DR 98-097
                                   
              NEW HAMPSHIRE ELECTRIC COOPERATIVE, INC. 
                                   
          ELECTRIC UTILITY RESTRUCTURING: COMPLIANCE FILING
                                   
      Order Addressing Compliance Filing and Announcing Interim
                Procedures Governing Retail Access   
                                   
                       O R D E R   N O.  23,013
                                   
                           September 8, 1998
         In this Order, the New Hampshire Public Utilities
Commission (Commission) approves a compliance filing by the New
Hampshire Electric Cooperative, Inc. (NHEC) relative to NHEC's 
obligations under the State's electric utility restructuring law,
RSA 374-F.  In addition, the Commission accepts NHEC's target
date of October 1, 1998 for providing retail access to its
members, although the Commission recognizes that events since the
hearing in this case may require NHEC to extend that date. 
Finally, this Order announces temporary procedures which shall
apply to prospective competitive electricity suppliers conducting
business within NHEC's service territory.  These temporary
procedures shall apply until such time as the Commission
completes several generic rulemaking dockets.
I.       BACKGROUND AND PROCEDURAL HISTORY
         On February 28, 1997, the Commission issued a Statewide
Electric Utility Restructuring Plan (the Plan) and five related
interim stranded cost orders (ISC orders) pursuant to RSA 374-F. 
     The Plan and ISC orders implemented the policies of RSA 374-F by,
     inter alia, requiring jurisdictional electric utilities
     (including NHEC) to provide unbundled, open access delivery
     services so that retail customers have the ability to purchase
     electricity from competitive suppliers.  
       In Order No. 22,875 (March 20, 1998), Commission
     affirmed, modified and amended various aspects of the Plan.  In
     the same order, the Commission affirmed the NHEC's ISC order
     (Order No. 22,513), and supplemented the compliance filing
     requirements for NHEC and the other jurisdictional electric
     utilities.
          On May 1, 1998, NHEC submitted its compliance filing
     which consisted of a petition, proposed tariff and supporting
     testimony.  NHEC supplemented its filing with additional
     testimony and exhibits on July 24, 1998.  
          The Commission held a duly noticed prehearing
     conference on June 24, 1998 during which it granted intervention
     requests filed by the following entities or individuals: the
     Governor's Office of Energy and Community Services (ECS), Freedom
     Partners, L.L.C.(Freedom), the City of Manchester (Manchester),
     Cabletron Systems, Inc. (Cabletron), Public Service Company of
     New Hampshire (PSNH), the Campaign for Ratepayer Rights (CRR),
     Unitil Companies (Unitil), and Susan Chamberlin, Esquire. 
     Limited intervention was granted to Ms. Anne Ross, and Mr.
     Camerino on behalf of Great Bay Power Corporation.  The
     Commission denied, without prejudice, the intervention request of 
     the Conservation Law Foundation (CLF).   
          During the prehearing conference the Commission heard
     argument by the parties on the issue of the scope of this
     proceeding.  It determined that as a compliance filing, the scope
     of this case was narrow, and limited to whether the filing was
     consistent with the orders of the Commission and applicable
     statutes.
          On July 27, 1998, NHEC filed a "settlement stipulation"
     (Stipulation) which further modified and amended its filing.  The 
     Stipulation was offered by the following parties: NHEC, the
     Commission Staff (Staff), the Office of Consumer Advocate (OCA),
     ECS, CRR, Freedom and Unitil (collectively, the Stipulating
     Parties).  
          During the July 30, 1998 merits hearing, NHEC presented
     the testimony of Teresa L. Muzzey, NHEC's Director of Finance and
     Administration, and Heather K. Saladino, NHEC's Manager of Rates
     and Financial Analysis.  
          The Commission deliberated NHEC's compliance filing
     during the Commission's August 17, 1998 public meeting.
     II.  PARTIES AND POSITIONS  
          A.   NHEC and Stipulating Parties
          The Stipulation addresses various aspects of NHEC's
     proposed compliance with RSA 374-F.  Below, we briefly summarize
     the most significant components of the Stipulation.   
               1.   ISC Charges
          NHEC and the stipulating parties agree that NHEC's
     interim stranded cost (ISC) charges should be calculated
     consistent with the Commission's decision in DR 96-150;
     specifically, ISC charges should be set at levels which allow 
     NHEC to meet its financial obligations to wholesale power
     suppliers during 1998 and 1999.  NHEC observes that the
     resolution of one issue will largely determine the level of its
     ISC charges: namely, its dispute with PSNH over the terms of
     their wholesale requirements contract, a matter which is pending
     before the Federal Energy Regulatory Commission (FERC).  NHEC
     projects ISC charges based upon alternative "high" and "low"
     scenarios reflecting the possible outcomes of that dispute. 
     Under the "low" scenario (i.e., NHEC prevails at FERC), NHEC
     projects a single ISC charge $.01920/kWh applying to all members
     taking service from alternative suppliers.  Exhibit 7, p.1. 
     Under the "high" scenario (PSNH prevails at FERC), NHEC's ISC
     charges would be $.07571 for 1998 and $0.07757 for 1999.  Exhibit
     4, p.4.       
               2.   Restructuring Surcharge 
          NHEC and the stipulating parties propose a
     restructuring surcharge on distribution rates which is designed
     to recover incremental costs associated with restructuring and
     the implementation of retail access.  According to NHEC, the
     surcharge will likely need to remain in place for three years
     following the implementation of retail access.   
     
               3.   Divestiture
          NHEC and the stipulating parties propose that NHEC
     should be permitted to submit a divestiture plan by July 1, 1999. 
     The plan would relate primarily to NHEC's ownership interest in
     the Seabrook Nuclear Power Plant, which NHEC proposes to retain
     during the term of the Seabrook Sellback Agreement.
               4.   Aggregation Services 
          As part of the Stipulation, NHEC has agreed that it
     will not provide competitive electric services to its members,
     including load aggregation services, unless it is specifically
     authorized to do so by the Commission.  The Stipulation notes a
     disagreement between NHEC and Staff over whether NHEC should be
     permitted to perform load aggregation services for its members.  
               5.   Designation of Transmission and Distribution                Facilities  
     
          NHEC's filing includes a request for the Commission to
     approve its designation of distribution facilities as consistent
     with FERC's seven-factor test.
               6.   Unbundled Distribution/Cost of Service
          The Stipulation provides that NHEC's cost of service
     allocations in DR 98-025 should be utilized for setting unbundled
     distribution rates.  
               7.   Special Contracts 
          NHEC proposes to abide by and enforce the terms of
     existing special contracts until such time as those contracts
     terminate or the Commission orders otherwise.
               8.   Low Income Program  
          NHEC proposes to begin collecting a charge of .15/kWh
     for low income assistance and to work with the settling parties
     to design and implement a low income assistance program for
     NHEC's members until a Statewide program is implemented.       
               9.   Conservation and Load Management Programs
          NHEC proposes to comply with Order No. 22,970 in DR
     98-043 relative to NHEC's conservation and load management
     programs for 1998 and 1999 until such time as the Commission
     orders otherwise.
               10.  Public Education
          NHEC proposes to implement a public education program
     which is consistent with recommendations of the public education
     working group.  NHEC filed a plan on July 31, 1998 which further
     explained its proposal.  
               11.  Default and Transition Service
          NHEC proposes to provide default power service to its
     members by utilizing its existing wholesale power supply
     contracts.  In addition, NHEC argues further that it should not
     be required to provide transition service because such a
     requirement would be inconsistent with its obligations under
     existing wholesale purchase power contracts.      
               12.  Effective Date
          NHEC seeks to make its compliance filing and proposed
     tariffs effective on September 1, 1998, although it acknowledges
     that several events must occur before retail access can be
     implemented for NHEC members.  According to NHEC, those events
     include: (a) FERC approval of an amendment to the requirements
     contract with PSNH, (b) completion of electronic data interchange
     (EDI) infrastructure development, and (c) load estimation and/or
     internal meter requirements consistent with the outcome of the
     aforementioned FERC dispute with PSNH.  In the Stipulation, NHEC
     projected that the foregoing prerequisites could be achieved by
     October 1, 1998.
          B.   PSNH
          PSNH made a statement at the close of the hearing in
     which it questioned whether NHEC's filing was consistent with RSA
     374-F in light of the potential for cost-shifting between NHEC's
     members and PSNH retail customers.  According to PSNH, the
     Commission will be better positioned to assess the impact of
     NHEC's restructuring proposal after the FERC proceedings related
     to the APRA are completed.         
     III. COMMISSION ANALYSIS
          We have determined that NHEC's compliance filing, as
     amended and modified by the Stipulation, complies in all material
     respects to the orders we issued in DR 96-150.  Likewise, we find
     that the Stipulation is substantially consistent with the
     interdependent policy principles set forth in RSA 374-F.  Based
     on the foregoing, we conclude that NHEC's filing meets the public
     interest standard in RSA 374-F:4, III.  
          The only disputed issue in this proceeding was raised
     by PSNH.  Specifically, PSNH asserts that NHEC's filing "may not"
     comport with RSA 374-F's interdependent policy principle which
     disfavors cost-shifting among retail consumers.  
          We note that, as a practical matter, PSNH has raised a
     concern for which it seeks no relief: it has not asked us to
     reject the filing, nor has it asked for any other relief to avoid
     the purported cost-shifting effect of the NHEC filing.  
          Moreover, as we observed during the prehearing
     conference, the issue of whether costs formerly allocated to NHEC
     (as a wholesale customer) are recoverable from PSNH's ratepayers
     is outside the scope of this proceeding.   
     
          The Commission does not agree that the policy principle
     identified by PSNH in RSA 374-F:3,VI applies to this
     circumstance.  This section is intended to prohibit cost-shifting
     among retail customer classes of the same utility when rates are
     unbundled.  Assuming, arguendo, that the policy principle
     identified by PSNH applies to these circumstances, however, we
     reiterate that PSNH has requested no relief to address the
     situation.  In fact, PSNH has consistently asserted that FERC
     possesses the exclusive jurisdiction to address such cost
     recovery issues.  We believe that the Commission retains the
     necessary jurisdiction and authority to address this matter if
     necessary when FERC issues a final decision.  
          Based on the foregoing considerations, we conclude that
     PSNH's concern does not warrant rejecting or modifying NHEC's
     filing.  
          Finally, we take this opportunity to notice the
     establishment of temporary procedures which shall govern supplier
     registration and electronic data interchange (EDI) for retail
     transactions with NHEC members.  We propose to adopt, on an
     interim basis, the supplier registration rules which have been
     recommended by the working group established to study the same in
     DR 96-150.  Similarly, we propose to require NHEC and suppliers
     to abide by the EDI procedures which the EDI working group
     recommended and which we approved in Order No. 22,919 (May 4,
     1998).  Once adopted, these temporary procedures shall govern the
     direct access transactions which occur within NHEC's service
     territory until such time as the Commission completes its generic
     rulemaking dockets in those areas.  These documents may be
     accessed on the Commission home page (www.puc.state.nh.us).  We
     will provide a 30-day comment period, beginning today, for any
     party or interested person to file comments on these proposed
     temporary procedures.  Pending receipt of such comments, it is
     the Commission's intent to approve these interim procedures at
     its meeting of October 12, 1998.
          We also note that pursuant to RSA 374-F:4 IX, an
     electricity supplier which is an affiliate of a public utility is
     only eligible to compete for open access customers if they have
     filed open access transmission and distribution rates with the
     FERC and this Commission, for all of their transmission and
     distribution facilities in New Hampshire.     
          Based upon the foregoing, it is hereby
          ORDERED, that NHEC's compliance filing as described in
     the Settlement Stipulation is APPROVED; and it is
          FURTHER ORDERED, that temporary procedures governing
     EDI and supplier registration are adopted as described in the
     body of this order.
          By order of the Public Utilities Commission of New
     Hampshire this eighth day of September, 1998.
     
     
     
                                                                     
        Douglas L. Patch    Bruce B. Ellsworth        Susan S. Geiger
            Chairman           Commissioner            Commissioner
     
     
     Attested by:
     
     
     
                                      
     Thomas B. Getz
     Executive Director and Secretary