DR 98-025 New Hampshire Electric Cooperative, Inc. Petition to Increase Base Rates Order Accepting Temporary Rates Settlement and Adopting a Procedural Schedule O R D E R N O. 23,032 October 5, 1998
APPEARANCES: Dean, Rice and Kane by Mark W. Dean, Esq. for the New Hampshire Electric Cooperative, Inc.; Office of the Consumer Advocate by Kenneth Traum for residential ratepayers; and, Eugene F. Sullivan III, Esq. for the Staff of the New Hampshire Public Utilities Commission. I. PROCEDURAL HISTORY On April 14, 1998, NHEC filed with the New Hampshire Public Utilities Commission (Commission) a petition seeking an increase in permanent retail rates of approximately $4.68 million or 5.1%, effective July 1, 1998, with supporting testimony and exhibits pursuant to RSA 378 and N.H. Admin. R., Puc Chapter 1600. Subsequently, on April 15, 1998, NHEC submitted a motion requesting that its proposed permanent rate increase be set as temporary rates pursuant to RSA 378:27 for effect on July 1, 1998. On May 12, 1998, the Commission issued Order No. 22,926 which, inter alia, suspended the implementation of the proposed rate increase for investigation pursuant to RSA 378:6, scheduled a prehearing conference for June 10, 1998, and set a hearing on the issue of temporary rates for July 15, 1998. On June 5, 1998, Public Service Company of New Hampshire (PSNH) filed a motion to intervene. The Office of Consumer Advocate (OCA) is a statutorily recognized intervenor. On June 10, 1998, the Commission held the duly noticed prehearing conference at which PSNH's Motion to Intervene was granted without objection. The parties stated their initial positions on the proposed rate increase and the parties adopted the proposed procedural schedule to govern the Commission's investigation. A technical session followed the prehearing conference. On June 2, 1998, Commission Staff pre-filed the testimony of Henry J. Bergeron of the Commission Finance department recommending that the Commission grant NHEC a temporary rate increase of 4.51% for effect on August 1, 1998. The 4.51% rate increase represented a Times Interest Earning Ratio (TIER) of 1.25. On June 2, 1998, the OCA pre-filed the testimony of Kenneth Traum, Finance Director of the OCA. Mr. Traum's testimony suggested that current rates serve as temporary rates in the interest of rate continuity. Mr. Traum testified that the Federal Energy Regulatory Commission (FERC) had recently issued two decisions resolving certain disputed issues between NHEC and PSNH that could result in substantial rate reductions to NHEC customers. Thus, Mr. Traum recommended holding current rates constant rather than implementing a rate increase to be followed shortly thereafter by a rate decrease. Mr. Traum further recommended that current rates only serve as temporary rates until October 1, 1998, to allow implementation of the FERC Orders. If the FERC orders have not been implemented by that time, Mr. Traum suggested that new increased temporary rates could then be implemented. II. SETTLEMENT In principle, the Settlement adopts the recommendation of the OCA. In the event NHEC customers are able to access their own suppliers of energy and related products prior to October 1, 1998, a temporary rate increase of $4.146 million will take effect at the time of customer choice. If retail access "customer choice" has not occurred by October 1, 1998, a temporary rate increase of $4.146 million will take effect on October 1, 1998. In either case, permanent rates will be reconciled to August 1, 1998. The temporary rate increase will be implemented proportionately across all rate classes or on an "across the board" basis. III. COMMISSION ANALYSIS The Commission may implement temporary rates to take effect pending investigation and consideration of a request to permanently increase rates if it finds such an increase is in the public interest and determines that such rates will yield "a reasonable return on the cost of the property of the utility used and useful in the public service . . .". RSA 378:27 Based on the testimony of NHEC and Staff, we find the proposed temporary rate increase just and reasonable. We reach this conclusion subject to the qualification that this finding is made prior to a thorough investigation of the requested rate increase and is based on the reports of the utility currently on file with the Commission. With regard to the proposed effective date for implementation of the proposed increase in rates, we believe the methodology for effectuating a temporary rate increase as set forth in the testimony of the OCA and adopted in the Settlement serves the public interest. This methodology better provides for rate continuity. Thus, we will approve the Settlement. Based upon the foregoing, it is hereby ORDERED, that the New Hampshire Electric Cooperative, Inc.'s request to increase its revenues by $4.146 million pursuant to RSA 378:27 on a temporary basis in the manner set forth in the Settlement is GRANTED; and it is FURTHER ORDERED, that this rate increase shall be implemented proportionately across all rate classes; and it is FURTHER ORDERED, that the procedural schedule set forth in the Order of Notice is adopted to govern the Commission's investigation into the proposed rate increase. By order of the Public Utilities Commission of New Hampshire this fifth day of October, 1998. Douglas L. Patch Bruce B. Ellsworth Susan S. Geiger Chairman Commissioner Commissioner Attested by: Thomas B. Getz Executive Director and Secretary