DR 97-230
      Concord Electric Company and Exeter & Hampton Electric Company
               1998/1999 Demand Side Management Program Plan
                       Order NISI Approving Program
                         O R D E R   N O.  22,948
                               June 1, 1998

         By Order No. 22,361 (October 15, 1996), the New
Hampshire Public Utilities Commission (Commission) approved
Demand Side Management (DSM) Programs for Concord Electric
Company (CECo) and Exeter & Hampton Electric Company (E&HCo)
(collectively UNITIL) for implementation through December 31,
1997.  The Order also required UNITIL to file its 1998 DSM
Program Plan by October 15, 1997. 
         On September 25, 1997, UNITIL filed a request for an
extension for filing its 1998 DSM Program Plan citing the
uncertainty of energy efficiency programs in New Hampshire, the
non-cost-effectiveness of its current programs, and the absence
of funding in its current budget for program redesign.  On
October 23, 1997, the Commission authorized UNITIL to file its
1998 DSM Program Plan within 30 days after the issuance of the
rehearing order regarding energy efficiency programs in Docket
DR 96-150.  The Commission also required UNITIL to submit a
letter stating how UNITIL intended to proceed after December 31,
1997, especially in regard to its DSM costs recovery mechanism
currently in effect.
         On October 30, 1997, UNITIL filed its response to the
Commission's October 23, 1997 letter.  UNITIL proposed to
continue the existing DSM programs and Conservation Charges (CCs)
until such time as the Commission issued its rehearing order. 
However, effective January 1, 1998, UNITIL planned to discontinue
any of its DSM programs that had a benefit/cost ratio for the
current program year which did not meet or exceed 1.0 using the
Total Resource Cost (TRC) test.  Additionally, regardless of its
benefit/cost ratio, UNITIL proposed to continue its Residential
Social Services Program, which offers space and water heating
measures to low income customers, until the Commission directs
         On January 6, 1998, UNITIL submitted a summary of the
cost-effectiveness of its 1996/1997 DSM programs using actual
data for November 1996 through November 1997 and estimated data
for December 1997.  The benefit/cost ratios ranged from 0.5 to
0.9.  Based on these results and consistent with its October 20,
1997 letter, effective January 1, 1998, UNITIL suspended all of
its DSM programs with the exception of the Residential Social
Services Program.  UNITIL proposed to honor commitments made to
customers through the end of 1997 and expected to complete all
outstanding projects by the end of the first quarter in 1998. 
UNITIL also proposed to continue the existing CCs until March 31,
1998 at which time it would file new CCs which reconcile any
         On February 27, 1998, UNITIL filed proposed CCs for the
period April 1, 1998 through March 31, 1999.  UNITIL stated it
had honored all commitments made to customers through 1997 and
had completed all outstanding projects.  The proposed CCs include
a reconciliation of prior over/underrecoveries, projected program
expenditures for the Residential Social Services Program,
projected expenditures for ongoing regulatory reporting and
recovery of lost base revenues.  On March 31, 1998, the
Commission issued Order No. 22,891 suspending UNITIL's proposed
CCs based on Commission Staff's (Staff) request for additional
     time to investigate the filing and supporting materials and also
     to discuss with UNITIL the impact of the Commission's rehearing
     order in Docket DR 96-150, Order No. 22,875 (March 20, 1998) on
     UNITIL's DSM programs on a forward-going basis.  
         On April 20, 1998, UNITIL filed a proposal to continue
     its existing Residential Social Services Program, capping
     spending at existing levels until new programs are approved by
     the Commission after the Energy Efficiency Working Group has
     reported its findings.  UNITIL stated its intent to participate
     in the working group.  UNITIL also proposed to continue its
     existing CCs until June 30, 1998 and to implement revised CCs
     effective July 1, 1998.
         On May 26, 1998, UNITIL filed proposed CCs for the
     period July 1, 1998 through June 30, 1999 as follows:
                                  CECo                E&HCo
     Domestic                      $0.00011/kWh       ($0.00006/kWh)
     Regular General Service      ($0.00042)/kWh       $0.00038/kWh
     Large General Service        ($0.00013)/kWh      ($0.00013/kWh)
     UNITIL also addressed the following issues which arose from
     informal discussions with Staff: 1) support for the proposed
     budget of $20,000 for ongoing regulatory reporting; 2) the impact
     of market-based costs (rather than traditional avoided costs) on
     the cost-effectiveness of UNITIL's 1996/1997 programs; and 3)
     support for UNITIL's decision to discontinue the majority of its
     programs.  The cost-effectiveness of the 1996/1997 DSM programs,
     using market-based costs, produced TRC ratios between 0.6 and
     1.1.  Only the Residential Social Services Program and Small
     Commercial and Industrial (C&I) Program passed the test with
     marginal ratios of 1.0 and 1.1, respectively.  UNITIL stated that
     these two programs did not meet the threshold values of the TRC
     test as set forth by the Commission in prior orders; i.e., 1.2
     for residential programs and 1.5 for C&I programs.  
         On May 28, 1998, Staff recommended that the Commission
     approve UNITIL's proposed DSM Program Plan and CCs.  However, of
     the issues informally discussed between Staff and UNITIL, Staff
     stated that its only outstanding concern was with the proposed
     level of on-going regulatory costs of $20,000.  Staff is unsure
     whether the $20,000 is justifiable; however, Staff recommends
     that the costs be approved subject to audit and reconciliation if
     so warranted.  Staff also noted that there are significant
     overrecoveries from UNITIL's ratepayers which warrant revisions
     to the CCs.  
         After careful review of the filings, we find that
     UNITIL's proposal to continue the Residential Social Services
     Program and revised CCs are reasonable and in the public good. 
     We shall approve the 1998/1999 DSM Program Plan subject to
     Staff's recommendation that the $20,000 estimated for on-going
     regulatory costs be subject to audit and possible reconciliation;
     however, we note that all costs incurred by a utility are subject
     to Commission review.
         We commend UNITIL's efforts to evaluate its DSM
     programs with respect to the rehearing order in DR 96-150.  We
     believe that UNITIL's proposal to discontinue its programs that
     are not cost-effective is consistent with the Final Plan and the
     rehearing order; i.e., to ensure that only cost-effective DSM
     programs are continued by UNITIL.  Although UNITIL has proposed
     at this time to discontinue the Small C&I Program because it is
     marginally cost-effective with a TRC ratio of 1.1, we direct
     UNITIL to be prepared to provide cost-effective DSM programs
     consistent with our conclusions resulting from the
     recommendations of the Energy Efficiency Working Group, if
         Finally, we waive the application of N.H. Admin. Rules,
     Puc 1203.05(a), which requires generally that rate changes be
     implemented on a service-rendered basis, and will allow UNITIL to
     implement its CCs on a bills-rendered basis.  This waiver,
     pursuant to Puc 201.05, produces a result consistent with the
     principles embodied in Puc 1203.05(b), which sets forth
     exceptions for allowing rate changes on a bills-rendered basis,
     and is in the public interest because it eliminates customer
     confusion and reduces administrative costs.
         Based upon the foregoing, it is hereby 
         ORDERED NISI, that UNITIL's 1998/1999 DSM Program Plan
     is APPROVED; and it is
         FURTHER ORDERED, that CECo's and E&HCo's Conservation
     Charges, as detailed above, shall be effective July 1, 1998 on a
     bills-rendered basis; and it is
         FURTHER ORDERED, that pursuant to N.H. Admin. Rules,
     Puc 1604.03 or Puc 1605.03, UNITIL 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 June 8, 1998 and to be documented by affidavit filed
     with this office on or before June 15, 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 June 22, 1998; and it
         FURTHER ORDERED, that any party interested in
     responding to such comments or request for hearing shall do so no
     later than June 29, 1998; and it is
         FURTHER ORDERED, that this Order Nisi shall be
     effective July 1, 1998, unless the Commission provides otherwise
     in a supplemental order issued prior to the effective date; and
     it is
         FURTHER ORDERED, that UNITIL shall file a compliance
     tariff with the Commission on or before July 1, 1998, in
     accordance with N.H. Admin. Rules, Puc 1603.02(b).
         By order of the Public Utilities Commission of New
     Hampshire this first day of June, 1998.
        Douglas L. Patch    Bruce B. Ellsworth        Susan S. Geiger
            Chairman           Commissioner            Commissioner
     Attested by:
     Thomas B. Getz
     Executive Director and Secretary