DR 96-424
                     hannaford brothers company, inc.
              Petition for Retail Electric Service or, In the
          Alternative, Amendment to Public Service Company of New
                Hampshire Backup Service Rate B (NHPUC No.
                       Order Requiring Negotiations 
                        Regarding Special Contract
                          O R D E R  N O.  22,947
                               June 1, 1998
         APPEARANCES: Preti, Flaherty, Beliveau and Pachios
     by Donald J. Sipe, Esq. for Hannaford Brothers Company,
     Inc.; Gerald M. Eaton, Esq. for Public Service Company of
     New Hampshire; and Eugene F. Sullivan, III, Esq. for the
     Staff of the New Hampshire Public Utilities Commission.
     I.  PROCEDURAL HISTORY                                       
               On December 31, 1996, Hannaford Brothers Company,
     Inc. (Hannaford) filed with the New Hampshire Public
     Utilities Commission a request for an order requiring Public
     Service Company of New Hampshire (PSNH) to provide
     separately priced Distribution and Transmission demand plus
     the related Administrative and Translation charges of PSNH's
     Backup Service Rate B (NHPUC No. 37-Electricity).  
               On July 11, 1997, PSNH filed with the Commission a
     Petition for Approval of Optional Pricing to PSNH's Backup
     and Standby Service Rate B to become effective immediately
     or within 30 days pursuant to RSA 378:3 and N.H. Admin.
     Rules, Puc 1601.05(a)(1).  The Petition proposed an optional
     pricing scheme that has a higher Administrative charge and a
     lower Distribution and Transmission charge compared to that
     currently under Rate B which PSNH asserted would provide for
     a more stable revenue stream.
               By Order No. 22,676 (August 4, 1997) the
     Commission noted that the two filings related to Rate B and
     set a prehearing conference for August 19, 1997 to address,
     among other things,  whether PSNH's newly proposed
     Amendments to Rate B are discriminatory, and whether
     Hannaford's petition should be addressed in conjunction with
     DR 97-141, PSNH's Rate B proposal. 
               A duly noticed prehearing conference was held
     August 19, 1997 at which the Parties and Staff stipulated to
     separate procedural schedules for each proceeding after the
     Commission ruled from the bench that consolidation of the
     two proceedings was not in the public interest.  By Order
     No. 22,717 dated September 15, 1997, the Commission
     established a procedural schedule regarding Hannaford's
     Petition providing for discovery and a hearing on October
     30, 1997.  
               On October 23, 1997, Staff requested a stay of the
     procedural schedule to conduct further discovery and resolve
     certain discovery disputes.  On October 27, 1997, the
     Commission stayed the procedural schedule and determined
     that the October 30, 1997 hearing would be used to resolve
     discovery issues. 
     A hearing on the substantive issues was ultimately held on
     December 3, 1997. 
               There were a number of discovery disputes
     requiring resolution.  On October 3, 1997, Hannaford filed a
     Motion to Compel in which it sought PSNH answers to data
     requests, 01-22, 01-23, 01-24 and 01-25.  On October 17,
     1997, Hannaford filed an Objection to Data Requests in which
     it argued that data request 1-PSNH 34 was an overly broad
     and burdensome request and in which it objected to data
     request 1-PSNH 33 as requesting confidential information. 
     On October 17, 1997, Hannaford filed its Second Set of
     Objections to Data Requests in which it objected to data
     requests 1-PSNH 8 through 12 as requesting confidential
     information.  On October 20, 1997, Hannaford filed its
     Objection to Staff Data Request and Request for Protective
     Order in which it argued that data request Staff-002 and 004
     should not be answered without a protective order in place.  
               The Commission held a hearing on October 30, 1997
     at which it heard comments on pending motions regarding
     discovery issues.  At the conclusion of the hearing, the
     Commission indicated, as to the pending motions, that data
     request 1 PSNH 33 was irrelevant and therefore granted
     Hannaford's objection; that it would not address 1-PSNH 34
     since the parties indicated that issue had been resolved;
     and, regarding Staff 02 and 04, 1-PSNH 08, 09, 10, 11 and
     12, and Hann 1-22, 1-23, 1-24 and 1-25, that it would allow
     those questions to be asked and expect them to be answered,
     and would expect the answers to be protected by means of a
     protective order. 
               Hannaford explains that it operates eleven
     supermarkets in the PSNH service territory that are the
     focus of an aggressive energy management program which
     includes self-generation.  It also contends that the
     geographic proximity of the supermarkets makes it practical
     to supply back-up power by means of a mobile generator and
     it is therefore prepared to isolate its operations from the
     PSNH system.  
               As an alternative to isolating its operations from
     the grid, Hannaford proposes to wheel back-up power between
     various locations.  Consequently, Hannaford seeks to modify
     the demand charge under PSNH Rate B and requests
     transmission and distribution (T&D) service from PSNH on an
     unbundled basis under the T&D portion of Rate B.  
               Hannaford contends that the modifications make
     Rate B economically viable, although not as advantageous as
     mobile back-up generators, and that retention of Hannaford
     as a customer would contribute approximately $270,000
     annually to the benefit of PSNH and its other customers. 
     Finally, Hannaford argues that its request should be granted
     because it is like arrangements PSNH had earlier allowed
     with Manchester Mack, GE Somersworth and Crown Vantage.
               PSNH asserts that the service requested is not
     authorized under its tariff and that retail wheeling of the
     nature requested must await industry restructuring.  In
     addition, PSNH contends that deviation from the tariff would
     not be in the public good because there are numerous
     commercial customers similarly situated and that the
     potential revenue loss "could easily amount to millions of
     dollars."  Moreover, PSNH states that the only exception to
     tariff service is a special contract and the Commission may
     not have the authority to order PSNH to enter into a special
     contract.  Finally, PSNH distinguishes the Manchester Mack,
     GE Somersworth and Crown Vantage cases from the instant
     case.  The Manchester Mack and GE Somersworth cases involve,
     among other things, geographically contiguous operations
     that allowed physical interconnection and Qualifying
     Facilities that could net sales and purchases while the
     Crown Vantage case involved an occasion where the customer
     deferred a cogeneration alternative.  
               Granting the relief requested by Hannaford would
     constitute an amendment to PSNH Rate B based on Hannaford's
     particular circumstances and would be contrary to
     longstanding regulatory practice that tariffs have general
     applicability and not be discriminatory.  This finding is
     consistent with our position in Order No. 22,756 (October
     20, 1997) where we denied PSNH's request to amend Rate B to
     meet the particular needs of one customer, North Atlantic
     Energy Services Company.  Moreover, Hannaford's request to
     unbundle Rate B is inopportunely timed to the extent it
     would conflict with or undermine the ongoing efforts to
     bring about retail competition in DR 96-150 where unbundling
     is a key component.  Accordingly, we cannot approve
     Hannaford's request to modify Rate B.
               While we believe it inappropriate to order a
     tariff change on Hannaford's behalf, we nonetheless
     recognize that under existing circumstances it is very
     likely that Hannaford will leave the PSNH system and that
     substantial lost revenues will accrue that PSNH may seek to
     collect from other ratepayers.  Thus, we conclude that the
     logical alternative is for PSNH to pursue a special contract
     with Hannaford.
               Accordingly, we direct PSNH to enter into good
     faith negotiations with Hannaford to develop within thirty
     days of our written order a special contract that would
     address Hannaford's particular need for back-up service.  If
     PSNH and Hannaford are unable to reach agreement on the
     terms and conditions of a special contract, we direct the
     parties to provide us with their respective last best
     offers.  Based on that information, we will determine
     whether PSNH acted imprudently in rejecting Hannaford's
     offer and reserve the right to disallow recovery of lost
     revenues if Hannaford leaves the PSNH system as a result of
     PSNH imprudence.
               Based upon the foregoing, it is hereby 
               ORDERED, Hannaford's request to modify PSNH Rate B
     is not approved; and it is
               FURTHER ORDERED, that PSNH and Hannaford file
     within 30 days of the date of this order a report detailing
     efforts to negotiate a special contract and, if an agreement
     is not reached, include with the report a copy of their
     respective last best offers.
               By order of the Public Utilities Commission of New
     Hampshire this first day of June, 1998.
        Douglas L. Patch    Bruce B. Ellsworth          Susan S.
            Chairman           Commissioner                  Commissioner
     Attested by:
     Thomas B. Getz
     Executive Director and Secretary