DR 96-150
                 Interim Stranded Cost Charges
               Order Amending Rehearing Schedule 
                    O R D E R   N O.  23,101
                        January 11, 1999
       This order schedules a prehearing conference to
     establish a procedural schedule for completing the rehearing
     process relating to the establishment of interim stranded cost
     (ISC) charges for Public Service Company of New Hampshire (PSNH). 
     As explained below, in the amended rehearing schedule, PSNH and
     other parties will be provided an opportunity to update and
     supplement their prior testimony in light of the interlocutory
     decision issued by the New Hampshire Supreme Court on December
     23, 1998.  The Commission will hold a prehearing conference to
     address any procedural matters on Wednesday, January 20, 1999 at
     2:00 p.m.
       On February 28, 1997, the Commission issued a Statewide
     Electric Utility Restructuring Plan (the Plan) and five
     utility-specific interim stranded cost orders (ISC orders)
     pursuant to RSA 374-F.  Although the Plan established generic
     restructuring policies, Order No. 22,875 at 8, the legal analysis
     accompanying the Plan addressed specific arguments advanced by
     PSNH in support of its request for ISC charges that reflect full
     stranded cost recovery.  See Plan, Legal Analysis, pp. 57-92. 
     Generally, PSNH asserted various legal rights which derived from
     the 1989 Rate Agreement reviewed by the Commission in DR 89-244. 
     Specifically, the Commission rejected PSNH's assertions that: (a)
     RSA 362-C limits the Commission's discretion in setting PSNH's
     ISC charges; (b) the confirmation order issued by the United
     States Bankruptcy Court requires the Commission to provide PSNH
     its requested  stranded cost recovery; (c) the Rate Agreement
     constitutes an enforceable contract with the State of New
     Hampshire which affords PSNH the right to its requested stranded
     cost recovery, and (d) Order No. 22,512 otherwise violates the
     Takings Clause of the United States Constitution and the parallel
     protections under the New Hampshire Constitution.  See Plan,
     Legal Analysis, pp. 57-92. 
       In Order No. 22,548 (April 7, 1997), the Commission
     suspended and stayed the Plan and ISC orders, including Order No.
     22,512 (PSNH's ISC order), pending the disposition of rehearing
     requests.  In the same order, the Commission specifically
     granted PSNH's request for rehearing on two discrete issues.  The 
     Commission articulated those issues as follows:     
         Whether the methodology utilized by the Commission in
       the Final Plan to establish PSNH's interim stranded
       costs charges requires PSNH, or any affiliated company,
       to write off any FAS 71 regulatory asset, and in turn,
       whether such accounting adjustment(s) violate(s) debt
       covenants in PSNH's credit facilities or those of any
       affiliate; and 
         Whether our decision relative to the Rate Agreement in
       Order 22,514 repudiates an enforceable obligation of
       the State, which in turn may cause violations of PSNH
       debt covenants or those of any affiliate.  
     Order 22,548 at 3.  The Commission subsequently expanded the
     scope of the rehearing to allow parties to make specific
     proposals for setting PSNH's ISC charges using cost-based
     methodologies.  Order No. 22,766 (October 24, 1998).  After
     granting two continuances, the Commission held evidentiary
     hearings and accepted briefs on the foregoing issues during
     November and December of 1997.  
       On February 20, 1998, in lieu of issuing rulings on the
     rehearing issues, the Commission transferred two questions of law
     to the New Hampshire Supreme Court pursuant to RSA 365:20. 
     Essentially, the transferred questions sought interlocutory
     rulings on whether the Rate Agreement or RSA 362-C created
     private rights that conflict with the restructuring policies and
     standards for stranded cost recovery set forth in RSA 374-F.  The
     questions specifically invited the Court to evaluate the validity
     of PSNH's claim that the Rate Agreement and RSA 362-C created
     certain enforceable contractual rights.
       On December 23, 1998, the Supreme Court issued a
     decision addressing the transferred questions.  The Court stated
     that the language of the Rate Agreement was "arguably ambiguous"
     and noted that "the proper resolution of the rate agreement's
     contractual character and scope may well require a review of the
     facts and circumstances beyond the four corners of the rate
     agreement itself."  In re New Hampshire Public Utilities
     Commission Statewide Electric Utility Restructuring Plan, slip
     op. (December 23, 1998), p. 6.  The Court concluded that it was
     unable to determine whether the Rate Agreement created a binding
     contract because the record was "incomplete" for that purpose. 
     Id. at 5-6.   
       Although the Court left open the contract issue, it
     provided guidance on the interplay between RSA 362-C and RSA 
     374-F for purposes of determining the extent to which PSNH is
     allowed to recover stranded costs.  According to the Court, 
         [T]he PUC must consider State obligations under RSA
       Chapter 362-C and the rate agreement, if any, when
       determining whether, and to what extent, PSNH receives
       an award of stranded costs...the [Commission] can award
       PSNH only those stranded costs, including deferred
       assets under the rate agreement, that comport with the
       standard mandated by the legislature in RSA 374-F:4, V
       and VI.  Accordingly, PSNH's ability to recover the
       deferred assets under the rate agreement through
       stranded cost recovery charge [sic] is limited by that
     Id. at 8.  The Court explained further,
         Reading the enabling statute and the restructuring
       statute as consistent in the prescribed manner permits
       the State to attempt to honor its obligation, if any,
       under RSA chapter 362-C and the rate agreement while
       still effectuating the legislature's intent to provide
       electric rate relief to New Hampshire citizens through
       the deregulation of generation services.  
     Id. at 8-9. 
       To date, the Commission has issued no decision on the 
     rehearing requests relating to PSNH's ISC charges.  PSNH's
     initial ISC order, and those portions of the Plan's legal
     analysis pertaining to PSNH, remain suspended pursuant to RSA
       In light of the passage of time and the Supreme Court's
     recent interlocutory decision, we have determined that it is
     necessary and appropriate to conduct additional evidentiary
     hearings before issuing a decision setting PSNH's ISC charges.
     The primary purpose of these proceedings will be to allow PSNH
     and other parties to update and supplement their prior testimony. 
     In addition, we will permit PSNH and parties to submit additional
     testimony and evidence specifically addressing the deficiencies
     in the record noted by the Court.  We note that the issues to be
     decided in the rehearing proceeding remain the same as defined in
     Order No. 22,548 and Order No. 22,766. 
       It is our intent to expeditiously complete the
     rehearing process and issue a final order establishing PSNH's ISC
     charges.  We will hold a prehearing conference on Wednesday,
     January 20, 1999 at 2:00 p.m. to establish a procedural schedule
     and to address any questions regarding the scope of the evidence
     to be presented at the supplemental rehearings.   
       Based upon the foregoing, it is hereby
       ORDERED, that a Prehearing Conference, pursuant to N.H.
     Admin. Rules Puc 203.05, be held before the Commission located at
     8 Old Suncook Road, Concord, New Hampshire on Wednesday, January
     20, 1999 at 2:00 p.m.
       By order of the Public Utilities Commission of New
     Hampshire this eleventh day of January, 1999.
           Douglas L. Patch       Susan S. Geiger     Nancy Brockway
               Chairman           Commissioner          Commissioner
     Attested by:
     Thomas B. Getz
     Executive Director and Secretary