Published: April 20, 2009 06:59 am      

NH coal-burning dispute part of national debate

CONCORD, N.H. — Wary of global warming, New Hampshire is cutting carbon emissions and switching steadily to renewable energy. So why is the state's largest utility putting millions of dollars into a 40-year-old coal-fired power plant?

It's a question being asked in court and before regulators, as critics suggest extending the plant's life is the same as burning dollar bills — at least $457 million of them.

The goal is to reduce mercury pollution, which everyone thinks is a good idea. What they disagree about is whether building mercury scrubbers at Public Service Company of New Hampshire's Merrimack Station plant makes sense, especially when the project's estimated cost nearly doubled recently.

"Is it really worth $457 million, let alone billions of our dollars, to keep dirty coal technology on life support, when it takes us in the exactly wrong direction from where we need to move on climate, and won't even eliminate mercury pollution?" asks Stonyfield Farm yogurt CEO Gary Hirshberg. Hirshberg leads a group of environmentalists, rival power producers and business customers who want the project delayed to review costs and possible alternatives.

Public Service has the upper hand so far. Construction is continuing, the Public Utilities Commission won't reconsider the project and legislators this month rejected proposals for more study and a cap on the cost to ratepayers.

But another study request and other challenges are pending in multiple lawsuits and before state regulators.

"We view this as an attempt by a number of individuals or organizations to shut down Merrimack Station and end the use of coal as a source of energy here in New Hampshire," said utility spokesman Martin Murray. If the opponents win, he said customers will pay millions of dollars more for electricity for years.

A study Hirshberg's group commissioned predicts that building the scrubbers would add costs as well, billions of dollars if the plant runs another 15 to 20 years. The main culprit would be government-imposed costs as part of a crackdown on carbon-emitting fossil fuels including coal, oil and natural gas. The scrubbers would not reduce the plant's carbon emissions.

President Barack Obama is pushing for clean energy, and on Friday, the Environmental Protection Agency concluded that carbon dioxide and five other gases blamed for global warming are a major hazard to Americans' health. It was the first time the federal government had said it was ready to use the Clean Air Act to require power plants, cars and trucks to curtail their release of climate-changing pollution, especially carbon dioxide from the burning of fossil fuels.

"The cork has been unpopped and we are now seeing movement across a whole lot of fronts on the environment," said Melissa Hoffer of the Conservation Law Foundation.

The foundation supported the 2006 state law requiring the scrubbers, then estimated to cost $250 million. But opposition blossomed when the estimate jumped to $457 million last year and with concern about the potential future costs.

Citing emissions and costs, some utilities or states have changed course on coal. Last month, a Montana utility dropped a coal-fired plant to consider natural gas. Louisiana ordered a utility to suspend a coal project for more study.

Concord lawyer Howard Moffett represents Granite Ridge Energy LLC, which owns a natural gas-burning power plant in Londonderry that also is challenging the scrubber. He said that for about the same amount as the scrubber, a natural gas-fired plant could be built that would generate more power and less pollution.

But Moffett said there are larger issues.

"This whole episode of the scrubber is going to raise again the question of whether it makes sense for PSNH to be in the business of generating electricity, because ratepayers are going to be paying through the nose for this," he said.

Under electricity deregulation of the 1990s, many states ordered utilities to sell power plants and distribute electricity produced by other companies.

Regulated utilities such as Public Service are all but guaranteed a return on their power-producing investments through rates. Under deregulation, the cost and risk of building plants is borne by companies such as Granite Ridge and their investors.

New Hampshire halted deregulation in mid-course after energy supplier Enron collapsed in 2001 in a fraud scandal. The Legislature concluded that letting Public Service continue to own plants including Merrimack Station would benefit its customers.

The state also encouraged independents such as Granite Ridge by barring Public Service from building alternative energy plants except through deregulated subsidiaries. Murray said customers would be better served if Public Service could provide alternative energy in the regulated market.

That's up for debate, but some other states agree. Eight have suspended deregulation and others have repealed or modified their laws.

The New York Assembly began efforts to re-regulate electricity last month, saying the current price-setting system overcharges New Yorkers $2.2 billion a year.

Two years ago, Virginia moved to a hybrid system providing incentives for regulated utilities to explore renewable energy.

Meredith Hatfield, New Hampshire's utility consumer advocate, supports studying the scrubber project. But she said Merrimack Station still could figure in New Hampshire's renewable energy picture.

"I wouldn't be surprised if there are people who are open to working with PSNH to explore and support them building new renewables," she said. "But, I would think the price for that is, 'We want you to agree to put Merrimack Station on a path toward retirement at some point.'"

Hoffer, at the Conservation Law Foundation, said that might make sense, but only if private generators could remain competitive.

"From the environmental standpoint, where the carbon reductions come from is much less important to us than that we get them," Hoffer said.