DR 95-247
Public Service Company of New Hampshire/
Bio-Energy Corporation
Consideration of Renegotiated Rate Order
Order Adopting Procedural Schedule
O R D E R N O. 22,904
April 28, 1998
I. PROCEDURAL HISTORY
On September 6, 1995 Public Service Company of New
Hampshire (PSNH) filed with the New Hampshire Public
Utilities Commission (Commission) the essential terms of a
purchased power agreement reached between PSNH and
Bio-Energy Corporation (Bio-Energy) that would replace
Bio-Energy's existing rate order.
On November 16, 1995 PSNH filed with the
Commission an executed Wood Project Power Purchase Contract
and an Agreement (collectively, the Contract) between itself
and Bio-Energy. By Order No. 22,479 issued January 15,
1997, the Commission approved the Contract, imposed certain
conditions, and required that the parties notify the
Commission within 30 days if they chose to withdraw from the
Contract.
On February 14, 1997, PSNH filed a letter with the
Commission indicating that it was unable to proceed with the
financial transactions necessary to complete the Contract,
specifically the lump-sum Payment Amount and the Letter of
Credit to secure the Contract's Annual Payments, because of
the uncertainties of cost recovery perceived by the
financial community.
On February 18, 1997, Bio-Energy filed a Motion
for Rehearing and Clarification, stating that it could not
fully evaluate whether to close on the Contract because
Order No. 22,479 did not contain waivers which PSNH and
Bio-Energy required and because of certain other perceived
deficiencies in the order.
In its deliberations on December 31, 1997,
followed by Order No. 22,848 issued February 17, 1998, the
Commission denied Bio-Energy's Motion for Rehearing and
clarified that Bio-Energy would be relieved of its
obligations under the Rate Order once the Contract went into
effect.
By Order of Notice issued January 13, 1998, the
Commission raised a number of questions related to PSNH's
failure to finance the Bio-Energy settlement and scheduled a
prehearing conference for February 24, 1998, set deadlines
for intervention requests and objections thereto, and
required the Parties and Commission Staff (Staff) to
summarize their positions with regard to the filing for the
record.
On February 19, 1998 the Governor's Office of
Energy and Community Services (ECS) filed a Motion for
Limited Intervention. The Office of the Consumer Advocate
(OCA) appeared at the prehearing conference and is a
statutorily recognized intervenor. At the prehearing
conference the Commission granted ECS limited intervention.
Bio-Energy had previously been granted intervention.
II. POSITIONS OF THE PARTIES
At the prehearing conference, in accordance with
the Order of Notice, the Parties and Staff stated their
positions with regard to the filing.
A. PSNH
PSNH addressed the issue of whether it could have
financed the Bio-Energy Contract through internal funds
available at that time. PSNH submitted that a dividend
which it paid to its parent, Northeast Utilities (NU),
represented funds for expenses associated with a PSNH
Employee Stock Ownership Program (ESOP), that funds
deposited by PSNH into NU's Money Pool were funds which were
later taken out of the Money Pool to be used for PSNH
financing obligations, and that PSNH may not have been able
to obtain financing through its Letter of Credit or obtained
other forms of external financing.
PSNH indicated that it would provide information
on the availability of funds in the NU Money Pool at the
time the Commission's original order approving the Contract
was issued.
In response to the assertion that the parties
thereto had a duty to use "best efforts" to complete the
Contract, PSNH stated that its duty was to renegotiate the
orders under the Rate Agreement, but that what PSNH did
after the Contract was agreed to does not fall under a best
efforts analysis.
B. Bio-Energy
Bio-Energy stated that it is interested in PSNH's
response on the question of what vehicles were available to
PSNH from which to procure the financing to consummate the
transaction represented by the Contract and that it was
interested in an analysis of whether a short-term line of
credit or NH Money Pool funds could have been used to
procure the funds necessary to close on the Contract.
C. Office of Consumer Advocate
The OCA stated that it was interested in
addressing, relative to the Contract, the parent-subsidiary
relationship between NU and PSNH and the duties of PSNH to
its ratepayers as distinguished from its parent. OCA stated
that PSNH should address whether it simply could not have
taken any action which would have allowed it to go forward
and conclude the transaction.
D. Staff
Staff stated that the analysis regarding the duty
of PSNH to complete the transaction was more than a
"prudence" analysis, but instead a "best efforts" analysis
as required by the Rate Agreement.
Staff was interested in, relative to the Line of
Credit Agreement through which PSNH may have obtained funds
at the time of the original order, whether under the Line of
Credit agreement it was determined that there were material
adverse conditions which existed at that time which resulted
in funds not being available to PSNH for the Bio-Energy
Contract. Staff also was interested in whether PSNH offered
Bio-Energy cash payment to fund the Contract and whether the
ESOP plan required an $85 million dividend payment to NU.
III. PROCEDURAL SCHEDULE
Following the prehearing conference the Parties
agreed to the following proposed procedural schedule:
PSNH Testimony April 3, 1998
Data Requests by Staff
and Intervenors April 17, 1998
Data Responses by PSNH May 8, 1998
Testimony by Staff and May 29, 1998
Intervenors
Data Requests by PSNH June 12, 1998
Data Responses by Staff and July 3, 1998
Intervenors
Rebuttal July 17, 1998
Hearings July 29 & 30, 1998
We find the proposed procedural schedule to be
reasonable and will approve it for the duration of the case.
Based upon the foregoing, it is hereby
ORDERED, that the procedural schedule delineated
above is approved; and it is
FURTHER ORDERED, that the Governor's Office of
Energy and Community Services is granted limited
intervention.
By order of the Public Utilities Commission of New
Hampshire this twenty-eighth day of April, 1998.
Douglas L. Patch Bruce B. Ellsworth Susan S.
Geiger
Chairman Commissioner Commissioner
Attested by:
Claire D. DiCicco
Assistant Secretary