DR 95-247
                 Public Service Company of New Hampshire/
                          Bio-Energy Corporation
                 Consideration of Renegotiated Rate Order
                    Order Adopting Procedural Schedule
                         O R D E R  N O.  22,904  
                              April 28, 1998
         On September 6, 1995 Public Service Company of New
     Hampshire (PSNH) filed with the New Hampshire Public
     Utilities Commission (Commission) the essential terms of a
     purchased power agreement reached between PSNH and
     Bio-Energy Corporation (Bio-Energy) that would replace
     Bio-Energy's existing rate order.  
         On November 16, 1995 PSNH filed with the
     Commission an executed Wood Project Power Purchase Contract
     and an Agreement (collectively, the Contract) between itself
     and Bio-Energy.  By Order No. 22,479 issued January 15,
     1997, the Commission approved the Contract, imposed certain
     conditions, and required that the parties notify the
     Commission within 30 days if they chose to withdraw from the
         On February 14, 1997, PSNH filed a letter with the
     Commission indicating that it was unable to proceed with the
     financial transactions necessary to complete the Contract,
     specifically the lump-sum Payment Amount and the Letter of
     Credit to secure the Contract's Annual Payments, because of
     the uncertainties of cost recovery perceived by the
     financial community.
         On February 18, 1997, Bio-Energy filed a Motion
     for Rehearing and Clarification, stating that it could not
     fully evaluate whether to close on the Contract because
     Order No. 22,479 did not contain waivers which PSNH and
     Bio-Energy required and because of certain other perceived
     deficiencies in the order.
         In its deliberations on December 31, 1997,
     followed by Order No. 22,848 issued February 17, 1998, the
     Commission denied Bio-Energy's Motion for Rehearing and
     clarified that Bio-Energy would be relieved of its
     obligations under the Rate Order once the Contract went into
         By Order of Notice issued January 13, 1998, the
     Commission raised a number of questions related to PSNH's
     failure to finance the Bio-Energy settlement and scheduled a
     prehearing conference for February 24, 1998, set deadlines
     for intervention requests and objections thereto, and
     required the Parties and Commission Staff (Staff) to
     summarize their positions with regard to the filing for the
         On February 19, 1998 the Governor's Office of
     Energy and Community Services (ECS) filed a Motion for
     Limited Intervention.  The Office of the Consumer Advocate
     (OCA) appeared at the prehearing conference and is a
     statutorily recognized intervenor.  At the prehearing
     conference the Commission granted ECS limited intervention. 
     Bio-Energy had previously been granted intervention.
         At the prehearing conference, in accordance with
     the Order of Notice, the Parties and Staff stated their
     positions with regard to the filing.
         A. PSNH
         PSNH addressed the issue of whether it could have
     financed the Bio-Energy Contract through internal funds
     available at that time.  PSNH submitted that a dividend
     which it paid to its parent, Northeast Utilities (NU),
     represented funds for expenses associated with a PSNH
     Employee Stock Ownership Program (ESOP), that funds
     deposited by PSNH into NU's Money Pool were funds which were
     later taken out of the Money Pool to be used for PSNH
     financing obligations, and that PSNH may not have been able
     to obtain financing through its Letter of Credit or obtained
     other forms of external financing.  
         PSNH indicated that it would provide information
     on the availability of funds in the NU Money Pool at the
     time the Commission's original order approving the Contract
     was issued.
         In response to the assertion that the parties
     thereto had a duty to use "best efforts" to complete the
     Contract, PSNH stated that its duty was to renegotiate the
     orders under the Rate Agreement, but that what PSNH did
     after the Contract was agreed to does not fall under a best
     efforts analysis.   
         B.  Bio-Energy
         Bio-Energy stated that it is interested in PSNH's
     response on the question of what vehicles were available to
     PSNH from which to procure the financing to consummate the
     transaction represented by the Contract and that it was
     interested in an analysis of whether a short-term line of
     credit or NH Money Pool funds could have been used to
     procure the funds necessary to close on the Contract.
         C.  Office of Consumer Advocate
         The OCA stated that it was interested in
     addressing, relative to the Contract, the parent-subsidiary
     relationship between NU and PSNH and the duties of PSNH to
     its ratepayers as distinguished from its parent.  OCA stated
     that PSNH should address whether it simply could not have
     taken any action which would have allowed it to go forward
     and conclude the transaction. 
         D.  Staff
         Staff stated that the analysis regarding the duty
     of PSNH to complete the transaction was more than a
     "prudence" analysis, but instead a "best efforts" analysis
     as required by the Rate Agreement.  
         Staff was interested in, relative to the Line of
     Credit Agreement through which PSNH may have obtained funds
     at the time of the original order, whether under the Line of
     Credit agreement it was determined that there were material
     adverse conditions which existed at that time which resulted
     in funds not being available to PSNH for the Bio-Energy
     Contract.  Staff also was interested in whether PSNH offered
     Bio-Energy cash payment to fund the Contract and whether the
     ESOP plan required an $85 million dividend payment to NU. 
         Following the prehearing conference the Parties
     agreed to the following proposed procedural schedule:
         PSNH Testimony                             April 3, 1998
         Data Requests by Staff
              and Intervenors                      April 17, 1998
         Data Responses by PSNH                       May 8, 1998
         Testimony by Staff and                      May 29, 1998
         Data Requests by PSNH                      June 12, 1998
         Data Responses by Staff and                 July 3, 1998
         Rebuttal                                   July 17, 1998
         Hearings                              July 29 & 30, 1998
         We find the proposed procedural schedule to be
     reasonable and will approve it for the duration of the case.
         Based upon the foregoing, it is hereby
         ORDERED, that the procedural schedule delineated
     above is approved; and it is
         FURTHER ORDERED, that the Governor's Office of
     Energy and Community Services is granted limited
         By order of the Public Utilities Commission of New
     Hampshire this twenty-eighth day of April, 1998.
        Douglas L. Patch    Bruce B. Ellsworth          Susan S.
            Chairman           Commissioner                  Commissioner
     Attested by:
     Claire D. DiCicco
     Assistant Secretary