Welcome - January 27, 2012

This electronic publication, known as The Advocate, is brought to you each Friday by your Greater Nashua Chamber of Commerce, in partnership with our friends at Devine Millimet & Branch, and ActiveEdge. Please use this piece to review what has happened in Concord this past week, read about our Chamber's lobbying efforts relating to those activities, and preview what we are doing on behalf of our Chamber members in the coming week.

This Week

Senate Deals a Blow to Northern Pass Project and to sound Public Policy (HB 648)

On Wednesday, the Senate passed HB 648 , the now well-known bill that was filed to stop the Northern Pass Project seeking to bring hydro-powered energy down from Canada and place it into the New England power grid. What finally emerged when the dust settled was a version of HB 648 that creates some hurdles for this Northern Pass Project. It will prohibit the use of eminent domain for electrical transmission projects that are not considered to be necessary for system reliability by the regional regulatory body.

You may recall that when HB 648 had its public hearing in the Senate Judiciary Committee last spring, the Chamber testified in opposition to the bill. Our position was not related to the specific impact of the bill on the Northern Pass Project per se, but rather to the fact that the bill was going to have an impact on any potential energy and infrastructure projects in the future. While the Nashua Chamber has been perhaps the single most staunch defender of the private property rights of businesses in the eminent domain context over the past 10 years, we also have a unique understanding of the other side of the eminent domain coin: the fact that Public Need sometimes requires eminent domain to be employed (albeit of course with the necessary constitutional and procedural protections and fair compensation). As we noted at the time of the hearing, the irony was that the folks who traveled to Concord to oppose the use of eminent domain for the Northern Pass Project had undoubtedly traveled on interstate highways constructed through the use of eminent domain.

Our Chamber had extensive and multiple conversations with our three local senators (Gary Lambert, Jim Luther and Sharon Carson) about our concerns over this bill. We wish to give a special note of thanks to both Senator Luther and Senator Carson for standing with us and supporting a compromise proposal that would have made the constitutional protections on eminent domain specifically applicable in the utility context by putting it into statute. They were two of eight Senators who supported that more preferable approach which, unfortunately, did not win the day. A group of Republican senators joined with all but one Democratic senator to pass the more damaging version of the bill that, regrettably, has set a dangerous precedent for future energy-related projects requiring new transmission lines.

The Northern Pass project has not been killed as a result of this development, and instead continues to very slowly move forward. PSNH officials have stated that they are making good progress on acquiring the last pieces of needed property far north of here without the need for eminent domain to even enter the conversation, which makes one wonder why HB 648 ever generated so much intensity in the first place.

Senate Passes Telecom Deregulation Bill (SB 48)

In what is some better news, last week the Senate unanimously voted to pass SB 48 , a landmark telecommunications deregulation bill that would create a largely deregulated environment in the telecom industry in New Hampshire. The Chamber supported this important bill. Right now, the Public Utilities Commission exercises almost complete control over the rates and operations of some telephone providers, such as Fairpoint Communications and TDS, but it has little or no jurisdiction over other types of providers of telecom service. This is a vestige of the time when telephone service was operated as a monopoly, a situation which could not be farther from the system that exists today. The telecom environment is hugely competitive, and New Hampshire consumers have many choices in the telecom services which they want to buy. As a result, it makes sense both for the companies and the consumers that prices and services should be dictated by the market, rather than by the Public Utilities Commission. The Chamber sees this bill as a priority piece of legislation for 2012, not only because it sends the right message about the State's role with respect to businesses, but also because it is calculated to enhance the ability of businesses to use the market to get the best deals possible in the telecom area.

As the unanimous Senate vote would indicate, this has wide, bi-partisan support, and it met with the final acceptance (if not necessarily the complete approval) of all of the interested parties, including the Public Utilities Commission. This now heads over to the House Science, Technology & Energy Committee, which we are betting will pass the bill quickly so it can get to the Governor's desk.

A Big Week Coming in the House Science & Tech Committee

Before the House Science and Tech Committee gets to SB 48 , it will take up two other critical bills. Next week, the Committee will be holding public hearings on HB 1305 , the bill which would reinstate the long-standing property tax exemption for telephone poles and conduits, and HB 1238 , which requires PSNH to divest its generation assets.

Pole Tax (HB 1305)

HB 1305 hardly needs any introduction. The issue of the property tax exemption for telephone poles has been a perennial subject of dispute, especially over the last couple of years. In 2010, the legislature allowed the property tax exemption to sunset. Last year, although SB 133 (intended to restore that exemption) was passed by the Senate and initially by the House, the House laid the bill on the table. The bill was then not able to be removed from the table once it reached the point in the session that it took a two-thirds vote to get the bill off the table. The hearing on this bill is coming up on Tuesday, and hopefully this will be fixed once and for all.

If the bill does pass, the legislature will be restoring the situation that existed ever since the communications services tax was first enacted in 1990. In the CST environment (and as was the case even in the years before the creation of the CST), municipalities never had the right to assess property taxes on telephone poles. Now that the exemption has gone away, the municipalities have indeed begun to levy the property tax on telephone poles, and so the telephone companies are paying that property tax in addition to the CST, and in addition to yet another tax the municipalities assess on the use of the municipal rights-of-way.

The result, of course, is that the customers of the telecom companies are going to end up paying more money. Just a few weeks ago, at the end of December, the Public Utilities Commission authorized Fairpoint to begin assessing a “municipal property tax surcharge” in its bills. If the opponents of the exemption were banking on the fact that citizens would not realize that they would be the ones ultimately paying this new tax, the PUC order tosses that assumption out the window. If HB 1305 does not pass, people will be reminded of this issue every month when they open their telephone bills and see the municipal property tax surcharge right there in black and white.

PSNH Asset Divestiture (HB 1238)

Finally, next Thursday, the Science & Tech Committee will be holding a hearing on HB 1238 , which requires PSNH to divest itself of its generation assets by December 1, 2013.

It has been some time since divestiture was an issue, but some of you may remember that this was a big deal back in the 1990's when electric utilities across the country were being deregulated. Most aspects of deregulation (such as the unbundling of charges on bills and the ability to purchase electricity from competitive electrical suppliers) actually were put into operation. However, the legislature put a hold on one important element of deregulation: the requirement that PSNH get rid of its electric generating facilities so that it was on a level playing field with the other electrical suppliers in the State. As the market for electricity began to change in the late 1990's, the legislature put the brakes on with respect to divestiture, and fortunately so, because PSNH was able to sell electricity at a lower cost than would have been the case if the electricity had to be purchased somewhere else. So, while this was a bone of contention for competitive electrical suppliers who could not compete with the prices being offered by PSNH, this was a really good thing for the many PSNH customers who benefited from these lower prices.

We don't think that the numbers will support the divestiture idea at this point in time. The ultimate test in the eyes of the Chamber is what is in the best interest of the businesses which are the consumers of electricity, and right now it looks to us that the best option is the status quo. Not only does the current situation offer stability, but the sale of the PSNH assets undoubtedly would leave customers having to pay hundreds of millions of dollars in stranded costs. We are expecting that PSNH will present a pretty strong case when they come before the Committee next week. We will be watching this very closely because, as we are all well aware, electrical rates are one of the most important issues facing those businesses here in New Hampshire, and those businesses thinking of relocating or expanding to New Hampshire.

Acknowledgements

This weekly update is made possible by the generous support of Devine Millimet & Branch, one of the state’s top law firms and our Chamber’s contracted representative in Concord. If your business has a legislative or local issue that needs strategic consulting and attention, they are a valuable resource that can help navigate you through both local and state processes.

This weekly update is designed and maintained by our friends at ActiveEdge, and we thank them for their help in delivering this piece to your inbox every Friday!

If you have questions about this update, or comments to share with us about other issues in Concord, please email Chris Williams at cwilliams@nashuachamber.com. We want to be sure we're representing you to the best of our ability, so do not hesitate to reach out to us!

J. Christopher Williams
President & CEO
Greater Nashua Chamber of Commerce
142 Main St.
Nashua, NH 03060
Phone: 603.881.8333
Fax: 603.881.7323