DE 98-199
                    Northern Utilities, Inc.
           Petition for Approval of Sale of Property
              Order Approving Procedural Schedule
                    O R D E R   N O.  23,107
                        January 12, 1999
       APPEARANCES: LeBoeuf, Lamb, Greene & MacRae by Susan L.
     Geiser, Esq. and Paul B. Dexter, for Northern Utilities, Inc.;
     Kenneth Traum for the Office of the Consumer Advocate; and, Larry
     S. Eckhaus, Esq., for the Staff of the New Hampshire Public
     Utilities Commission.
       On November 18, 1998, Northern Utilities, Inc.
     (Northern or Company) filed a Petition for Approval of Sale of
     Property, pursuant to RSA 374:30, to its affiliate Granite State
     Transmission, Inc. (Granite), both wholly-owned subsidiaries of
     Bay State Gas Company (Bay State).  The property in question is
     the Gosling Road Lateral (GRL), an existing 5,324 foot lateral of
     8 and 12 inch pipe extending from a connection with Granite along
     Gosling Road in Newington to the proposed site of Granite's 
     proposed interconnection with the joint facilities of Portland
     Natural Gas Transmission System (PNGTS)/Maritimes and Northeast
     Pipeline LLC (Maritimes). 
       Currently, Northern receives gas transported via the
     Portland Pipe Line (PPL) to Granite.  Northern's contract with
     PPL expires April 30, 1999. Northern's gas supply and
     transportation capacity on the leased PPL pipeline  will be
     replaced by PNGTS/Maritimes.  Northern proposes to sell the GRL
     to Granite at its net book value at date of transfer,
     approximately $372,035.  Northern maintains that the proposed
     sale is the least expensive and environmentally preferable plan
     to link Granite with PNGTS/Maritimes' Newington interconnection
     because the distance between Granite and the site of the
     interconnection is approximately one mile in a densely congested
       Due to the imminent completion of the PNGTS pipeline,
     the Company's request for expedited treatment and in anticipation
     of the Technical Session, Staff promulgated a series of
     interrogatories intended to elicit additional information
     regarding the proposal and met informally with the Company on
     December 4, 1998.
       At the duly noticed Prehearing Conference on December
     21, 1998, the Office of the Consumer Advocate (OCA) appeared on
     behalf of residential customers pursuant to RSA 363:28 II.
     Affidavits of Publication were duly filed and the Newington Town
     Clerk was notified. In accordance with the Order of Notice, the
     parties and Staff provided preliminary statements of their
          A. Northern Utilities, Inc.
       As described in its Petition, Northern's proposal
     involves a transfer of pipe from Northern to Granite to allow
     Northern to receive its PNGTS volumes into its system in the most
     efficient manner possible, i.e., via Granite which has more than
     35 delivery points on Northern's system.  The economic and
     environmental consequences are the most significant reasons for
     making this proposal.  The Company questioned the applicability
     of RSA 366:3 to this transaction or the need to do so.
          B. OCA
       The OCA has no final position, but raised certain
     questions:  Would it be less expensive for Northern to take gas
     directly from PNGTS rather than Granite?  Is the opportunity for
     bypass greater?  Is the transfer price appropriate?  Are there 
     safety implications?  Should Northern acquire Granite? and, Is
     there a potential for double recovery via the CGA and base rates
     due to potential timing differences between filings at the FERC
     and at the Commission?
          C. Staff
       According to Staff, the filing raises numerous issues
     including: the relationship of this proceeding to the related
     proceedings before the Federal Energy Regulatory Commission
     (FERC) and the Maine Public Utilities Commission (MPUC); the
     applicability of RSA 366:3; the costs and environmental
     considerations of alternatives to the proposed sale, including
     Northern filing for a limited FERC certificate to serve as an
     interstate pipeline; treatment of Northern customers connected to
     the GRL; the risk of bypass along the GRL if that segment becomes
     an interstate pipeline; the status of the PNGTS and Maritimes
     pipeline projects; the appropriateness of net book value as the
     sale price of the GRL; the costs avoided by Granite and PNGTS as
     a result of approval of this petition; the effect the sale will
     have on Northern, Northern's customers in New Hampshire, Granite,
     Bay State, present transportation customers, and transportation
     service in the present and in a full or partially unbundled
     environment; the future relationship of Northern and Granite;
     whether the proposed interconnection is the best link from both a
     cost and safety perspective; Northern's plans regarding the PSNH
     Newington metering facilities installed in accordance with DR
     91-095; how safety issues along the GRL will be addressed; and,
     whether granting the proposed petition would be for the public
       At a Technical Session subsequent to the Prehearing
     Conference, the parties and Staff confirmed the procedural
     schedule contained in the Order of Notice, and discussed the
     content of the testimony to be filed by the Company on December
     23, 1998 to address the issues described above.
               Staff maintains that this proceeding should be governed
     by both RSA 374:30 and RSA 366:3.  RSA 373:30 requires Commission
     approval for, inter alia, the transfer of any works or system. 
     The last sentence of RSA 366:3 provides that:
               The commission may also require a public utility to file in
          such form as the commission may require full information
          with respect to any purchase from or sale to an affiliate,
          whether or not made in pursuance of a continuing contract or
     Although the preceding sentence of RSA 366:3 refers to certain
     kinds of services, the above sentence does not.  Northern did not
     believe that the Commission had ordered it to file anything
     pursuant to RSA 366:3, therefore, it had not done so.  Northern
     recognized, however, that it is within the Commission's
     discretion to order it to do so. (Response TDR-2)
               We accept the Staff's contention that this proceeding
     should go forward under both RSA 374:30 and RSA 366:3.  Although
     the standard of review is the same under both statutes, given the
     affiliate relationship between Northern and Granite pursuant to
     RSA 366:1, II and that the proposed transaction is a purchase and
     sale between affiliates, we believe both statutes are applicable. 
               We also reaffirm the procedural schedule proposed in
     the Order of Notice to be reasonable and just.
               Based upon the foregoing, it is hereby
               ORDERED, this proceeding shall proceed under both RSA
     366:3, with investigation pursuant to RSA 366:5, and 374:30; and
     it is 
               FURTHER ORDERED, that the procedural schedule contained
     in the Order of Notice and stipulated to by the parties and Staff
     is adopted to govern our investigation in this proceeding.
               By order of the Public Utilities Commission of New
     Hampshire this twelfth day of January, 1999.
           Douglas L. Patch       Susan S. Geiger     Nancy Brockway
               Chairman           Commissioner          Commissioner
     Attested by:
     Thomas B. Getz
     Executive Director and Secretary