DR 96-150
                 Interim Stranded Cost Charges
             Order Setting Procedural Schedule and 
                   Addressing Motion to Stay
                   O R D E R   N O.   23,137
                        February 4, 1999
       This order sets a procedural schedule for further
     hearings on the motion by Public Service Company of New Hampshire
     (PSNH) for rehearing of Orders Nos. 22,512 and 22,514, which set
     PSNH's interim stranded cost (ISC) charges.  The Commission also
     addresses PSNH's motion to stay these rehearing proceedings which
     asserts, inter alia, that the Commission has been enjoined from
     completing the rehearings by the United States District Court for
     the District of New Hampshire.  As explained in this order, the
     Commission denies PSNH's motion, but establishes a procedural
     schedule that allows PSNH to seek clarification from the federal
     court on the scope of the preliminary injunction well before the
     hearings are scheduled to begin. 
       A full understanding of the issues raised by PSNH's
     motion to stay requires a somewhat detailed review of the history
     of this proceeding and the related federal court case to date.
              A.   The Restructuring Plan and District Court's
            Temporary Restraining Order 
       On February 28, 1997, the Commission issued a Statewide
     Electric Utility Restructuring Plan (the Plan) and five
     utility-specific interim stranded cost orders (ISC orders)
     pursuant to RSA 374-F.  The Plan established generic
     restructuring policies, Order No. 22,875 at 8, and the Legal
     Analysis accompanying the Plan addressed generic legal claims
     advanced by non-PSNH utilities, as well as specific arguments
     advanced by PSNH in support of its request for ISC charges that
     reflect full stranded cost recovery.  See Plan, Legal Analysis,
     pp. 57-92.  For example, the Commission rejected the assertion
     that New Hampshire's electric utilities are constitutionally
     protected from all losses that result from competition.  See
     Plan, Legal Analysis at 16.  The Commission also rejected PSNH's
     claims relative to the legal and constitutional implications of
     the 1989 "Rate Agreement" and certain other events surrounding
     the PSNH bankruptcy reorganization. 
       PSNH sought and obtained a temporary restraining order
     in federal court staying Order Nos. 22,512 and 22,1514 "to the
     extent, and only to the extent, that those orders establish a
     rate setting methodology that is not designed to recover [PSNH's]
     costs of providing service and would require [PSNH] to write off
     any regulatory asset under FAS 71."  Public Service Company of
     New Hampshire v. Patch, et al., N.H. Civil Action No. 97-97-JD.,
     R.I. Civil Action No. 97-121L, Temporary Restraining Order at 1
     (March 10, 1997).  This Order was later memorialized in the
     Court's Amended Restraining Order, dated March 21, 1997.
       B.   Motions for Rehearing
       One of the parties to our docket, Enron Capital and
     Trade Resources, Inc. (Enron), sought rehearing on March 14,
     1997, regarding the Commission's methodology for determining
     PSNH's interim stranded cost charges.  Specifically, Enron
     requested that the Commission reconsider its sole reliance on the
     benchmark regional average rate approach and supplement its order
     with a cost-based methodology for setting PSNH's interim stranded
     cost charges. PSNH objected to Enron's standing to request
     rehearing on the ISC issue, argued that rehearing the ISC
     methodology would not achieve Enron's stated purpose of
     expediting restructuring, and claimed that only a stay of all
     aspects of Order Nos. 22,512 and 22,514, as those orders apply to
     PSNH, would remove the irreparable harm alleged by the Company in
     its federal claims.
       Central Vermont Electric Company (CVEC), among other
     parties, supported Enron's motion for rehearing.  By Order No.
     22,526, on March 19, 1997, the Commission approved the request
     for rehearing, and set the matter for a procedural conference. 
     Pending the resolution of the rehearing, the Commission ordered a
     stay of the restructuring orders applicable to PSNH in language
     tracking the federal District Court temporary restraining order
     then in effect.  The Commission specifically noted that the
     proceedings before the District Court called into question the
     effect on the Company of the Final Plan:
         The arguments posed by PSNH in the Federal Court
       litigation indicate that our Order has not satisfied
       the [Company's] accounting concerns.  In light of these
       developments and the arguments of Enron in its motion,
       we find that Enron has demonstrated "good reason" to
       justify rehearing on this issue pursuant to RSA 541:3. 
       Subsequently, on March 31, 1997, PSNH filed a timely
     motion for rehearing with the Commission.  On April 7, 1997, the
     Commission issued a procedural order addressing the motions for
     rehearing, Order No. 22,548.  In that Order, the Commission
     determined that further evidence was necessary to consider PSNH's
     motions for rehearing.  The Commission noted that it had, as of
     April 7, 1997, identified two issues raised by PSNH and other
     parties which warranted additional discovery and hearings.  Those
     two issues are as follows: 
         Whether the methodology utilized by the Commission in
       the Final Plan to establish PSNH's interim stranded
       costs charges requires PSNH, or any affiliated company,
       to write off any FAS 71 regulatory asset, and in turn,
       whether such accounting adjustment(s) violate(s) debt
       covenants in PSNH's credit facilities or those of any
       affiliate; and 
         Whether our decision relative to the Rate Agreement in
       Order 22,514 repudiates an enforceable obligation of
       the State, which in turn may cause violations of PSNH
       debt covenants or those of any affiliate.  
       The Commission again reiterated its stay of the ISC
     orders relative to PSNH, and further suspended them pursuant to
     RSA 541:5, the rehearing statute.  The Commission tailored the
     scope of the stay to the scope of the March 21, 1997 Order of the
     District Court, and further allowed a sufficient time after the
     issuance of any order determining the reheard issues so that
     parties could then seek their remedies in the event the rehearing
     order did not satisfy their objections to the Commission's
         Consistent with the authority granted to the Commission
       by RSA 541:5, we hereby suspend and stay those aspects
       of the Final Plan (Order No. 22,514) that are the
       subject of the above-referenced rehearing or
       clarification requests so that we may thoroughly review
       and evaluate the issues raised in such motions.  We
       wish to note that with regard to PSNH, we view this
       action as affording protections that are at least as
       extensive as those contained in the temporary
       restraining order issued by the federal court in PSNH
       v. Patch, et al., N.H. Civil Action No. 97-97-JD, R.I.
       Action CA 97-121L.  For the above-stated reason, we
       also suspend and stay the interim stranded cost orders
       relating to PSNH (Order No. 22,512), Unitil (Order No.
       22,510), GSEC (Order No. 22,511) and CVEC (Order
       No.22,509).  The suspension and stay of these orders
       will remain in effect until two weeks following the
       issuance of any order concerning outstanding requests
       for rehearing and clarification.
       Order 22,548 at 3.   After granting two continuances at
     the request of PSNH so that it could pursue mediation, the
     Commission held evidentiary hearings and accepted briefs on the
     foregoing issues during November and December of 1997.  
       C.   Transfer of Legal Questions
       On February 20, 1998, the Commission deferred ruling on
     the legal issues raised in PSNH's rehearing request and instead 
     transferred two threshold questions of law to the New Hampshire
     Supreme Court pursuant to RSA 365:20.  Essentially, the
     transferred questions sought interlocutory rulings on whether the
     Rate Agreement or RSA 362-C created private rights that conflict
     with the restructuring policies or standards for stranded cost
     recovery set forth in RSA 374-F.  The questions specifically
     invited the Court to evaluate the validity of PSNH's claim that
     the Rate Agreement and RSA 362-C created enforceable contractual
     rights against the State of New Hampshire.
       D.   Order on Rehearing (Order No. 22,875)
       On March 20, 1998, the Commission issued Order No.
     22,875.  That order resolved all outstanding rehearing requests
     except those relating to PSNH's asserted rights under the Rate
     Agreement or to PSNH's ISC charges.  Order No. 22,875 affirmed,
     clarified and modified the remainder of the Plan and explicitly
     left unresolved all rehearing requests relating to PSNH's ISC
     Order (Order No. 22,512) as well as those relating to the Plan's
     Legal Analysis (pp. 57-92) which addressed various legal
     arguments advanced by PSNH.  Although Order No. 22,875 did not
     resolve PSNH's rehearing requests, the Commission articulated how
     and when those requests would be addressed:
         The Commission will issue a separate rehearing order
       addressing PSNH's ISC charge based on the information
       presented at the rehearing and incorporating the final
       policies and decisions articulated herein, as well as
       the response of the New Hampshire Supreme Court to our
       Request for Interlocutory Rulings.  
     Order No. 22,875 at 3.  Thus, the issuance of a rehearing order
     was deferred pending receipt of a decision from the Supreme Court
     on these issues.
       The Commission also indicated that, at a minimum, the
     new ISC order for PSNH would employ a methodology designed to
     prevent the adverse financial consequences which the company had
     previously predicted: 
         The Commission's ISC order have already made some
       adjustments to the benchmark approach for equitable
       reasons.  In the case of PSNH, its initial ISC order
       reflected an adjustment.  Upon rehearing, we have
       identified the need to change the manner in which its
       ISC charges are set.  We have decided to fashion a
       cost-based ISC charge for PSNH...
     Order No. 22,875 at 47-48.  The Commission stated that its
     objective was "to avoid the accounting problems identified by
     PSNH and others during the rehearing process."  Id.  By this
     action the Commission effectively vacated its initial ISC order
     for PSNH, which utilized the regional average rate benchmark
       E.   Amended Restraining Order, June 1998     
       In its Order of March 20, 1998, the Commission directed
     all the utilities except PSNH to make compliance filings by May
     1, 1998.  PSNH, CVEC, Granite State and Unitil sought a revision
     to the Amended Restraining order in effect since March 21, 1997. 
     The transcript of the arguments before the District Court on June
     5, 1998, show that counsel for CVEC and Unitil argued to the
     Court that the Commission's requirement of a compliance filing
     would, among other things, subject the utilities to great expense
     to prepare detailed filings when the orders in question were
     still under appeal, that the implementation would result in
     trapped costs and grave damage to the companies' financial
     integrity, and further that the Commission had threatened to hold
     utility officers in contempt, and fine them, if they failed to
     make the requisite compliance filing. 
       On June 5, 1998, the Court orally granted the motion
     for the amended restraining order, noting that substantial
     constitutional issues remained to be decided in the cases before
     it, that the Restructuring Orders could be "gutted" as a result
     of the Court's disposition of those issues, and that therefore
     the implementation of the outstanding restructuring orders should
     be stayed, including the requirement of a compliance filing,
     because preparing and filing compliance plans "may be a complete
     waste of time and effort, depending on the outcome of this case." 
     Transcript at 21, lines 16-19.  The Court went on to say:
         So I want to make it abundantly clear that the
       Commission should not require the filing of compliance
       plans, and if there is any doubt about it, I am going
       to remove that doubt today.  I'm also going to make it
       clear that this injunction applies to all the
       plaintiffs, including the intervening plaintiffs [i.e.
       utilities other than PSNH].
     Id. at pp. 21-22.  The Court then noted that "the Order that is
     proposed by the plaintiffs is reasonable, and I will enter it." 
     The Court read the following text as the order granted from the
         The motion of the plaintiffs for an amended preliminary
       injunction is granted as follows:  Pending further
       order of the Court following a trial on the
       merits...defendants are enjoined from requiring any
       plaintiff, including plaintiff intervenors, to
       implement New Hampshire revised statutes annotated,
       Section 374-F, in accordance with the New Hampshire
       Public Utilities Commission's Orders issued in Electric
       Utility Restructuring Docket Number DO 96-150, or
       requiring plaintiffs to take any action under those
       orders, including the filing of compliance plans.
     Id. at 22.
       The Court on June 12, 1998, entered a written order
     substantially in the same form. 
              E.   Decision of the New Hampshire Supreme Court on
            Transferred Questions
       On December 23, 1998, the Supreme Court issued a
     decision addressing the transferred questions.  The Court first
     noted that "[t]here are circumstances in which a binding contract
     can exist between a private party and the government involving
     subject matter otherwise regulated by the government."  In re New
     Hampshire Public Utilities Commission Statewide Electric Utility
     Restructuring Plan, No. 98-114, Slip Op. at 5 (December 23,
     1998).  The Court stated, however, that the language of the Rate
     Agreement was "arguably ambiguous" and that 
         the proper resolution of the rate agreement's
       contractual character and scope may well require a
       review of the facts and circumstances beyond the four
       corners of the rate agreement itself.  
     Id. at 6.  Thus, the Court concluded that it was unable to
     determine whether the Rate Agreement created a binding contract
     because the record was "incomplete" for that purpose.  Id. at
     5-6.  Accordingly, the case was remanded to the Commission.  Id.
     at 10.   
       The Court also provided guidance to the Commission on
     the interplay between RSA 362-C and RSA 374-F for purposes of
     determining the extent to which PSNH is allowed to recover
     stranded costs.  According to the Court, 
         [T]he PUC must consider State obligations under RSA
       Chapter 362-C and the rate agreement, if any, when
       determining whether, and to what extent, PSNH receives
       an award of stranded costs...the [Commission] can award
       PSNH only those stranded costs, including deferred
       assets under the rate agreement, that comport with the
       standard mandated by the legislature in RSA 374-F:4, V
       and VI.  Accordingly, PSNH's ability to recover the
       deferred assets under the rate agreement through
       stranded cost recovery charge [sic] is limited by that
     Id. at 8.  The Court explained further,
         Reading the enabling statute and the restructuring
       statute as consistent in the prescribed manner permits
       the State to attempt to honor its obligation, if any,
       under RSA chapter 362-C and the rate agreement while
       still effectuating the legislature's intent to provide
       electric rate relief to New Hampshire citizens through
       the deregulation of generation services.  
     Id. at 8-9. 
       G.   Further Hearings on Motion for Rehearing
       After receipt of the Supreme Court's decision on the
     transferred questions, on January 11, 1999, the Commission issued
     Order No. 23,101 which, inter alia, initiated additional
     proceedings to complete the process of addressing PSNH's
     rehearing requests.  The Commission noted that the primary
     purpose of the additional hearings was to allow PSNH and other
     parties to update and supplement their prior testimony, but that
     PSNH and other parties would also be allowed to submit testimony
     and evidence specifically addressing the deficiencies in the
     record noted by the Court.  The Commission also noted that the
     issues to be decided in the rehearing proceeding remained the
     same as defined in Order No. 22,548 and Order No. 22,766, and
     that Order No. 22,512 (setting PSNH's ISC charge) and all
     portions of the Legal Analysis pertaining to PSNH, remained
     suspended and stayed pursuant to RSA 541:5.  
       H.   Motion to Stay
       On January 18, 1999, PSNH filed a motion to stay the
     rehearing proceedings.  PSNH's motion argues that:  the New
     Hampshire Supreme Court's decision on the interlocutory questions
     deferred these issues to the federal court; it would be
     inappropriate for the Commission to further adjudicate these
     issues since it "has previously made up its mind on these
     issues"; the District Court's preliminary injunction expressly
     restrains the Commission from requiring PSNH to participate in
     these proceedings; the Commission should stay the proceedings
     until the District Court has an opportunity to rule on the Rate
     Agreement issues; and, finally, the granting of this motion will
     not lead to any additional delay.
       Also, during the prehearing conference various parties
     (other than PSNH) proposed a procedural schedule to complete the
     rehearing process.  PSNH objected to this aspect of the
     prehearing conference - taking comment on a possible schedule for
     further hearings - on the ground that it violated the preliminary
     injunction entered by the United States District Court for the
     District of New Hampshire on June 12, 1998.    
       I.   Positions of Other Parties
       Various parties presented argument on PSNH's motion
     during the January 20, 1999 prehearing conference.  The following
     parties oppose PSNH's motion:  Representative Jeb Bradley,
     Freedom Partners, L.L.C. (Freedom), Cabletron Systems, Inc.
     (Cabletron), Retail Merchants Association (RMA), EnerDev Inc.,
     Granite State Taxpayers Association, City of Manchester
     (Manchester), Campaign for Ratepayers' Rights, Enron Capital and
     Trade Resources, Inc., and the Governor's Office of Energy and
     Community Services (ECS).  A number of these parties specifically
     refuted PSNH's contention that the United States District Court's
     injunction bars any further hearings.   
       Representative Bradley states that a stay of the
     rehearings "does not...enhance the prospects of settlement with
     [PSNH]".  Tr. 11:23.  Freedom asserts that the rehearing process
     is "an opportunity and not a requirement."  Tr. 15:1.   RMA
     observes that PSNH is not being required to unbundle its rates,
     open its service territory or make a compliance filing; rather,
     it is being asked only to make available information relevant to
     the Rate Agreement.  Tr. 19:3.  RMA further argues that the
     Commission is fulfilling a fact-finding function pursuant to the
     Supreme Court's order and is not requiring an implementation of
     RSA 374-F or any order which has been stayed by the federal
     court.  Tr. 18:20.
       Cabletron asserts that two documents it obtained from
     the Commission's public file (marked as Exhibits R-64 and R-65)
     suggest that, in 1989, Northeast Utilities (NU) and its attorneys
     "knew precisely what they needed to do to create a binding
     contractual obligation on the part of the State," and the State
     rejected NU's request.  According to Cabletron, these documents
     demonstrate how compelling the need is for the Commission to move
     forward with the rehearings.   Id. at 29.  
       Manchester states that the proceedings announced in
     Order No. 23,101 "are very much consistent with how the Federal
     Court wanted [the Commission] to proceed."  Id. at 40.  ECS
     suggests that the Commission "inform the Federal Court of the
     [rehearing] schedule, without asking permission," which it does
     not think the Commission needs.  Id. at 42.    
       The Office of Consumer Advocate (OCA) argues that
     additional proceedings are unnecessary at this time because the
     Commission has a sufficient record from which it can make factual
     findings, which could then be sent to the New Hampshire Supreme
     Court.  According to the OCA, the Supreme Court referred to the
     conflicting testimony presented to the Commission in DO 96-150,
     and that it lacked only the Commission's findings of fact on that
              A.   PSNH's Motion to Stay
       We first consider PSNH's motion to stay the rehearing
     proceedings.  As noted above, parties opposing PSNH's motion
     offered their objections as part of a lengthy oral argument that
     occurred during the prehearing conference.  
       As a threshold consideration, we note that the
     rehearing proceedings announced in Order No. 23,101 are aimed at
     addressing PSNH's pending motion for rehearing filed on March 31,
     1998.  At the Prehearing Conference, the Company expressly stated
     that it had not withdrawn its motion asking the Commission to
     rehear Order Nos. 22,512 and 22,514.  Tr. 54:14. PSNH has thus
     asked that we "stay" the same proceedings which we believe are
     necessary to fairly evaluate its request for relief.  PSNH
     elected to seek a stay instead of simply withdrawing its pending
     motion for rehearing, which would have been consistent with its
     view that the Commission lacks jurisdiction to complete the
     rehearing process.   
       PSNH essentially makes three arguments to support its 
     request that we stay the rehearing proceedings for an
     indeterminate period of time.  First, the Company argues that the
     rehearing proceedings are "contrary" to the New Hampshire Supreme
     Court's decision on the questions of law transferred by the
     Commission pursuant to RSA 365:20.  See, In re New Hampshire
     Public Utilities Commission Statewide Electric Restructuring
     Plan, supra.  According to PSNH, the Court explicitly "deferred"
     consideration of the Rate Agreement and related constitutional
     issues to the United States District Court.  Motion at 3.  During
     oral argument, several parties differed with PSNH's analysis. 
                        1.   Role of the Commission in Considering Reheard
       We disagree with PSNH's view that the New Hampshire
     Supreme Court has expressly or implicitly designated the federal
     court as the primary forum for adjudicating the issues which are
     the subject of the pending rehearing proceeding.  The Commission
     must reach specific conclusions about the Rate Agreement and
     issue a new stranded cost charge for PSNH under the statutory
     guidelines articulated by the Supreme Court.  The federal court
     considers only the constitutionality of the order, looking only
     at those issues actually implicated by the order.  Since that
     order  - the subject of this very proceeding - has not yet been
     issued, it is impossible to know what, if any, aspects of the
     Rate Agreement may be implicated.  
       The issues before the federal court are thus not
     coextensive with the issues before the Commission.  According to
     the Supreme Court, the Commission must determine whether the Rate
     Agreement and RSA 362-C create any State obligations, and, if so,
     to what extent those obligations must be recovered through
     stranded cost charges under RSA 374-F's standard of "equitable,
     appropriate, and balanced,...in the public interest,
     and...substantially consistent with these interdependent
     principles."  Slip Op. at 6. The Supreme Court also found that
     the nature and scope of any contractual obligations created by
     the Rate Agreement and RSA 362-C depend upon findings of the
     parties' intent that could not be decided upon the incomplete
     record.  Slip Op. at 4.  The Court also indicated that extrinsic
     evidence must be considered on this issue. 
       Although the Supreme Court did not "direct" the
     Commission to hold additional hearings, it most certainly
     contemplated that such proceedings would occur, stating that
     "[w]e answer the questions to the extent possible at this
     juncture to offer guidance to the PUC in fulfilling its statutory
     obligations under RSA chapter 374-F."  Slip Op. at 5.  Such
     guidance would have been unnecessary if the Commission had no
     need to make decisions on whether the Rate Agreement and RSA
     362-C created obligations relevant to PSNH's stranded cost
     charges.  Consequently, in order to satisfy its statutory
     obligations under RSA 374-F, the Commission must make findings
     based on the facts and circumstances of the Rate Agreement, and
     apply the appropriate standards for determining ISCs.
                        2.   Role of the Federal Court
       With respect to the role of the federal court, the
     Supreme Court merely recognized that the constitutionality of the
     Commission's Plan is before the federal court and that whether
     the Rate Agreement constitutes a binding contract is a component
     of PSNH's claim.  Slip Op. at 5.  The overall claim before the
     federal court is that a stranded cost award providing PSNH less
     than it alleges it is entitled to under the Rate Agreement is
     unconstitutional either as a "taking" or a violation of the
     Contracts Clause.  Slip Op. at 6.  Under either theory, however,
     the federal court will need to consider the specific application
     of an actual stranded cost order.  Presently, there is no
     stranded cost order applicable to PSNH for the federal court to
     evaluate.  The initial question thus remains before the
     Commission, and was, in no sense, transferred to the federal
     court by the Supreme Court. 
                        3.   Whether the Commissioners Have Prejudged
                 PSNH's Rehearing
       Next, PSNH alleges that it would be "inappropriate" for
     the Commission to address PSNH's rehearing requests relating to
     the Rate Agreement because our prior decisions "show that the
     Commission has previously made up its mind on these issues." 
     Motion at 3.  The implication of PSNH's argument is that this
     Commission is unable to preside any further in this matter and
     cannot render an unbiased determination based solely upon the
     facts and law before it.  We reject this notion out of hand.
       Administrative agencies are routinely called upon to
     reconsider, in whole or in part, their prior decisions.  See, RSA
     541:3.  PSNH's argument completely ignores the express language
     of RSA 365:28 which provides that "[a]t any time after the making
     and entry thereof, the commission may, after notice and hearing,
     alter, amend, suspend, annul, set aside or otherwise modify any
     order made by it."  (Emphasis supplied.)  The New Hampshire
     Supreme Court has interpreted this provision broadly, finding
     that the Commission's "statutory power to reconsider and modify
     an existing order is limited only in that the modification must
     satisfy the requirements of due process and be legally correct." 
     Appeal of the Consumer Advocate, 134 N.H. 651, 658 (1991).  
       By enacting this statute, the Legislature has
     instructed the Commission that its exercise of jurisdiction over
     the utilities it regulates is continuous, and required that it
     have the adjudicative capacity and demeanor to adapt to changes
     in fact or law, or the presentation of reasoned argument for
     reconsideration.  The Supreme Court has clearly recognized the
     ability of an appointed official to carry out this
     responsibility, so long as the official has no pecuniary interest
     in the outcome of the case, and has no personal animus towards
     any of the parties.  Milk Dealers Association v. New Hampshire
     Milk Control Board, 107 N.H. 335, 339 (1966).
       The Legislature has mandated that a Commissioner must
     "disqualify himself from proceedings in which his impartiality
     might reasonably be questioned."  RSA 363:12, VII. (Emphasis
     supplied.)  "Whether an appearance of impropriety exists is
     determined under an objective standard, i.e., would a reasonable
     person, not the judge [her]self, question the impartiality of the
     court."  Kathleen Taylor-Boren v. Andrew L. Isaac, Esq., Nos.
     96-500, 96-816, Slip Op. at 8 (December 30, 1998).  "It is clear,
     however, that 'impartiality' must be defined in the context of
     the commission's policy-making role."  Appeal of Seacoast
     Anti-Pollution League, 125 N.H. at 476, Justice Brock,
       The only evidence of impartiality cited by PSNH is the
     Commission's previous determinations on these questions.  It is
     contrary to reason, however, to hold that such initial decisions 
     - and no more - constitute a cause for disqualification of the
     Commission from reconsidering its earlier orders.  Such a
     conclusion would render the provisions of RSA 365:28 and 541:3
     for rehearing and altering orders meaningless, a result
     completely contrary to the basic premise that statutes are to be
     construed to effectuate their evident purpose.  See, Quality
     Carpets v. Carter, 133 N.H. 887 (1991).  We would be derelict in
     our oath of office were we to accept PSNH's view that once we
     deliberate and rule upon an issue we cannot fairly reconsider our
       The fact that the Commission granted PSNH's rehearing
     request and has already reconsidered and modified many provisions
     of our initial order in the docket provides ample evidence of the
     Commission's objectivity.  RSA 541:3 permits the Commission to
     grant a motion for rehearing only upon a showing of "good
     reason."  We concluded in our earlier orders that PSNH has met
     this standard, a conclusion we would not have reached if, as PSNH
     asserts, our minds were closed to reconsider our orders.
       In addition, as was pointed out during the January 20,
     1999 hearing, a new Commissioner - Commissioner Nancy Brockway - 
     has been appointed since the initial orders were issued.  Company
     Counsel agreed that Commissioner Brockway has not taken any
     position on the issues before the Commission.  Tr. 61:8.  As the
     Commission is a body which attempts to reach its decisions by
     consensus, the addition of a new Commissioner changes the
     Commission's deliberative dynamics.  Since Commissioner
     Brockway's appointment, the ISC and Rate Agreement issues have
     not been deliberated.  Indeed, the Commission is attempting, by
     this very rehearing process, to give these matters as fresh a
     look as possible.
       The only decisions the Commission has made so far
     regarding PSNH's request for rehearing is to grant it and, by
     committing to use a cost-based methodology to arrive at a new ISC
     charge, we effectively vacated our earlier ISC order.  Though the
     Commission had previously granted rehearing with respect to its
     decision in Order No. 22,514 relative to the Rate Agreement, the
     Legal Analysis of that Order, particularly with respect to the
     character of the Rate Agreement, was stayed and suspended, albeit
     not expressly vacated.  
       As discussed above, the Supreme Court's opinion in In
     Re New Hampshire, supra, noted that "there are circumstances in
     which a binding contract can exist between a private party and
     the government involving subject matter otherwise regulated by
     the government" (Slip Op. at 5), and found that review of the
     Rate Agreement itself as well as the facts and circumstances
     surrounding its creation must be made in order to determine the
     nature and scope of the contractual obligation it may have
     created.  In view of these holdings, and despite the fact that
     they do not reach to the entirety of our Legal Analysis, we have
     decided to vacate our previous Legal Analysis and conclusions
     with respect to the Rate Agreement.  Specifically, the findings
     and conclusions on pages 58-82 of the Plan's Legal Analysis are
     hereby vacated.  
       Moreover, to the extent there has been any question,
     we reaffirm our decision to change the manner in which the ISC
     charge is set for PSNH and expressly state our intention to
     reconsider the adoption of the regional average rate as the
     generic benchmark approach for PSNH.  We invite parties to
     provide comment and testimony on this point.  Therefore, all
     decisions pertaining to the Rate Agreement and ISC - both factual
     and legal - are now expressly vacated, and these issues are
     unambiguously open and undecided. 
       We intend to evaluate PSNH's rehearing request and set
     its ISC charges from a fresh perspective, based on all the
     evidence, testimony and argument in the record.  Thus, there is
     no need for parties to resubmit testimony and exhibits or reargue
     positions in briefs previously tendered.  We recognize the
     efforts all parties have made thus far, and will give due
     consideration to all of this material.  At this juncture,
     however, we have determined that it is appropriate to allow
     parties an opportunity to update and supplement their prior
     testimony, submit additional evidence and have an opportunity for
     cross-examination on such new material before we deliberate these
       PSNH argued that allowing additional evidence at this
     point is unnecessary because, pursuant to previous rehearing
     orders, PSNH and other parties have already provided additional
     evidence concerning the enforceability of the Rate Agreement. 
     Tr. 8:23.  The Commission is quite aware of the state of the
     record, and do not ask - and will not allow - parties to burden
     this proceeding or each other by simply resubmitting what has
     previously been provided.  Cabletron's attorney, however,
     proffered documents that are not part of the current record and
     that appear to pertain to certain aspects of the question of
     whether the Rate Agreement is a contract.  See, Exhibits R-64 and
     R-65.  Other evidence may be adduced bearing on whether a
     contract was formed, to what effect, and between whom, as a
     result of the Rate Agreement transactions.  We have not yet heard
     from PSNH to explain these exhibits and whether they should be
     accorded any significance.  We find that these documents support
     our determination that it is necessary to reopen the record, and
     we now admit them into evidence for the limited purpose of
     demonstrating that there are further facts that need to be
     brought to light to understand the Rate Agreement.  
              4.   Effect of Outstanding Federal Court Injunction
       PSNH's final and most serious allegation is that the
     United States District Court has enjoined the Commission from
     completing the rehearing proceeding and that any attempt to do so
     would violate the amended preliminary injunction issued by the
     District Court last June.  If the Commission were in doubt about
     the scope of the Court's injunction, we would not proceed.  But
     we do not share PSNH's view that the preliminary injunction
     enjoins the Commission from completing the rehearing process. 
     Rather, the manifest purpose of the Court's injunction is to
     preclude us from requiring PSNH (or any plaintiff-intervenor) to
     implement RSA 374-F or any of our prior orders interpreting that
     law.  We do not seek to undertake any of those prohibited
     activities: the rehearing will not require PSNH to take any
     transitional step towards implementation of the Commission's
     Restructuring Plan, such as the submission of a compliance
     filing.  Most telling, however, is that PSNH has not alleged that
     the contemplated hearings and subsequent issuance of a new ISC
     order would place a burden on the Company.
       We expressly do not seek to delay the rehearing process
     and thereby forestall the District Court's consideration of all
     the issues before it.  As discussed above, the Commission's
     progress on the rehearing was dependent upon receipt of the New
     Hampshire Supreme Court's rulings on the interlocutory
     transferred questions.  Having received that Court's ruling, the
     Commission is now proceeding as expeditiously as we can,
     consistent with due process.
       Our objective in this rehearing proceeding is to
     reexamine PSNH's legal claims, and to fashion a new ISC order
     that complies with the statutory requirements as interpreted by
     the New Hampshire Supreme Court's recent decision and averts the
     financial consequences which PSNH asserted would result from the
     initial ISC order. 
       This objective conforms with the District Court's
     previous recognition that judicial economy and "the notion of
     wise judicial administration dictates that the Court should offer
     the Commission one last chance to hash out its differences with
     PSNH regarding the ratemaking methodology and the effect of the
     Rate Agreement."  PSNH v. Patch, 962 F. Supp. at 243. Under the
     earlier Temporary Restraining Order, the District Court expressly
     understood that the Commission would, and should, complete its
     rehearing process.  We believe that the considerations that
     prompted the Court to allow the rehearing to proceed remain
     relevant, and our duties were not altered by the Amended
     Restraining Order issued in June, 1998.
       The effort to complete the rehearing process is
     intended to eliminate the "lingering uncertainties about the
     ratemaking methodology" that concerned the District Court.  Id.,
     at 244.  It is not intended to force PSNH to start the transition
     to competition any earlier than is consistent with applicable law
     and judicial orders.  We wholly agree with the Federal Court that
     it would be burdensome and wasteful to force the Company to begin
     "a costly transitional process at a time when a key aspect of the
     regulatory landscape -- as well as the legal validity of this
     entire landscape -- remains unclear."  Id.  Rather, we seek to
     provide our determination of the issues raised by PSNH's motion
     in light of the guidance of the several Courts, federal and
     state, that have opined on certain of the issues raised by that
     motion, and in this fashion permit the Federal Court, should it
     continue to trial on these matters, to "encompass all the
     issues raised in the complaint."  Id., at 243.
       Finally, we once again note that the Commission has a
     statutory responsibility to implement RSA 374-F as soon as
     possible.  In the event that the District Court ultimately
     agrees with the Commission and finds that PSNH's constitutional
     claims (including its Contract Clause claim) are jurisdictionally
     barred, a stay of this rehearing would only result in additional
     delays.  Even if the Court ultimately concludes otherwise, we do
     not anticipate that the Court will find it economical or
     appropriate to adjudicate the constitutionality of orders that we
     no longer seek to enforce.  
              5.   Conclusion: Denial of Motion to Stay; Time to Seek
       Based on these considerations, we believe that the most
     appropriate and efficient course of action is for us to set an
     expedited procedural schedule, complete PSNH's rehearings, and to
     issue a final order setting PSNH's ISC as soon as possible.  We
     therefore reject PSNH's last argument that a stay is warranted
     under the Commission's rules of practice.  See Motion, paragraph
     10, at 6, citing N.H. Code Admin. Rule Puc Rule 203.04(b).  
       Despite these conclusions, PSNH raises the question of
     whether we might "trespass" on the District Court's preliminary
     injunction by completing the rehearing process.  However
     unwarranted that conclusion may be, as before we will build
     sufficient time into the procedural schedule, should PSNH wish to
     seek clarification from the Court as to the scope of its June
     1998 injunction.
              B.   Procedural Schedule for Completion of Rehearing
            For the foregoing reasons, we will set the procedural
     schedule in this case as follows:        
       Data requests - February 19, 1999
       Responses to data requests - February 26, 1999
       Intervenor testimony - March 5, 1999
       PSNH Reply testimony - March 12, 1999
       Hearings - March 16-18, 1999
            In setting the procedural schedule in this manner,
     we have essentially suspended the rehearing process for a
     two-week period to accommodate PSNH's request.  Should PSNH seek
     clarification from the District Court, we would support any
     request for a speedy hearing on any such motion.  We request that
     PSNH report the status of its efforts by February 16, 1999 in the
     form of a letter to the Commission's Executive Director with
     copies to all parties on the rehearing service list.  In any
     event, we anticipate issuing another order if for any reason the
     procedural order set forth above becomes unattainable.
       Based upon the foregoing, it is hereby
       ORDERED, that PSNH's Motion to Stay is DENIED as set
     forth herein; and it is 
       FURTHER ORDERED, that Order No. 22,512 and pages 58-82
     of the Legal Analysis attached to the Commission's Final Plan
     (Order No. 22,514) are hereby vacated; and it is
       FURTHER ORDERED, that the procedural schedule set forth
     in this order shall apply to these proceedings until the
     Commission orders otherwise.
       By order of the Public Utilities Commission of New
     Hampshire this fourth day of February, 1999.
           Douglas L. Patch       Susan S. Geiger     Nancy Brockway
               Chairman           Commissioner          Commissioner
     Attested by:
     Thomas B. Getz
     Executive Director and Secretary