SB 128-FN – AS AMENDED BY THE SENATE

AN ACT relative to the establishment of emissions reduction standards as required by the Clean Power Act.

SPONSORS: Sen. Johnson, Dist 2

AN ACT relative to the establishment of emissions reduction standards as required by the Clean Power Act.

AN ACT relative to the establishment of emissions reduction standards as required by the Clean Power Act.

The Public Utilities Commission states this bill may increase state, county, and local expenditures by an indeterminable amount in FY 2006 and each year thereafter. There will be no fiscal impact on state, county, and local revenue.

The Public Utilities Commission (PUC) states this bill establishes emissions reduction standards as required by New Hampshire’s Clean Power Act, RSA 125-O. This bill would require reductions in total mercury emissions from all affected sources burning coal as fuel. This bill would also require reductions in total CO2 emissions based upon allowances submitted to and received from a regional interstate trading and banking program. If enacted, this bill would require Public Service of New Hampshire (PSNH), a public utility, or whoever owns the generating plants at the time, to modify the equipment and/or operations of PSNH’s coal burning power plants to meet the initial mercury reduction levels effective July 1, 2009. Preliminary cost estimates provided to the PUC by the Department of Environmental Services and PSNH for necessary capital improvements to meet the proposed mercury emissions standards at PSNH’s Merrimack Station and Schiller Station general plants, effective July 1, 2009, range from $7,000,000 to $76,000,000. In addition, additional annual operating and maintenance costs at the plants are estimated to be between $5,000,000 to $10,000,000 per year. PUC states these estimates were informally reported to the PUC and have not been analyzed. Estimates were also expressed in different terms of valuation (different year’s dollars) and may not be directly comparable. With the additional reduction in mercury emissions mandated by July 1, 2013, additional capital and operational modifications are expected to be required beyond those estimated above. Potential modifications include capital improvements in addition to increases in annual fixed and variable operation and maintenance costs of the generating plants. Assuming that PSNH is the owner of the plants, increased costs could be passed on either directly to PSNH’s customers through higher power rates, or indirectly through potentially higher wholesale market prices. This would result in additional costs for all of PSNH’s customers, including state, municipal and county government, assuming PSNH could make such capital improvements and when such improvements become operational. Using the estimates described above, the range of potential impact to state, county, and local governments could be between $285,000 to $880,000 per year. PSNH can only pass along the cost of capital improvements once those plant additions become used and useful. The PUC cannot determine whether PSNH would make such improvements or, in lieu thereof, limit plan operations, or close the power plants affected by the proposed new requirements. This bill also refers to “alternative compliance methods” that have not yet been established or described. The PUC does not have any information to determine the cost of any alternative compliance methods. PSNH’s plants currently comply with the annual CO2 emissions cap that is effective until December 31, 2010. The potential cost impact of the annual CO2 cap to be established effective January 1, 2011 is unknown. PUC cannot determine when estimated costs will be finalized, incurred, or passed on to PSNH customers. For the purposes of this fiscal note, PUC assumes any fiscal impact will occur in FY 2006 and each year thereafter.

The Department of Environmental Services states this bill would require affected sources, such as PSNH’s Merrimack Station in Bow, Newington Station in Newington, and Schiller Station in Portsmouth to reduce emissions of two air pollutants by either installing air pollution control equipment or by securing emissions credits reflecting reductions achieved upwind. This bill will have no fiscal impact on the Department.