DR 98-012
                 Granite State Electric Company
          Retail Restructuring:  Offer of Settlement  
     Order Approving Interim Low Income Assistance Program 
                    O R D E R   N O.  23,102
                        January 11, 1999
       APPEARANCES:  Carlos Gavilondo, Esq., for Granite State
     Electric Company; Wynn E. Arnold, Esq., Asst. Attorney General,
     for the Governor's Office of Energy and Community Services; Alan
     Linder, Esq., for N.H. Legal Assistance; Kenneth Traum for the
     Office of Consumer Advocate; and Robert J. Frank, Esq., for the
     Staff of the New Hampshire Public Utilities Commission.
       This Order approves an Interim Low Income Assistance
     Program (Interim Program) for retail customers of Granite State
     Electric Company (GSEC).  The Interim Program will provide rate
     discounts of approximately 25% to eligible low income customers
     of GSEC and will remain in place until the Commission approves a
     Statewide low income assistance program. 
       In Order No. 23,041 (October 7, 1998), the Commission 
     approved, with certain conditions, a settlement proposal relating
     to GSEC's compliance obligations under the State's electric
     utility restructuring law, RSA 374-F.  One condition imposed by
     the Commission required GSEC to propose an "interim" low income
     assistance program to remain effective until the Commission
     implements a Statewide program.  See, Order No. 23,041 at 63.  
       On November 2, 1998, GSEC filed its proposed Interim
     Program with supporting testimony and exhibits.  The Commission
     Staff filed testimony on December 4, 1998.  On December 7, 1998,
     the Commission held a hearing to address GSEC's filing and the
     issues raised by Staff.  
       A.   GSEC'S Proposed Interim Program
       GSEC states that the primary objective of the Interim
     Program is to provide low income customers with rate relief as
     soon as possible and with minimal administrative burden. 
     According to GSEC, it is inappropriate to develop and implement a
     complex administrative infrastructure for a program that will be
     temporary.  GSEC also contends that the Interim Program should be
     self-sustaining and fully reconciling; in other words, the costs
     of the Interim program should be paid solely from collections
     under the Systems Benefit Charge, and any over- or under-
     collections should be reflected in the Systems Benefit Charge for
     the subsequent period. 
       GSEC's original Interim Program proposal was designed
     to reduce the total bills for eligible customers by 25% through
     discounted distribution rates.  However, GSEC modified its
     proposal during the hearing to address issues raised in Staff's
     testimony such that eligible customers would receive discounted
     customer charges (in addition to discounted distribution rates)
     to produce overall bill discounts at the 25% level.
       GSEC asserts that a 25% overall discount "will provide
     [GSEC's] participating low income customers with a meaningful
     level of rate relief...and also appears supported by empirical
     data from low income programs offered by [GSEC's] affiliates in
     Massachusetts and Rhode Island."  Exhibit 59 at 18.  In addition,
     GSEC notes that 25% is within the range of discounts recommended
     by the Low Income Working Group.  In response to questions from
     the Commission, GSEC stated that approval of the interim program
     would not make implementation of the burden-based program
     approved in Docket No. 96-150 more difficult.
       B.   Staff
       Prior to the hearing, Staff filed direct testimony of
     Tracy Guyette, Staff Economist.  According to Ms. Guyette, GSEC's
     original proposal was deficient in several respects.  She argued
     that GSEC should reduce customer charges as a means of
     discounting bills rather than relying exclusively on discounted
     distribution charges.  GSEC's original proposal would create an
     incentive on the part of customers to increase electricity
     consumption because "the percent discount off the total bill
     increases with consumption."  Exhibit 69 at 2. 
       Ms. Guyette also contended that GSEC's proposal would
     create a "negative charge" or credit for consumption with respect
     to at least one distribution rate schedule, a result which she
     characterized as "inappropriate rate-making.".  Id.
       Ms. Guyette further recommended that GSEC should not
     discount the first 250 kWh block of Residential Rate D
     distribution rates because that block of usage is already
     discounted through lifeline rate design.  Finally, Ms. Guyette
     recommended that GSEC should be required to file monthly
     reconciliation reports which track spending and recovery of the
     system benefit charge.
       We believe that GSEC's Interim Program (as amended to
     address Staff's concerns) is reasonable and consistent with the
     public good and, accordingly, we approve the Program without
     condition.  GSEC is authorized to reduce its systems benefit
     charge and make the other necessary tariff adjustments to
     implement the Interim Program.  Consistent with Staff's
     recommendation, GSEC is also directed to submit monthly reports
     that track spending and revenues associated with the systems
     benefit charge.   
       Based upon the foregoing, it is hereby
       ORDERED, that Granite State Electric Company's Interim
     Low Income Assistance Program is APPROVED as set forth herein.
       By order of the Public Utilities Commission of New
     Hampshire this eleventh day of January, 1999.
           Douglas L. Patch       Susan S. Geiger     Nancy Brockway
               Chairman           Commissioner          Commissioner
     Attested by:
     Thomas B. Getz
     Executive Director and Secretary