DR 98-128
          Order Granting Temporary Rate Increase
                  O R D E R  N O.  23,151
                     February 22, 1999

       APPEARANCES: Mary Ellen Goggin, Esq. for Central Water
     Company Inc.; Robert J. Frank, Esq. for the Staff of the New
     Hampshire Public Utilities Commission.
               Central Water Company, Inc. (Central or the Company)
     serves 625 customers in Barnstead, New Hampshire.  On September
     25, 1998, Central filed with the New Hampshire Public Utilities
     Commission (Commission) proposed rate schedules which would
     increase Central's annual revenues by 32.15% and raise the annual
     average water bill of its customers from approximately $421 to
               By Order No. 23,045 the Commission suspended Central's
     proposed rate increase and scheduled a prehearing conference for
     November 13, 1998.  On the same date as the prehearing
     conference, Central filed a petition and supporting testimony for
     temporary rates.
               The Commission conducted a hearing to address Central's
     request for temporary rates on January 21, 1999.             
                    A.   Central
               Central and Staff stipulated to temporary rates that
     reflect a revenue deficiency of $50,009.  See Exhibit 3.
     Central's witness, Stephen St. Cyr, testified that Central's net
     operating income for the test year ending December 31, 1997
     amounted to $5,439.  According to Mr. St. Cyr, based on the last
     authorized rate of return of 9.54%, the Company's net operating
     income should amount to $56,932. 
               Central requested that temporary rates be effective on
     service rendered on or after December 14, 1998 given the
     cash-flow obligations incurred from the time of the filing to the
     issuance of an order in the temporary rate proceeding.      
                    B.   Locke Lake Colony Association
               Locke Lake Colony Association (the Association)
     submitted comments but did not testify during the hearing.  The
     Association states that some customers are experiencing
     difficulty paying their bills at current rates and a 20%
     temporary rate increase during the middle of winter would only
     increase that burden.  The Association urged the Commission to
     carefully scrutinize the information underlying Central's request
     before granting it.
                    C.   Staff
               Staff stipulated with Central to a revenue deficiency
     of $50,009 for purposes of establishing temporary rates.  Mr.
     Deres testified that based on information contained in Central's
     annual report for the year 1997 the Central's rate of return on
     rate base was 0.92% far below the Commission's last authorized
     rate of return of 9.54%.  Mr Deres' calculations on the
     recommended revenue level were shown on Attachment 1 of his
               With respect to the effective date of the temporary
     rates, Staff recommended that the Commission apply its normal
     practice of allowing the temporary rates to become effective on
     the date an order issued. 
               Based on the testimony and evidence in the record, we
     will grant Central's request for temporary rates at the revenue
     levels stipulated to by Staff and Central.  Temporary rates at
     the stipulated levels are justified because they will mitigate
     the effect that any permanent rate increase may have on
     customers.  However, by approving Central's request for temporary
     rates, we have not judged the appropriate rate of return for
     permanent rates or the particular rate base items that may be in
     dispute in the permanent case.  As always, temporary rates are
     subject to reconciliation, up or down, upon the determination of
     permanent rates. 
               As to the effective date, we will allow Central to make
     the temporary rates effective as of February 1, 1999.
               Based upon the foregoing, it is hereby 
               ORDERED, that the Settlement Agreement entered into by
     Staff and Central setting temporary rates at 18.99% over existing
     rates is APPROVED; and it is
               FURTHER ORDERED, that the effective date for such
     temporary rates shall be February 1, 1999; and it is
               FURTHER ORDERED, that Central shall submit tariff pages
     in compliance with this order within 15 days.
               By order of the Public Utilities Commission of New
     Hampshire this twenty-second day of February, 1999.       
            Douglas L. Patch                 Susan S. Geiger                                 Nancy Brockway 
                Chairman             Commissioner          Commissioner
     Attested by:
     Claire D. DiCicco
     Assistant Secretary