DF 98-002
                          Petition for Financing
                Order NISI Providing Approval for Financing
                         O R D E R   N O.  22,896
                               April 7, 1998

         The New Hampshire Electric Cooperative, Inc. (NHEC), on
     January 22, 1998, filed with the New Hampshire Public Utilities
     Commission (Commission), a petition pursuant to RSA 369 for
     authority to issue debt instruments in the amount of $26,561,300. 
     The requested financing is intended to finance its ongoing
     construction program.  The funds would be borrowed from the
     National Rural Utilities Cooperative Finance Corp. (CFC),
     pursuant to the terms of NHEC's Restated Mortgage and Security
     Agreement.  The requested authorization further implements the
     existing lending relationship between NHEC and CFC.  NHEC also
     requests the Commission to find that the capitalization which
     would result from the proposed borrowing would produce a
     projection of future rates which are within a just and reasonable
         CFC is a cooperative finance authority which provides
     capital to member cooperatives.  The Commission has previously
     approved the lending relationship of CFC and NHEC in DR 92-009,
     the docket approving NHEC's Plan of Reorganization.  See Order
     No. 20,618 (October 5, 1992).  The Commission has also approved
     borrowing from CFC in DF 95-186, in which approval was granted
     for NHEC to complete the refinancing of its Rural Utilities
     Service (RUS) debt which was no longer available to NHEC.  See 
     Order No. 20,671 (November 19, 1992) and Order No. 21,801 (August
     29, 1995).
         The borrowing arrangement is structured as twelve
     $2,000,000 notes and one $2,561,300 note.  NHEC will request
     funding in these amounts as its cash flow requires.  NHEC
     anticipates that, initially, construction projects will be funded
     through its $10,000,000 Line of Credit with CFC and then
     borrowings under the requested long term notes will be used to
     pay down the Line of Credit.  Each note will carry a term of 35
     years, with interest rates determined at the date of funding.  As
     of January 5, 1998, NHEC indicates that the fixed interest rate
     was 7.25%.  NHEC also has access to other rate options including
     variable rate options that may assist the Company in reducing its
     overall cost of debt.  As a condition of each loan, NHEC is
     required to purchase Loan Capital Term Certificates (LCTCs) in
     amounts ranging from 0% to 3% of the loan amount.  As NHEC repays
     principal each year, the required LCTC balance is recalculated as
     of December 31 of each year, and the excess is returned to the
         NHEC has stated in its petition and supporting
     testimony that it does not anticipate borrowing the full amount
     requested.  Instead, the Company anticipates that it may need as
     little as $6,500,000 in new financing to meet its needs as
     identified in its 1997-99 Construction Work Plan.  If any balance
     of the remaining funds are not needed for unforeseen operating
     and capital expenses, funds could be used to prepay higher
     interest rate debt which would reduce NHEC's total interest
         As stated, we have previously reviewed the relationship
     between NHEC and CFC in other dockets.  We find the continuation
     of this relationship to be beneficial to NHEC as a source of low-cost financing.  We recognize that, as a cooperative, NHEC must
     obtain capital for the replacement of existing facilities and for
     the construction of new facilities wholly through debt financing. 
     In this petition, NHEC requests financing authority for issuance
     of debt instruments of up to $26,561,300 for its 1997-99
     Construction Work Plan, and for the other limited purposes as
     discussed herein.  We believe that the terms and conditions of
     the loan, as offered by CFC and accepted by NHEC, are reasonable.
     We also believe the proposed uses for the funds as anticipated in
     NHEC's petition are in the public good and we will approve the
         Based upon the foregoing, it is hereby 
         ORDERED NISI, that NHEC's issuance of debt instruments
     to CFC, pursuant to RSA 369, in an amount up to $26,561,300 is
     approved; and it is
         FURTHER ORDERED, that on January 1 and July 1 of each
     year, NHEC shall file with this Commission a detailed statement,
     duly sworn by its Treasurer, showing the disposition of the
     proceeds of each note that may have been issued in the prior six
     month period, until the entire proceeds shall have been fully
     accounted for; and it is
         FURTHER ORDERED, that pursuant to N.H. Admin. Rules,
     Puc 1604.03 or Puc 1605.03, the Petitioner shall cause a copy of
     this Order Nisi to be published once in a statewide newspaper of
     general circulation or of circulation in those portions of the
     state where operations are conducted, such publication to be no
     later than April 14, 1998 and to be documented by affidavit filed
     with this office on or before April 21, 1998; and it is
         FURTHER ORDERED, that all persons interested in
     responding to this petition be notified that they may submit
     their comments or file a written request for a hearing on this
     matter before the Commission no later than April 28, 1998; and it
                   FURTHER ORDERED, that any party interested in
     responding to such comments or request for hearing shall do so no
     later than May 5, 1998; and it is
         FURTHER ORDERED, that this Order Nisi shall be
     effective May 7, 1998, unless the Commission provides otherwise
     in a supplemental order issued prior to the effective date.
         By order of the Public Utilities Commission of New
     Hampshire this seventh day of April, 1998.
        Douglas L. Patch    Bruce B. Ellsworth        Susan S. Geiger
            Chairman           Commissioner            Commissioner
     Attested by:
     Thomas B. Getz
     Executive Director and Secretary