DR 98-097
NEW HAMPSHIRE ELECTRIC COOPERATIVE, INC.
ELECTRIC UTILITY RESTRUCTURING: COMPLIANCE FILING
Order Addressing Compliance Filing and Announcing Interim
Procedures Governing Retail Access
O R D E R N O. 23,013
September 8, 1998
In this Order, the New Hampshire Public Utilities
Commission (Commission) approves a compliance filing by the New
Hampshire Electric Cooperative, Inc. (NHEC) relative to NHEC's
obligations under the State's electric utility restructuring law,
RSA 374-F. In addition, the Commission accepts NHEC's target
date of October 1, 1998 for providing retail access to its
members, although the Commission recognizes that events since the
hearing in this case may require NHEC to extend that date.
Finally, this Order announces temporary procedures which shall
apply to prospective competitive electricity suppliers conducting
business within NHEC's service territory. These temporary
procedures shall apply until such time as the Commission
completes several generic rulemaking dockets.
I. BACKGROUND AND PROCEDURAL HISTORY
On February 28, 1997, the Commission issued a Statewide
Electric Utility Restructuring Plan (the Plan) and five related
interim stranded cost orders (ISC orders) pursuant to RSA 374-F.
The Plan and ISC orders implemented the policies of RSA 374-F by,
inter alia, requiring jurisdictional electric utilities
(including NHEC) to provide unbundled, open access delivery
services so that retail customers have the ability to purchase
electricity from competitive suppliers.
In Order No. 22,875 (March 20, 1998), Commission
affirmed, modified and amended various aspects of the Plan. In
the same order, the Commission affirmed the NHEC's ISC order
(Order No. 22,513), and supplemented the compliance filing
requirements for NHEC and the other jurisdictional electric
utilities.
On May 1, 1998, NHEC submitted its compliance filing
which consisted of a petition, proposed tariff and supporting
testimony. NHEC supplemented its filing with additional
testimony and exhibits on July 24, 1998.
The Commission held a duly noticed prehearing
conference on June 24, 1998 during which it granted intervention
requests filed by the following entities or individuals: the
Governor's Office of Energy and Community Services (ECS), Freedom
Partners, L.L.C.(Freedom), the City of Manchester (Manchester),
Cabletron Systems, Inc. (Cabletron), Public Service Company of
New Hampshire (PSNH), the Campaign for Ratepayer Rights (CRR),
Unitil Companies (Unitil), and Susan Chamberlin, Esquire.
Limited intervention was granted to Ms. Anne Ross, and Mr.
Camerino on behalf of Great Bay Power Corporation. The
Commission denied, without prejudice, the intervention request of
the Conservation Law Foundation (CLF).
During the prehearing conference the Commission heard
argument by the parties on the issue of the scope of this
proceeding. It determined that as a compliance filing, the scope
of this case was narrow, and limited to whether the filing was
consistent with the orders of the Commission and applicable
statutes.
On July 27, 1998, NHEC filed a "settlement stipulation"
(Stipulation) which further modified and amended its filing. The
Stipulation was offered by the following parties: NHEC, the
Commission Staff (Staff), the Office of Consumer Advocate (OCA),
ECS, CRR, Freedom and Unitil (collectively, the Stipulating
Parties).
During the July 30, 1998 merits hearing, NHEC presented
the testimony of Teresa L. Muzzey, NHEC's Director of Finance and
Administration, and Heather K. Saladino, NHEC's Manager of Rates
and Financial Analysis.
The Commission deliberated NHEC's compliance filing
during the Commission's August 17, 1998 public meeting.
II. PARTIES AND POSITIONS
A. NHEC and Stipulating Parties
The Stipulation addresses various aspects of NHEC's
proposed compliance with RSA 374-F. Below, we briefly summarize
the most significant components of the Stipulation.
1. ISC Charges
NHEC and the stipulating parties agree that NHEC's
interim stranded cost (ISC) charges should be calculated
consistent with the Commission's decision in DR 96-150;
specifically, ISC charges should be set at levels which allow
NHEC to meet its financial obligations to wholesale power
suppliers during 1998 and 1999. NHEC observes that the
resolution of one issue will largely determine the level of its
ISC charges: namely, its dispute with PSNH over the terms of
their wholesale requirements contract, a matter which is pending
before the Federal Energy Regulatory Commission (FERC). NHEC
projects ISC charges based upon alternative "high" and "low"
scenarios reflecting the possible outcomes of that dispute.
Under the "low" scenario (i.e., NHEC prevails at FERC), NHEC
projects a single ISC charge $.01920/kWh applying to all members
taking service from alternative suppliers. Exhibit 7, p.1.
Under the "high" scenario (PSNH prevails at FERC), NHEC's ISC
charges would be $.07571 for 1998 and $0.07757 for 1999. Exhibit
4, p.4.
2. Restructuring Surcharge
NHEC and the stipulating parties propose a
restructuring surcharge on distribution rates which is designed
to recover incremental costs associated with restructuring and
the implementation of retail access. According to NHEC, the
surcharge will likely need to remain in place for three years
following the implementation of retail access.
3. Divestiture
NHEC and the stipulating parties propose that NHEC
should be permitted to submit a divestiture plan by July 1, 1999.
The plan would relate primarily to NHEC's ownership interest in
the Seabrook Nuclear Power Plant, which NHEC proposes to retain
during the term of the Seabrook Sellback Agreement.
4. Aggregation Services
As part of the Stipulation, NHEC has agreed that it
will not provide competitive electric services to its members,
including load aggregation services, unless it is specifically
authorized to do so by the Commission. The Stipulation notes a
disagreement between NHEC and Staff over whether NHEC should be
permitted to perform load aggregation services for its members.
5. Designation of Transmission and Distribution Facilities
NHEC's filing includes a request for the Commission to
approve its designation of distribution facilities as consistent
with FERC's seven-factor test.
6. Unbundled Distribution/Cost of Service
The Stipulation provides that NHEC's cost of service
allocations in DR 98-025 should be utilized for setting unbundled
distribution rates.
7. Special Contracts
NHEC proposes to abide by and enforce the terms of
existing special contracts until such time as those contracts
terminate or the Commission orders otherwise.
8. Low Income Program
NHEC proposes to begin collecting a charge of .15›/kWh
for low income assistance and to work with the settling parties
to design and implement a low income assistance program for
NHEC's members until a Statewide program is implemented.
9. Conservation and Load Management Programs
NHEC proposes to comply with Order No. 22,970 in DR
98-043 relative to NHEC's conservation and load management
programs for 1998 and 1999 until such time as the Commission
orders otherwise.
10. Public Education
NHEC proposes to implement a public education program
which is consistent with recommendations of the public education
working group. NHEC filed a plan on July 31, 1998 which further
explained its proposal.
11. Default and Transition Service
NHEC proposes to provide default power service to its
members by utilizing its existing wholesale power supply
contracts. In addition, NHEC argues further that it should not
be required to provide transition service because such a
requirement would be inconsistent with its obligations under
existing wholesale purchase power contracts.
12. Effective Date
NHEC seeks to make its compliance filing and proposed
tariffs effective on September 1, 1998, although it acknowledges
that several events must occur before retail access can be
implemented for NHEC members. According to NHEC, those events
include: (a) FERC approval of an amendment to the requirements
contract with PSNH, (b) completion of electronic data interchange
(EDI) infrastructure development, and (c) load estimation and/or
internal meter requirements consistent with the outcome of the
aforementioned FERC dispute with PSNH. In the Stipulation, NHEC
projected that the foregoing prerequisites could be achieved by
October 1, 1998.
B. PSNH
PSNH made a statement at the close of the hearing in
which it questioned whether NHEC's filing was consistent with RSA
374-F in light of the potential for cost-shifting between NHEC's
members and PSNH retail customers. According to PSNH, the
Commission will be better positioned to assess the impact of
NHEC's restructuring proposal after the FERC proceedings related
to the APRA are completed.
III. COMMISSION ANALYSIS
We have determined that NHEC's compliance filing, as
amended and modified by the Stipulation, complies in all material
respects to the orders we issued in DR 96-150. Likewise, we find
that the Stipulation is substantially consistent with the
interdependent policy principles set forth in RSA 374-F. Based
on the foregoing, we conclude that NHEC's filing meets the public
interest standard in RSA 374-F:4, III.
The only disputed issue in this proceeding was raised
by PSNH. Specifically, PSNH asserts that NHEC's filing "may not"
comport with RSA 374-F's interdependent policy principle which
disfavors cost-shifting among retail consumers.
We note that, as a practical matter, PSNH has raised a
concern for which it seeks no relief: it has not asked us to
reject the filing, nor has it asked for any other relief to avoid
the purported cost-shifting effect of the NHEC filing.
Moreover, as we observed during the prehearing
conference, the issue of whether costs formerly allocated to NHEC
(as a wholesale customer) are recoverable from PSNH's ratepayers
is outside the scope of this proceeding.
The Commission does not agree that the policy principle
identified by PSNH in RSA 374-F:3,VI applies to this
circumstance. This section is intended to prohibit cost-shifting
among retail customer classes of the same utility when rates are
unbundled. Assuming, arguendo, that the policy principle
identified by PSNH applies to these circumstances, however, we
reiterate that PSNH has requested no relief to address the
situation. In fact, PSNH has consistently asserted that FERC
possesses the exclusive jurisdiction to address such cost
recovery issues. We believe that the Commission retains the
necessary jurisdiction and authority to address this matter if
necessary when FERC issues a final decision.
Based on the foregoing considerations, we conclude that
PSNH's concern does not warrant rejecting or modifying NHEC's
filing.
Finally, we take this opportunity to notice the
establishment of temporary procedures which shall govern supplier
registration and electronic data interchange (EDI) for retail
transactions with NHEC members. We propose to adopt, on an
interim basis, the supplier registration rules which have been
recommended by the working group established to study the same in
DR 96-150. Similarly, we propose to require NHEC and suppliers
to abide by the EDI procedures which the EDI working group
recommended and which we approved in Order No. 22,919 (May 4,
1998). Once adopted, these temporary procedures shall govern the
direct access transactions which occur within NHEC's service
territory until such time as the Commission completes its generic
rulemaking dockets in those areas. These documents may be
accessed on the Commission home page (http://puc.nh.gov). We
will provide a 30-day comment period, beginning today, for any
party or interested person to file comments on these proposed
temporary procedures. Pending receipt of such comments, it is
the Commission's intent to approve these interim procedures at
its meeting of October 12, 1998.
We also note that pursuant to RSA 374-F:4 IX, an
electricity supplier which is an affiliate of a public utility is
only eligible to compete for open access customers if they have
filed open access transmission and distribution rates with the
FERC and this Commission, for all of their transmission and
distribution facilities in New Hampshire.
Based upon the foregoing, it is hereby
ORDERED, that NHEC's compliance filing as described in
the Settlement Stipulation is APPROVED; and it is
FURTHER ORDERED, that temporary procedures governing
EDI and supplier registration are adopted as described in the
body of this order.
By order of the Public Utilities Commission of New
Hampshire this eighth day of September, 1998.
Douglas L. Patch Bruce B. Ellsworth Susan S. Geiger
Chairman Commissioner Commissioner
Attested by:
Thomas B. Getz
Executive Director and Secretary