DR 98-005
Public Service Company of New Hampshire
1998 Conservation and Load Management Pre-Approval Filing
Order Providing for Limited Expansion of
1998 Conservation and Load Management Program
O R D E R N O. 22,999
August 17, 1998
APPEARANCES: Catherine E. Shively, Esq. for Public
Service Company of New Hampshire; David W. Marshall, Esq. for the
Conservation Law Foundation; Stephen Judge, Esq. and Wynn E.
Arnold, Esq. for the Governor's Office of Energy and Community
Services; Michael Holmes, Esq. and James Anderson, Esq. for the
Office of the Consumer Advocate; and Eugene F. Sullivan, III,
Esq. for the Staff of the New Hampshire Public Utilities
Commission.
I. PROCEDURAL HISTORY
By Order No. 22,905 (April 28, 1998) in Docket
DR 98-005, the New Hampshire Public Utilities Commission
(Commission) approved a Stipulation entered into by Public
Service Company of New Hampshire (PSNH), the Office of the
Consumer Advocate (OCA) and Commission Staff (Staff). The
Governor's Office of Energy and Community Services (ECS) and the
Conservation Law Foundation (CLF) did not sign the Stipulation
because both parties believed that the C&LM budget was too low
to provide optimal cost-effective programs.
PSNH, OCA and Staff agreed through the Stipulation that
PSNH's 1998 Conservation and Load Management (C&LM) Pre-Approval
Filing, as set forth in PSNH's January 30, 1998 filing, should be
approved at a funding level of $2,399,355 and with minor program
modifications. However, the Commission also directed Staff to
convene a meeting of the parties to see if they could reach an
agreement on a limited expansion of the 1998 C&LM Program to
include regional and/or national market transformation programs
that are consistent with the position stated in the Commission's
Electric Restructuring Rehearing Order in DR 96-150, Order No.
22,875 (March 20, 1998), regarding energy efficiency. The
Commission stated that the limited expansion of PSNH's program
was consistent with the position taken in the Rehearing Order
regarding market transformation programs; however, it was
inconsistent with capping funding levels for energy efficiency
programs. The Commission found that PSNH represents a unique
situation because PSNH's funding level for its C&LM programs is
minimal compared to other utilities and because PSNH's
relationship with Northeast Utilities, Inc. (NU) may provide PSNH
with an opportunity to be involved in regional programs. The
Commission reminded the parties and Staff that any expansion of
PSNH's 1998 C&LM Program was limited to market transformation
initiatives and asked the parties and Staff to report the results
of their efforts to the Commission within thirty days.
Subsequent to Order No. 22,905, the parties and Staff
engaged in four technical sessions. The first meeting was held
on May 13, 1998 at which the parties and Staff determined that
further discussions were necessary. At the May 22, 1998 meeting,
the Executive Director of the Northeast Energy Efficiency
Partnerships, Inc. (NEEP) attended to discuss regional and
national market transformation initiatives. On June 3, 1998, the
parties and Staff discussed a proposal for a limited expansion of
the C&LM program developed by PSNH. On June 15, 1998, the
parties and Staff discussed a proposal developed jointly by ECS
and CLF. At the end of the June 15, 1998 meeting, the parties
and Staff were still unable to reach consensus regarding a
limited expansion of the program; therefore, the parties and
Staff agreed to file with the Commission by June 22, 1998 the
proposals developed by PSNH and jointly by CLF and ECS and
comments and/or supplemental testimony. The parties and Staff
also requested that the Commission schedule a hearing to consider
the proposals and testimonies regarding a limited expansion of
PSNH's C&LM program.
On June 22, 1998, PSNH filed its market transformation
options and comments on the proposal and recommendations by ECS
and CLF. ECS and CLF filed its proposal and recommendations.
The OCA submitted a position paper. Staff filed supplemental
testimony. By secretarial letter dated June 24, 1998, the
Commission determined that, consistent with Order No. 22,905, a
hearing was necessary to address market transformation
initiatives with regard to PSNH's C&LM program and scheduled the
hearing for July 9, 1998. On July 1, 1998, ECS filed a Motion
for Full Intervention and testimony. ECS obtained concurrence of
the other parties with respect to its intervention and
participated fully in the proceeding. Consequently, the
intervention of ECS is reasonable and has been effectively
granted by the Commission. The hearing commenced on July 9, 1998
and was resumed and completed on July 13, 1998.
II. POSITIONS OF THE PARTIES AND STAFF
A. PSNH
On June 22, 1998, PSNH filed with the Commission a
proposal detailing three scenarios for supporting market
transformation initiatives. Scenario 1 would allow PSNH to:
participate in a regional efficient motors replacement program
whose development has been facilitated by NEEP; calculate a home
energy rating; and, become an ENERGYSTAR Partner by entering
into an agreement with the U.S. Department of Energy and the U.S.
Environmental Protection Agency. This scenario could be
implemented with no additional funding.
Scenario 2 proposed implementation of a residential
lighting program. NU's affiliates in Connecticut and
Massachusetts are supporting a national and regional effort
through a direct mail catalog which offers state-of-the-art
residential high efficiency lighting products which generally are
not available in retail stores. PSNH proposed two options under
this scenario: PSNH could mail the catalog directly to its
residential customers at a cost, including product subsidies, of
$500,000, or, as an alternative, PSNH could make the customers
aware of the availability of the catalog through a bill insert
which would require customers to request the catalogs. Under
that alternative, PSNH anticipated a lesser number of required
catalogs and estimated that the resulting cost of the bill
insert, including subsidies, is $300,000.
Scenario 3 proposed implementation of a high efficiency
clothes washer program. PSNH estimated that it could participate
in this program for the remainder of 1998 for approximately
$200,000. PSNH proposed offering a $100 rebate per washer for
residential customers using electrically heated hot water and a
$25 rebate for customers heating water with other energy sources.
PSNH described in its June 22, 1998 filing that it
could reallocate approximately $310,000 from the existing 1998
budget to fund an expansion of its C&LM program. PSNH noted that
due to some delay in program approval, there are legitimate
uncertainties as to whether PSNH would spend all of its 1998 C&LM
budget. Program expansion necessitating expenditures greater
than $310,000 would require additional funds.
B. CONSERVATION LAW FOUNDATION AND THE GOVERNOR'S OFFICE
OF ENERGY AND COMMUNITY SERVICES
ECS and CLF proposed a package of regional market
transformation initiatives for PSNH that would require additional
funding of $953,500. ECS and CLF basically endorsed the three
scenarios offered by PSNH with the following provisions. ECS and
CLF recommended that the lighting catalog be directly mailed to
residential customers for a total program cost of $500,000. ECS
and CLF believe that this alternative will yield a greater
customer participation rate and may increase the program's
cost-effectiveness and its market transformation potential. ECS
and CLF also recommended a flat $100 rebate per unit under the
clothes washer initiative regardless of the type of energy used
to heat the water. Further, ECS and CLF recommended that PSNH
increase its penetration rate of 300-500 washers to 750 for the
remainder of 1998.
In addition to their support of the scenarios offered
by PSNH, ECS and CLF also proposed that PSNH participate in
NEEP's Commercial and Industrial (C&I) Unitary HVAC program at a
cost of $60,000 and in NEEP's C&I Lighting Remodeling program at
a cost of $34,000 to assist in this program's market research and
evaluation and the development of lighting design guidelines.
ECS and CLF also recommended that PSNH become a member of the
Consortium for Energy Efficiency for $5,000.
ECS and CLF stated that their preferred funding for any
increase in PSNH's C&LM budget is to add the increment to base
rates.
C. OFFICE OF THE CONSUMER ADVOCATE
The OCA stated that it supports PSNH's Scenario 1 and
that any other proposed market transformation initiatives should
be evaluated in the context of the New Hampshire Energy
Efficiency Working Group (Working Group) created by the
Commission in its Rehearing Order. The OCA supports a separate
line item on customer bills for all C&LM costs which would vary
by customer class based on the costs incurred to serve that
class.
D. STAFF
Staff also recommended that the Commission implement
PSNH's proposed Scenario 1. Staff stated that Scenario 1 affords
the Commission the opportunity to allow PSNH to expand its
program to include market transformation initiatives without
affecting the issues currently being addressed by the Working
Group or increasing rates.
Staff recommended that should the Commission direct
PSNH to expand its 1998 C&LM program to an extent that warrants
an increase in PSNH's budget, then the increased costs should be
funded through a class specific C&LM surcharge mechanism. Staff
stated that further C&LM costs should not be buried in base
rates. Staff averred that a C&LM surcharge provides a better
mechanism for accounting for variations in spending and sales
forecasts, the major causes of over- and under-collections.
Further, Staff stated that in an appropriate proceeding, it would
take the position that the $1.7 million currently in base rates
should be transferred to the C&LM surcharge.
Staff testified that the proposals offered by PSNH and
jointly by CLF and ECS do not take into consideration Lost Fixed
Cost Recovery (LFCR). Staff illustrated the cumulative effect of
PSNH's LFCR and how LFCR represented a significant portion of
PSNH's C&LM budget at the end of the fixed rate period. Staff
stated that neither PSNH nor ECS and CLF estimated the amount of
LFCR associated with their proposals and that under current
standards, PSNH would be entitled to request the LFCR associated
with any additional programs.
III. COMMISSION ANALYSIS
After careful consideration of the testimony and
exhibits offered at the hearings, we have determined that PSNH's
1998 C&LM Program shall be expanded in the following manner.
PSNH shall implement Scenario 1 and Scenario 2, with the option
of the bill insert at a budget level of $300,000, both as
described in PSNH's June 22, 1998 filing. Further, PSNH shall
also implement the clothes washer initiative, but at the budget
level of $379,500 and with a flat $100 rebate per washer as
recommended by ECS and CLF. The determination to include the
clothes washer initiative is based on testimony offered at the
hearings that the $100 rebate, as used in the Northwest, was
phased out in three years. The phase-out of the rebates is
consistent with our statement in the Rehearing Order that
"efforts during the transition toward market-based DSM programs
should focus on creating an environment for energy efficiency
programs and services that will survive without subsidies in the
future."
We agree with Staff's position that in this case it is
not appropriate to continue to have C&LM costs paid by customers
through base rates and we believe that the best way to handle
C&LM charges is to unbundle those expenses from the rest of base
rates. As we move toward competition, customers should see the
various costs of providing service, including any costs spent on
energy efficiency programs. However, rather than implementing
unbundling in this case, we direct Staff to file its
recommendation in PSNH's base rate proceeding (DR 97-059) to
remove the $1.7 million currently in base rates for C&LM and to
establish a separate surcharge. To the extent that increased
dollars are spent on C&LM through this docket, it should be paid
for through a separate C&LM surcharge that would be established
in the base rate proceeding. We note that by the time the
proceeding in DR 97-059 is concluded, the Commission will
probably have a better idea of how much will actually be spent on
energy efficiency programs in 1998. The Commission can then
require PSNH to unbundle C&LM costs, set up a separate surcharge
and perhaps provide for recovery of costs needed to fund this
expansion, if necessary.
PSNH indicated that it anticipates an underspending of
C&LM programs of approximately $310,000. This reallocation of
funds supports the residential lighting program we approved
above. At this time, however, the Commission is not approving
any increase in rates for the limited expansion related to the
clothes washer initiative. We recognize that should PSNH spend
its entire budget as approved in Order No. 22,905 and the
additional $379,500 we have authorized as a temporary measure
through this order, then it may be necessary to provide for
recovery in a subsequent proceeding for the undercollection
caused by this expansion.
We encourage PSNH to try to minimize administrative
costs related to its C&LM programs. PSNH's market transformation
programs should focus on customer education and rebates that are
part of an individual program.
Further, nothing in this order should be construed by
any person or party participating in the Working Group as
establishing precedent regarding any of the issues brought forth
in this proceeding or to be addressed by the Working Group. The
directives we have issued in this order are temporary measures
needed to bring resolution to this docket. This is a difficult
time to address energy efficiency programs because of the
transition to what the Commission hopes will be retail
competition in a relatively short period of time. The Working
Group will address many important issues and we look forward to
reviewing their recommendations.
Based upon the foregoing, it is hereby
ORDERED, that PSNH shall expand its C&LM program for
the 1998 program year as detailed above; and it is
FURTHER ORDERED, that there shall be no increase in
rates as part of this docket and that any undercollection caused
by this limited expansion of the 1998 C&LM program shall be
reconciled in some other proceeding; and it is
FURTHER ORDERED, that ECS is granted full intervention
in this proceeding.
By order of the Public Utilities Commission of New
Hampshire this seventeenth day of August, 1998.
Douglas L. Patch Bruce B. Ellsworth Susan S. Geiger
Chairman Commissioner Commissioner
Attested by:
Thomas B. Getz
Executive Director and Secretary