DR 95-250
                   Order Extending Term of Pilot Program
                         O R D E R   N O.  22,945
                               May 20, 1998
         This order addresses the numerous inquiries
     received in recent months by the New Hampshire Public
     Utilities Commission (Commission) concerning the scheduled
     termination of the Retail Electric Competition Pilot Program
     (Pilot).  The Pilot, which commenced during June and July,
     1996, was originally scheduled to operate for a two-year
     period.  Order No. 22,033 (Final Guidelines) at 18
     (February 28, 1996).  By Secretarial Letter issued on March
     11, 1998, the Commission solicited public comments from the
     participating electric utilities and interested members of
     the public concerning whether to continue the Pilot beyond
     the two-year term.  The Commission also held a hearing on
     May 12, 1998 to accept public comments on whether to
     continue the Pilot, and if so, under what terms and
          The written and oral public comments offered by
     various stakeholders nearly unanimously support a
     continuation of the Pilot.  Several parties suggest that
     customer eligibility for participation in the Pilot should
     be expanded beyond the 3% load limitation established in the
     Final Guidelines.  The electric utilities participating in
     the Pilot are split on the issue, and below, we briefly
     summarize their respective positions.  
          Two utilities, Public Service Company of New
     Hampshire (PSNH) and the Unitil Companies (Unitil), have
     offered to voluntarily extend the Pilot.  Unitil has agreed
     to extend the Pilot under all existing terms and conditions. 
     See Order No. 22,210 (July 1, 1996).  PSNH proposed to
     extend the Pilot subject to several modifications to the
     existing Guidelines.  These proposed modifications (with one
     exception) were agreed to by the City of Manchester and were
     presented to the Commission during the May 12th hearing. 
     See, Exhibit PH-1. 
          Two participating utilities, Granite State
     Electric Company (GSEC) and Connecticut Valley Electric
     Company (CVEC), oppose continuation of the Pilot.  According
     to GSEC, "the Pilot should be terminated to avoid confusion
     and administrative difficulties on the eve of choice in New
     Hampshire."  GSEC Letter (March 27, 1998).  CVEC argues that
     the Pilot has served its objectives, and any attempt to
     extend the Pilot would "re-raise" the same complex and
     contentious issues that...are part and parcel of
     implementing retail competition."  CVEC Letter (March 20,
          During the May 12th hearing, the New Hampshire
     Electric Cooperative, Inc. (NHEC) advised the Commission
     that its members are still unable to participate in the
     Pilot due to the pendency of a proceeding at the Federal
     Energy Regulatory Commission (FERC) concerning NHEC's
     wholesale requirements agreement with PSNH.  (Public
     Service Company of New Hampshire v. New Hampshire Electric
     Cooperative, Inc., FERC Docket No. EL96-53-000).  In
     addition, NHEC contends that its members have been required
     to subsidize the participation of PSNH's Pilot customers
     because FERC has failed to act upon an amendment to its
     wholesale requirements agreement with PSNH.   
          At the outset, we recognize that some aspects of
     the  Pilot are controlled by the joint recommendations which
     we conditionally approved in utility-specific orders.  See,
     Order No. Order No. 22,029 (February 28, 1996) Order No.
     22,037 (March 4, 1996); Order No. 22,081 (March 29, 1998);
     and Order No. 22,210 (July 1, 1998).  However, the
     aforementioned orders did not relinquish the Commission's
     authority to exercise ongoing control over the Pilot
     consistent with the Legislature's broad delegation of
     authority under RSA 374:26-a.  Rather, the primary function
     of the joint recommendations, from the Commission's
     perspective, was to consensually establish utility-specific
     stranded cost charges or other rate mechanisms which were
     designed to achieve a minimal level of savings for Pilot
     customers who select a competitive electricity supplier. 
     See e.g., Order No. 22,029 at 10.  From the utilities'
     standpoint, the joint recommendations approved by the
     Commission provided a mechanism for limiting the financial
     impact of the Pilot associated with stranded cost exposure. 
     We do not intend to impose a financial burden     
          After considering the written comments and public
     statements made during the May 12th hearing concerning this
     matter, and while recognizing the purpose of the joint
     recommendations, we are persuaded that it is in the public
     interest to extend the Pilot on a statewide basis albeit
     under the revised terms and conditions specified below.     
          First, we will not compel any utility to continue
     to offer the "participation incentive credit" (PIC) or a
     reduced stranded cost charge which is designed to guarantee
     customers the 10% savings contemplated by the joint
     recommendations.  We recognize that each utility agreed to
     a PIC (or reduced stranded cost charge) based on an
     assumption that the Pilot would be limited in duration to
     two-years.  However, we strongly encourage each of the
     utilities to extend this aspect of the Pilot. In that
     regard, we commend Unitil for agreeing to continue the Pilot
     under all existing terms and conditions and urge the other
     utilities to adopt the same approach.  Any utility that is
     unwilling to continue to offer Pilot customers a PIC (or in
     GSEC's case, a reduced stranded cost charge) must inform all
     of its Pilot customers through a direct mailing.             
          Second, we will continue to allow customers who
     qualify as "new load" to participate in the Pilot under the
     more specific definition offered by Manchester. 
     Specifically, new load for purposes of Pilot eligibility
     will be limited to large customers who locate at facilities
     that have not been provided with utility service for at
     least six months prior to the new account being established. 
     Although we understand PSNH's concern about the
     administrative burdens associated with this aspect of the
     Pilot, we believe that any such burdens are far outweighed
     by the benefits of allowing new large customers to gain
     experience in the direct access market. 
          Although the foregoing discussion does not
     specifically address the PSNH-Manchester proposal, our
     decision today is consistent with that proposal except for
     new load eligibility.  Thus, with that limited exception, we
     approve the remainder of PSNH-Manchester proposal outlined
     in Exhibit PH-1.  Specifically, we also adopt their
     suggestion to (a) limit eligibility to "existing accounts at
     existing locations," (b) require customers who terminate
     service with a competitive supplier to choose a new supplier
     within two full billing cycles, and (c) notify Pilot
     customers of the foregoing modifications in the program. 
     Each of the foregoing modifications shall also apply to
     Unitil, CVEC, and NHEC.  
          Finally, we share NHEC's frustration that FERC has
     not yet issued a decision concerning either the APRA dispute
     or the  amendment to the wholesale Fuel and Purchase Power
     Adjustment Clause (FPPAC).  The latter is necessary to
     neutralize the rate effects of the Pilot on NHEC.  It is our
     understanding that PSNH and NHEC both agree that an
     adjustment to the wholesale FPPAC formula is necessary.  If
     FERC does not issue its decision on that filing within the
     next several months, we will consider taking further action
     to urge such action.       
               Based upon the foregoing, it is hereby
          ORDERED, that CVEC, GSEC, Unitil and PSNH are
     directed to extend the Pilot, under the terms specified
     herein, until such time as the Commission orders otherwise;
     and it is
          FURTHER ORDERED, that NHEC's members shall remain
     eligible for the Pilot in the event that FERC issues its
     decision relative to the APRA as discussed in the Final
          By order of the Public Utilities Commission of New
     Hampshire this twentieth day of May, 1998.
       Douglas L. Patch    Bruce B. Ellsworth   Susan S. Geiger
           Chairman           Commissioner       Commissioner
     Attested by:
     Thomas B. Getz
     Executive Director and Secretary