DR 97-188
                              DR 98-112
                      LAKES REGION WATER COMPANY
                       O R D E R   N O.  23,058
                           November 2, 1998
         On December 17, 1997, Lakes Region Water Company, Inc.
(Lakes Region or Company), a public utility consisting of nine
separate stand alone water systems serving customers in various
towns in central New Hampshire, filed with the New Hampshire
Public Utilities Commission (Commission) a petition for a
permanent increase in overall annual revenues of $66,765.  The
filing opened docket DR 97-188.  With the exception of a proposed
14.99% rate reduction at Echo Lake Woods system, the remaining
eight systems were proposed to see increases ranging from 1.27%
to 210.28%. 
         By Order No. 22,835 (January 12, 1998) the Commission
suspended the proposed rates and scheduled a prehearing
conference for February 2, 1998.  A procedural schedule for the
case was subsequently adopted by Order No. 22,852.  The Company
filed Supplemental Testimony on May 5, 1998, late in the
procedural schedule, supporting consolidation of the Company's
various stand-alone rates into a single unified rate.  After
Staff expressed concerns about the timing of the proposal and
lack of notice to customers, the Company withdrew the request for
consolidation. At the final hearing on May 28, 1998, the parties
presented a settlement agreement stipulating to a new revenue
requirement for each of the Company's stand-alone systems.  
         On June 23, 1998, the Company filed a new proposal for
consolidation based on the stipulated revenue requirements,
resulting in the opening of a separate docket (DR 98-112).   On
July 1, 1998, the Company submitted additional information
regarding the step increases.  On July 10, 1998, the Company
filed a request that the stipulated increase in DR 97-188 not be
delayed unless temporary or interim rates were granted to cover
the period of time the decision was pending.  
         On August 20, 1998, the Commission issued an Order of
Notice:  establishing a Prehearing Conference and Temporary Rate
Hearing for September 10, 1998; delaying approval of the rate
increase in DR 97-188 pending formal consideration of the rate
consolidation issue; requiring that each Lakes Region customer be
individually provided notice of the rate impacts under both
stand-alone and consolidated rates; and, requiring that the
impacts of potential future step increases related to proposed
improvements in the Company's Tamworth and Brake Hill systems be
considered at the same time.  Finally, the Commission combined
the two open dockets procedurally for consideration of temporary
rates, rate consolidation, step increases and any related
         At the September 10th hearing, testimony was heard from
Stephen P. St. Cyr representing Lakes Region Water Company.  Mr.
St. Cyr briefly stated the Company's position regarding temporary
rates and supporting consolidation of the Company's standalone
rates into a single unified rate. Both Commission Staff and Lakes
Region agreed that temporary rates at the current levels
retroactive to July 1, 1998 would be appropriate, but that any
rate consolidation at this time would not be appropriate.   In
addition, the proposed procedural schedule set forth in the
August 20, 1998 Order of Notice was discussed and modified as
agreed to by the parties.  The new procedural schedule would
eliminate discovery of Commission Staff by the Company, and
reschedule the Settlement Conference and the Hearing on the
         Our authority to set temporary rates is explicitly
authorized by RSA 328:27, conditioned on a finding that such
rates are in the public interest.  Temporary rates are
established without the extensive investigation as is required
for the determination of permanent rates. Re New England
Telephone & Telegraph Company v. State, 95 N.H. 515 (1949);
Pennichuck Water Works, Inc., 78 NH PUC 197 (1993).  The standard
for determining temporary and permanent rates requires that rates
must be sufficient to yield not less than a reasonable return on
the cost of utility property that is used and useful in the
public service less accrued depreciation.  RSA 378:38,
Pennichuck, 78 NHPUC 197, 200. 
         In the instant case the parties and Staff propose to
set current rates as temporary rates as of July 1, 1998.  In the
ongoing investigation into rate consolidation and step increases,
we find that the proposed temporary rates are consistent with the
public interest and sufficient to yield a reasonable return on
the cost of the Company's property.  The effect of the temporary
rates, pursuant to RSA 378:27, is to permit reconciliation of any
permanent rate increase retroactive to July 1, 1998.
          The Commission finds the revised Procedural Schedule
noted below to be just and reasonable.  Limited intervention is
granted to Norman and Mary VanderNoot, which was requested by
letter dated September 4, 1998.
         Based upon the foregoing, it is hereby
         ORDERED, to establish Lakes Region's current rates as
temporary rates effective with service rendered on and after July
1, 1998; and it is
         FURTHER ORDERED, that the remainder of the procedural
schedule, previously outlined in the Order of Notice, be amended 
as follows:

         Testimony by Staff and                       October  28, 1998 

         Hearing on the Merits                        November 24, 1998 
                                                10:00 A.M.

         By order of the Public Utilities Commission of New
Hampshire this second day of November, 1998.

               Douglas L. Patch     Susan S. Geiger        Nancy Brockway
                   Chairman            Commissioner         Commissioner

Attested by:

Thomas B. Getz
Executive Director and Secretary