DE 98-199
Northern Utilities, Inc.
Petition for Approval of Sale of Property
Order Approving Procedural Schedule
O R D E R N O. 23,107
January 12, 1999
APPEARANCES: LeBoeuf, Lamb, Greene & MacRae by Susan L.
Geiser, Esq. and Paul B. Dexter, for Northern Utilities, Inc.;
Kenneth Traum for the Office of the Consumer Advocate; and, Larry
S. Eckhaus, Esq., for the Staff of the New Hampshire Public
Utilities Commission.
I. PROCEDURAL HISTORY
On November 18, 1998, Northern Utilities, Inc.
(Northern or Company) filed a Petition for Approval of Sale of
Property, pursuant to RSA 374:30, to its affiliate Granite State
Transmission, Inc. (Granite), both wholly-owned subsidiaries of
Bay State Gas Company (Bay State). The property in question is
the Gosling Road Lateral (GRL), an existing 5,324 foot lateral of
8 and 12 inch pipe extending from a connection with Granite along
Gosling Road in Newington to the proposed site of Granite's
proposed interconnection with the joint facilities of Portland
Natural Gas Transmission System (PNGTS)/Maritimes and Northeast
Pipeline LLC (Maritimes).
Currently, Northern receives gas transported via the
Portland Pipe Line (PPL) to Granite. Northern's contract with
PPL expires April 30, 1999. Northern's gas supply and
transportation capacity on the leased PPL pipeline will be
replaced by PNGTS/Maritimes. Northern proposes to sell the GRL
to Granite at its net book value at date of transfer,
approximately $372,035. Northern maintains that the proposed
sale is the least expensive and environmentally preferable plan
to link Granite with PNGTS/Maritimes' Newington interconnection
because the distance between Granite and the site of the
interconnection is approximately one mile in a densely congested
area.
Due to the imminent completion of the PNGTS pipeline,
the Company's request for expedited treatment and in anticipation
of the Technical Session, Staff promulgated a series of
interrogatories intended to elicit additional information
regarding the proposal and met informally with the Company on
December 4, 1998.
At the duly noticed Prehearing Conference on December
21, 1998, the Office of the Consumer Advocate (OCA) appeared on
behalf of residential customers pursuant to RSA 363:28 II.
Affidavits of Publication were duly filed and the Newington Town
Clerk was notified. In accordance with the Order of Notice, the
parties and Staff provided preliminary statements of their
positions.
II. PRELIMINARY POSITIONS OF THE PARTIES
A. Northern Utilities, Inc.
As described in its Petition, Northern's proposal
involves a transfer of pipe from Northern to Granite to allow
Northern to receive its PNGTS volumes into its system in the most
efficient manner possible, i.e., via Granite which has more than
35 delivery points on Northern's system. The economic and
environmental consequences are the most significant reasons for
making this proposal. The Company questioned the applicability
of RSA 366:3 to this transaction or the need to do so.
B. OCA
The OCA has no final position, but raised certain
questions: Would it be less expensive for Northern to take gas
directly from PNGTS rather than Granite? Is the opportunity for
bypass greater? Is the transfer price appropriate? Are there
safety implications? Should Northern acquire Granite? and, Is
there a potential for double recovery via the CGA and base rates
due to potential timing differences between filings at the FERC
and at the Commission?
C. Staff
According to Staff, the filing raises numerous issues
including: the relationship of this proceeding to the related
proceedings before the Federal Energy Regulatory Commission
(FERC) and the Maine Public Utilities Commission (MPUC); the
applicability of RSA 366:3; the costs and environmental
considerations of alternatives to the proposed sale, including
Northern filing for a limited FERC certificate to serve as an
interstate pipeline; treatment of Northern customers connected to
the GRL; the risk of bypass along the GRL if that segment becomes
an interstate pipeline; the status of the PNGTS and Maritimes
pipeline projects; the appropriateness of net book value as the
sale price of the GRL; the costs avoided by Granite and PNGTS as
a result of approval of this petition; the effect the sale will
have on Northern, Northern's customers in New Hampshire, Granite,
Bay State, present transportation customers, and transportation
service in the present and in a full or partially unbundled
environment; the future relationship of Northern and Granite;
whether the proposed interconnection is the best link from both a
cost and safety perspective; Northern's plans regarding the PSNH
Newington metering facilities installed in accordance with DR
91-095; how safety issues along the GRL will be addressed; and,
whether granting the proposed petition would be for the public
good.
At a Technical Session subsequent to the Prehearing
Conference, the parties and Staff confirmed the procedural
schedule contained in the Order of Notice, and discussed the
content of the testimony to be filed by the Company on December
23, 1998 to address the issues described above.
III. COMMISSION ANALYSIS
Staff maintains that this proceeding should be governed
by both RSA 374:30 and RSA 366:3. RSA 373:30 requires Commission
approval for, inter alia, the transfer of any works or system.
The last sentence of RSA 366:3 provides that:
The commission may also require a public utility to file in
such form as the commission may require full information
with respect to any purchase from or sale to an affiliate,
whether or not made in pursuance of a continuing contract or
arrangement.
Although the preceding sentence of RSA 366:3 refers to certain
kinds of services, the above sentence does not. Northern did not
believe that the Commission had ordered it to file anything
pursuant to RSA 366:3, therefore, it had not done so. Northern
recognized, however, that it is within the Commission's
discretion to order it to do so. (Response TDR-2)
We accept the Staff's contention that this proceeding
should go forward under both RSA 374:30 and RSA 366:3. Although
the standard of review is the same under both statutes, given the
affiliate relationship between Northern and Granite pursuant to
RSA 366:1, II and that the proposed transaction is a purchase and
sale between affiliates, we believe both statutes are applicable.
We also reaffirm the procedural schedule proposed in
the Order of Notice to be reasonable and just.
Based upon the foregoing, it is hereby
ORDERED, this proceeding shall proceed under both RSA
366:3, with investigation pursuant to RSA 366:5, and 374:30; and
it is
FURTHER ORDERED, that the procedural schedule contained
in the Order of Notice and stipulated to by the parties and Staff
is adopted to govern our investigation in this proceeding.
By order of the Public Utilities Commission of New
Hampshire this twelfth day of January, 1999.
Douglas L. Patch Susan S. Geiger Nancy Brockway
Chairman Commissioner Commissioner
Attested by:
Thomas B. Getz
Executive Director and Secretary