OREANDA-NEWS. New Hampshire state regulators, lawmakers, environmental groups and utility holding company Eversource Energy agreed to a deal that will ensure that the 439MW coal-fired Merrimack plant stays on line at least through mid-2017.

The settlement resolves a dispute over the future of power plants owned by the Eversource subsidiary formerly called Public Service of New Hampshire. State lawmakers under the deal will pass legislation allowing issuance of state-backed bonds in the amount equivalent to stranded costs at Eversource's generation fleet, including the \$422mn cost of a wet-flue gas desulfurization system installed at Merrimack.

Eversource plans to sell Merrimack, the 400MW oil and natural gas-fired Newington station, the 150MW coal and biomass-fired Schiller and nine hydropower plants with 69MW of combined capacity. The sale process will start after the legislation enabling the issuance of bonds is in effect and the state Public Utilities Commission approves the settlement, both expected later this year.

The deal requires buyers to keep Merrimack, Schiller and other plants on line for at least 18 months following the sale, providing a near-term certainty about the coal fleet in New Hampshire. Eversource says the sale process should start in early 2016.

Coal use for generation in New England peaks in winter and summer months. Merrimack in the first quarter received supplies from Consol's Bailey mine in Pennsylvania and the Calenturitas mine in Colombia while Schiller took deliveries from the La Loma mine in Colombia, Energy Information Administration data show.

The terms of the settlement, announced yesterday, are similar to the deal lawmakers and Eversource made in February. But all major stakeholders now back the agreement. "This historic agreement will benefit our customers by providing rate stability and long-term savings," Eversource New Hampshire operations president Bill Quinlan said.

Eversource will absorb \$25mn of the stranded costs at its generation fleet, defined as the excess of the net book investment in the power plants over proceeds from the proposed sale. A fixed recovery charge payable by retail customers will back the state-issued bonds, with residential customers responsible for about 50pc of the recovery charge.

The deal securitizes future collections and allows Eversource to receive the stranded costs in full and upfront, rather than collecting it over time. Parties to the settlement believe that the state-backed bonds can be sold at lower yields than the interest rate imputed into Eversource's retail electricity rates. Eversource in February said securitizing stranded costs will save customers \$300mn over five years.

The utility plans to cover its future load obligations by buying energy and capacity on New England's power market.