.9 cents or 7.5 cents per kilowatt-hour, compared with PSNH's rate of 9.5 cents, for a 12-month contract.

Keeping rates unchanged was part of the initial agreement between the two companies.

Several other competitive suppliers exist.

PSNH has about 425,000 residential customers in New Hampshire.

David Brooks can be reached at 594-5831 or dbrooks@nashua telegraph.com.

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