DR 98-192
            Connecticut Valley Electric Company Inc.
  1999 Conservation and Load Management Percentage Adjustment
                  Order Approving Stipulation
                    O R D E R   N O.  23,167
                         March 22, 1999
       APPEARANCES:  Kenneth C. Picton, Esq., for Connecticut
     Valley Electric Company Inc.; Wynn E. Arnold, Esq., for the
     Governor's Office of Energy and Community Services; Kenneth E.
     Traum for the Office of the Consumer Advocate for residential
     ratepayers; and Michelle A. Caraway and Paul S. Keller for the
     Staff of the New Hampshire Public Utilities Commission.
               On November 4, 1998, Connecticut Valley Electric
     Company Inc. (CVEC) filed with the New Hampshire Public Utilities
     Commission (Commission) its Proposal for 1999 Conservation and
     Load Management (C&LM) Percentage Adjustment (C&LMPA). 
               By an Order of Notice issued November 30, 1998, the
     Commission scheduled a prehearing conference for January 4, 1999,
     set deadlines for intervention requests and objections thereto,
     outlined a procedural schedule, and required the parties and
     Commission Staff (Staff) to summarize their positions with regard
     to the filing for the record.  On December 30, 1998, the
     Governor's Office of Energy and Community Services (ECS) filed a
     late Motion for Full Intervention.  There were no objections to
     ECS' motion to intervene.  The Office of the Consumer Advocate
     (OCA) is a statutorily recognized intervenor.  On January 11,
     1999, the Commission issued Order No. 23,103 granting ECS's
     motion to intervene and approving the procedural schedule.
               Pursuant to the approved procedural schedule, CVEC,
     ECS, the OCA and Staff engaged in formal discovery.  On January
     25, 1999, ECS, the OCA and Staff submitted prefiled direct
     testimony.  A settlement conference was scheduled for February 5,
     1999, but was canceled by the parties as a result of telephonic
     conferences.  On February 17, 1999, CVEC, the OCA, and Staff
     entered into a Stipulation.  The Stipulation addresses all of the
     issues raised by the OCA and Staff.  ECS was not a signatory to
     the Stipulation.  On February 18, 1999, a hearing was held before
     the Commission.
                    A.   Connecticut Valley Electric Company, Inc.
               CVEC proposed a 1999 C&LMPA which is substantially
     composed of the collection of the net present value of the net
     revenue loss (NRL) for the 1999-2024 period.  CVEC stated that
     the benefits from accelerated recovery derive from the
     elimination of administrative expenses associated with the annual
     C&LMPA filing and the monthly variance reports.  CVEC ramped down
     its C&LM programs during 1997, as authorized by the Commission in
     Order No. 22,536 (March 31, 1997).  The proposed 1999 C&LMPA
     recovers no direct program spending, only the net present value
     of future NRL, as well as 1999 administrative costs and prior
     period over/undercollections.  The 1999 C&LMPA is also proposed
     to be applicable only to off-season billings in the March through
     November 1999 period.  No C&LMPA billing is proposed for the peak
     season months of January, February, and December 1999.  The
     proposed C&LMPAs are 2.32% for the Residential rate class and
     4.37% for the Commercial/Industrial rate class.
               CVEC does not propose any C&LM programs for 1999.  In
     response to a provision of the Stipulation, CVEC provided
     testimony at the hearing regarding various C&LM programs offered
     by other New Hampshire utilities as well as its parent company,
     Central Vermont Public Service (CVPS), and the feasibility of
     CVEC either piggybacking on those programs or having those
     utilities actually provide the programs to CVEC's customers. 
     However, CVEC recommended that the Commission wait until the New
     Hampshire Energy Efficiency Working Group (Working Group)
     completed its discussions before deciding whether CVEC should
     reintroduce C&LM programs for its customers.
                    B.   Governor's Office of Energy and Community Services
               ECS has two primary concerns related to CVEC's filing. 
     First, ECS did not support CVEC's proposal for accelerated
     recovery of NRL for the period 1999-2024.  ECS is "concerned that
     CVEC's proposal could provide the Company with opportunities for
     inappropriate recovery and/or double recovery of certain costs,
     including costs that the company might end up recovering in
     future rate cases or through potential stranded cost recovery
     charges.  We are concerned that the proposed amount of NRL may
     include generation-related revenues that the Commission would not
     allow a future stand-alone transmission and distribution company
     to collect...  we are concerned about basing payment of NRL on
     estimated measure savings over the next several decades without
     periodically updating these estimates to account for new
     information that may be relevant to actual savings" (Ex. 5 at 2). 
               ECS was also concerned that CVEC ramped down its C&LM
     programs in 1997 and is not proposing any programs for 1999.  ECS
     recommended that the Commission authorize CVEC to initiate C&LM
     programs using the infrastructure currently in place for CVEC's
     parent company, CVPS, or by piggybacking off regional
     initiatives; for example, the TumbleWash program.  Should the
     Commission authorize CVEC to provide programs for 1999, ECS
     recommended that supplemental testimony should be filed to
     address program design and funding levels. 
                    C.   Office of the Consumer Advocate
               The OCA was not supportive of CVEC's filing in two
     respects.  First, OCA disagreed with CVEC's proposal for
     accelerated recovery of NRL through the 1999 C&LMPAs.  Instead,
     the OCA recommended that the Commission continue to authorize NRL
     on an annual basis until CVEC's next base rate case.  Second, the
     OCA stated that it "supports programs that are cost effective, as
     well as those targeting low income ratepayers and ones educating
     ratepayers on the benefits of conservation" (Ex. 4 at 3) but
     expected that CVEC would have proposed such programs for 1999.
                    D.   Staff
               Staff's concerns also focused on the accelerated
     recovery of NRL and the reintroduction of C&LM programs for 1999. 
     Staff's position on NRL was consistent with ECS' and OCA's. 
     Staff also emphasized that the Working Group was directed by the
     Commission to address the treatment of lost revenues as part of
     its discussions. 
               In regard to program delivery, Staff did not support
     the reintroduction of C&LM programs in CVEC's service territory. 
     Staff noted that the Commission allowed CVEC to phase out its
     C&LM programs in 1997 and reaffirmed that decision by Order No.
     22,892 (April 1, 1998).  Staff recommended that the Commission
     defer its decision on the provision of C&LM programs until the
     Working Group completes its discussions and provides its
     recommendations on whether and how energy efficiency programs
     should be delivered in a restructured electric environment. 
               CVEC, the OCA and Staff agree that CVEC's C&LMPA
     proposal, as set forth in CVEC's November 4, 1998 filing, is in
     the public interest and should be approved, subject to the
     following modifications:
          1.   The 1999 amounts to be collected through the C&LMPA consist of
          $16,600 for C&LM costs, $91,729 for NRL and $1,471 for interest. 
          The prior period over/undercollections are from the actual 1998
          C&LMPA reconciliations using actual data through December 31,
          2.   The C&LMPA rates are to be applied only to billings rendered
          during the off season.  The C&LMPAs will not be applied to peak
          season billings.  For all rate classes except Rate T, such
          billings occur from March through November.  For Rate T, such
          billings occur from April through December.
          3.   The 1999 Residential C&LMPA is 0.57%.  The 1999 Commercial/
          Industrial C&LMPA is 1.10%.
          4.   Net Revenue Loss (NRL) for 1999 for program measures installed
          before 1998 will be recovered through the 1999 C&LMPAs.  Subject
          to annual filings and Commission approval, NRL for the years
          2000-2024 will be collected annually until the effective date of
          rates from CVEC's next base rate case, at which time the recovery
          of NRL from pre-1998 C&LM programs is accomplished through a base
          rate change and the C&LMPA recovery of NRL will cease.
          5.   In the event the New Hampshire Energy Efficiency Working Group
          recommends utility-sponsored C&LM programs, CVEC will work with
          the parties to implement practicable programs in CVEC's service
          territory, and will consider the implementation of an Interim
          C&LMPA to recover the costs of these or any other interim programs
          as ordered by the Commission.  No C&LM programs will be undertaken
          by CVEC in 1999 unless specifically ordered by the Commission.
          6.   CVEC will continue to track inquiries it receives for its C&LM
          programs, including number of inquiries, nature of inquiries, and
          specific programs inquired about by the customer.
          7.   Pilot tariffs shall be adjusted in accordance with the C&LMPA
          rates stated above and with past practice.  Upon approval of this
          Stipulation by the Commission, CVEC shall file tariff pages for
          C&LMPA and adjusted Pilot Program rates to be effective on bills
          rendered on or after March 1, 1999, or such later date as ordered
          by the Commission.
          8.   The approved C&LMPAs and related Pilot tariff will be implemented
          on a bills rendered basis, consistent with prior approved C&LMPAs
          and Pilot tariffs, and in accordance with CVEC's request in its
          November 4, 1998 filing.  To accomplish this result, CVEC, the OCA
          and Staff request that the Commission waive the application of
          N.H. Admin. Rules, Puc 1203.05(a), which generally requires that
          rate changes be implemented on a service rendered basis, and allow
          CVEC to implement this C&LMPA and related Pilot tariff on a bills
          rendered basis.
          9.   At the hearing on February 18, 1999, CVEC will summarize its
          discussions with adjacent New Hampshire utilities on the
          feasibility of having one of those utilities expand their existing
          low-income or other programs to serve the CVEC service territory. 
          Each party shall have an opportunity at the hearing to make
          recommendations relating to such information provided by CVEC.
          10.  As provided on the proposed tariff page attached to the
          Stipulation, variance reports will be filed with the Commission on
          a quarterly basis, as opposed to the monthly reports currently
          being submitted.
               After careful review of the record in this docket, we
     find that the Stipulation filed by CVEC, the OCA and Staff is
     reasonable and is in the public good.  We will approve CVEC's
     1999 C&LMPA filing as modified by the Stipulation.
               We find that the Stipulation addresses the concerns
     raised by ECS, the OCA and Staff regarding the accelerated
     recovery mechanism of NRL.  Although the magnitude of NRL for
     CVEC pales in comparison to amounts requested for recovery by
     other New Hampshire utilities, we refrain from deciding at this
     time whether such a recovery mechanism provides the appropriate
     assurances that neither ratepayers nor shareholders are unjustly
     burdened.  Our decision today should not prevent any party or
     Staff from recommending this mechanism or other mechanisms in a
     future C&LM proceeding or within the Working Group itself.  We
     are interested in the Working Group's considerations of the
     benefits and disadvantages associated with mechanisms to phase
     out and/or eliminate NRL on a forward-going basis. 
               Further, we will not require CVEC to reintroduce C&LM
     programs in its service territory at this time.  Through our
     Order on Rehearing in DR 96-150 (March 20, 1998), we created a
     Working Group of interested parties to address several issues
     related to energy efficiency programs.  The Working Group is
     expected to submit its recommendations in the near future and we
     anticipate taking action on those recommendations in time to
     provide guidance for the 2000 filings.
               However, the Commission emphasizes that, although we
     are not requiring CVEC to implement any new C&LM programs or to
     continue programs previously offered, we expect that the results
     of the Working Group would produce some information that we could
     review to assist us in deciding how energy efficiency products
     and services could best be provided in the future consistent with
     legislative directions and sound public policy.  Although the
     Stipulation discusses introducing programs that are recommended
     by the Working Group and approved by the Commission, that does
     not limit the types of programs that we may consider
     implementing; i.e, there may be programs not recommended by the
     Working Group, or there may not be agreement by the Working
     Group, yet there may be programs the Commission finds
               Through Order No. 22,892, we directed CVEC to track the
     inquiries it receives for its C&LM programs to assist us in
     determining the extent to which customers are expecting energy
     efficiency programs to be offered by their local distribution
     companies.  Although the Stipulation states that CVEC will
     continue to track such inquiries, at the hearing CVEC stated that
     it did not have a formal tracking process.  CVEC stated that
     customers inquire about services from various CVEC employees.
     Therefore, developing a tracking program must integrate work
     processes of several departments.  Since the Commission is not
     requiring CVEC to implement C&LM programs in 1999, we continue to
     believe that the information we required of CVEC for 1998 will
     continue to assist us as we contemplate the future of
     ratepayer-funded, utility-sponsored energy efficiency programs. 
     Therefore, we direct CVEC to continue to track such inquiries as
     directed by Order No. 22,892 and to develop a more formal system
     that will allow CVEC to compile the data in a timely and reliable
               Through Order No. 23,155 (February 26, 1999), the
     Commission suspended the C&LMPAs proposed by CVEC in both the
     November 4, 1998 filing and the Stipulation due to Commission
     commitments which prevented deliberations and the issuance of a
     final order in this proceeding before March 1, 1999, the proposed
     effective date for the C&LMPAs.  Therefore, we direct CVEC to
     recalculate the C&LMPAs for the Residential and
     Commercial/Industrial rate classes to reflect the estimated
     revenues to be collected over the remaining non-peak months of
     1999 and to implement those rates effective April 1, 1999.
               Finally, we waive the application of N.H. Admin. Rules,
     Puc 1203.05(a), which requires generally that rate changes be
     implemented on a service-rendered basis, and will allow CVEC to
     implement its C&LMPAs on a bills-rendered basis.  This waiver,
     pursuant to Puc 201.05, produces a result consistent with the
     principles embodied in Puc 1203.05(b), which sets forth
     exceptions for allowing rate changes on a bills-rendered basis,
     and is in the public interest because it eliminates consumer
     confusion and reduces administrative costs.
               Based upon the foregoing, it is hereby 
               ORDERED, the CVEC's 1999 C&LMPA proposal, as filed on
     November 4, 1998 and as modified by the Stipulation, is APPROVED;
     and it is
               FURTHER ORDERED, that CVEC's 1999 C&LMPAs are approved
     as modified by this order effective April 1, 1999 on a
     bills-rendered basis; and it is
               FURTHER ORDERED, that CVEC shall file compliance tariff
     pages no later than ten days from the date of this order.
               By order of the Public Utilities Commission of New
     Hampshire this twenty-second day of March, 1999.
           Douglas L. Patch       Susan S. Geiger     Nancy Brockway
               Chairman           Commissioner          Commissioner
     Attested by:
     Thomas B. Getz
     Executive Director and Secretary