DR 96-150
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
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.
I. BACKGROUND AND PROCEDURAL HISTORY
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
decisions:
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
approach.
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
bench:
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
standard.
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
issue.
II. COMMISSION ANALYSIS
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
Questions
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,
concurring.
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
decision.
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
matters.
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
Orders
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
Relief
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