DR 97-250
CONCORD ELECTRIC COMPANY
and
EXETER & HAMPTON ELECTRIC COMPANY
Fuel Adjustment Clause and
Purchased Power Adjustment Clause
Order Approving Charges
O R D E R N O. 22 ,816
December 31, 1997
Appearances: LeBoeuf, Lamb, Greene & MacRae by Scott J.
Mueller, Esq. on behalf of Concord Electric Company and Exeter &
Hampton Electric Company; and Henry J. Bergeron and Todd M. Bohan
for the Staff of the New Hampshire Public Utilities Commission
I. PROCEDURAL HISTORY
On December 2, 1997, Unitil Service Corporation,
(Unitil), on behalf of Concord Electric Company (CEC) and Exeter
& Hampton Electric Company (E&H) (collectively the Companies),
filed with the New Hampshire Public Utilities Commission
(Commission) revised tariff pages, supporting testimony, and
exhibits for proposed revisions to the Companies' retail fuel
adjustment clauses (FAC) and purchased power adjustment clauses
(PPAC) and short-term purchased power rates for qualifying
facilities (QFs) for the period of January 1 through June 30,
1998. On December 10, 1997, Unitil filed an amended FAC/PPAC
filing to update the filing made on December 2. As stated in the
letter accompanying the amended filing, "[T]he initial FAC/PPAC
filing incorporated estimates based on the Company's estimated
[Administrative and General (A&G) costs] for the 1998 budget
which was initially compiled the last week of November. During
the subsequent budget review process, adjustments and corrections
were made to the initial A&G estimates and a more recent version
of the Company budget was compiled the week ending December 5,
1997." On December 18, 1997, the Commission held a duly noticed
consolidated hearing to review the Companies' FAC and PPAC rate
filings.
II. POSITIONS OF THE PARTIES AND STAFF
A. The Companies
Unitil presented calculations supporting CEC's request
for a FAC credit of ($0.00246) per kWh and a PPAC rate of
$0.00780 per kWh. The combined effect of the two rates is to
increase a typical 500 kWh residential customer's bill by $0.43
per month, or 0.79%.
Unitil also presented calculations in support of E&H's
request for a FAC credit of ($0.00213) per kWh and a PPAC rate of
$0.01074 per kWh. The combined effect of the two rates is to
increase a typical 500 kWh residential customer's bill by $1.78
per month, or 3.38%.
Unitil witness Sheryl L. Wookey, Contracts Manager for
Unitil Service Corp., explained why a revised filing was made.
The changes that were made in the revised filing lowered A&G
costs from $1,631,100 to $1,356,000 for the demand charges and
from $898,300 to $747,200 for the base energy charge. The
unbilled prior amounts were respectively lowered from $781,500 to
$749,300 and from $101,500 to $94,100. The effect was to reduce
the demand charge from $26.64 per kW to $26.35 per kW, and to
reduce the base energy charge from $0.00661 per kWh to $0.00632
per kWh.
Ms. Wookey testified on the derivation of Unitil Power
Corp's (UPC) wholesale rates and the calculation of UPC's short-term avoided costs. Her pre-filed testimony indicated that UPC's
wholesale rates, effective January 1, 1998, would be as follows:
Demand $26.35 per kW
Base Energy $0.00632 per kWh
Fuel Charge $0.02247 per kWh
Ms. Wookey also discussed the approximate $3,000,000 in
mitigation savings that Unitil had achieved. These savings can
be attributed to the termination of contracts or portions
thereof, buyouts of above market priced contracts, and other
savings associated with the pass through of restructuring related
savings under cost of service contracts. These savings represent
almost 7% of retail power costs.
Ms. Wookey also explained that the cause for higher
replacement power costs were the result of a number of Unitil's
suppliers being scheduled for either refueling or maintenance
outages during the upcoming FAC/PPAC period. For example, during
the month of April, four of its suppliers' units are scheduled
for a combined total of 101 calendar days of outages.
Linda S. Hafey, Supervisor of Regulatory Operations for
Unitil Service Corp., explained that the difference in the rate
increase between CEC and E&H can be directly attributable to the
prior period over-collection of the purchased power costs. CEC's
over-collection was $693,000, and E&H's was $109,000.
The Companies also filed revised tariffs for short-term
power purchase rates for Qualifying Facilities as follows:
Energy Rates On Peak 3.78 cents per kWh
Off Peak 2.82 cents per kWh
All Hours 3.12 cents per kWh
Capacity Rate $57.71 per kW-year
B. Commission Staff
Staff did not oppose the Companies' filings but
conducted cross examination on 1) the mitigation savings achieved
by the Companies, 2) the higher replacement power costs, 3) the
impact, (both from the standpoint of capacity and the financial
effect on a customer's bill), of the Millstone 3 unit being out,
4) the difference in the magnitude of the rate increase for each
Company, 5) the errors in computing certain demand charges, and
6) the increase in the capacity rate for short-term power
purchases for Qualifying Facilities. The capacity rate paid to
QFs had been $6.34 per kW for the prior period. The Companies
proposed a rate of $57.71 per kW. According to Ms. Wookey, this
increase was due to two factors: 1) the capacity rating loss of
the Millstone Units 1, 2 and 3 on November 1; and, 2) the
uncertainty concerning the phase-in of a "capacity only" market
in New England. This phase-in had originally been scheduled for
November 1, 1997 but, in late October, it was postponed until
April 1, 1998. Consequently, when Unitil had to purchase or
arrange contracts for the period of time in which it was
deficient in meeting its NEPOOL requirements, the price ranged
from $5.75 to $6.75 per kW/month.
Unitil has also changed its methodology of computing
the weighted value of these costs. Instead of dividing the costs
for the periods in which it was deficient by the total kW per
month, including those months in which it had a surplus, the
costs are now being divided only by the sum of the kW per month
for those months in which a deficiency occurs. This results in
the estimated costs being closer to actual since they are no
longer being "diluted" by using the total kw for the whole period
as the divider.
Unitil also was questioned as to whether it was one of
the plaintiffs to the Massachusetts lawsuit against NU regarding
the Millstone outages. One of the wholly-owned subsidiaries of
Unitil, Fitchburg Gas & Electric, is a joint owner of Millstone
and is a party to the demand for arbitration in Connecticut and
the Massachusetts lawsuit. With regards to the New Hampshire
companies, Unitil has reached a settlement with NU for
replacement energy associated with its entitlement in Millstone
3. UPC has since been able to withdraw from its entitlement in
Millstone 3.
III. COMMISSION ANALYSIS
We have reviewed all the testimony and exhibits in this
case, including the responses provided by the Companies. Based
on our review of the record, we find that the FAC for the January
1 through June 30, 1998 period will be a credit of ($0.00246) per
kWh for CEC and a credit of ($0.00213) per kWh for E&H. For the
same period, the PPAC will be $0.0078 per kWh for CEC and
$0.01074 per kWh for E&H. For a typical CEC residential customer
using 500 kWh per month, the net result of the FAC and PPAC
changes is a $0.43 increase to the monthly bill. For a typical
E&H residential customer using 500 kWh per month, the net result
of the FAC and PPAC changes is a $1.78 increase to the monthly
bill.
We find that the proposed short term avoided capacity
and energy rates, although calculated in a somewhat different
manner for this period than the methodology outlined in prior
Commission orders, are just and reasonable.
Based upon the foregoing, it is hereby
ORDERED, that CEC's FAC rate for the period of January
1, 1998 through June 30, 1998, shall be a credit of ($0.00246)
per kWh while its PPAC rate shall be $0.00780 per kWh; and it is
FURTHER ORDERED, that E&H's FAC rate for the period of
January 1, 1998 through June 30, 1998, shall be a credit of
($0.00213) per kWh while its PPAC rate shall be $0.01074 per kWh;
and it is
FURTHER ORDERED, that Concord Electric Company and
Exeter & Hampton Electric Company file revised tariff pages in
compliance with this order on or before January 31, 1998.
By order of the Public Utilities Commission of New
Hampshire this thirty-first day of December, 1997.
Douglas L. Patch Bruce B. Ellsworth Susan S. Geiger
Chairman Commissioner Commissioner
Attested by:
Thomas B. Getz
Executive Director and Secretary