DR 98-139
                                
             Public Service Company Of New Hampshire
                                
                 Special Contract Service Rates
                                
      Order Approving Stipulation and Offer of Settlement
                                
                    O R D E R   N O.  23,139
                                
                        February 8, 1999
     
       APPEARANCES:  Gerald M. Eaton, Esq. for Public Service
     Company of New Hampshire; Lisa Shapiro, Ph.D. and David
     Garfunkel, Esq. for Wausau Paper of N.H., Timken MPB and American
     Tissue; Dom S. D'Ambruoso, Esq. for Anheuser-Busch, Monadnock
     Paper Mills, Portland Pipeline Corp., Textron and Teradyne, Inc.;
     James Monahan for Cabletron Systems; Hugh T. Lee, Esq. for
     Heidelberg Web Press; Senator Fred W. King from Senate District
     1; Representative Jeb E. Bradley from Carroll County District 8;
     Henry Veilleux from the Business & Industry Association; Gary
     Gilmore from the Campaign for Ratepayers' Rights; Michael W.
     Holmes, Esq. and Kenneth E. Traum, Finance Director of the Office
     of the Consumer Advocate on behalf of residential ratepayers; and
     Eugene F. Sullivan, III, Esq. for the Staff of the New Hampshire
     Public Utilities Commission.
     
          I.   PROCEDURAL HISTORY
               In Docket No. DR 98-014, Public Service Company of New
     Hampshire's (PSNH) semi-annual Fuel and Purchased Power Cost
     Adjustment (FPPAC) filing, the New Hampshire Public Utilities
     Commission (Commission) approved an FPPAC rate of $0.00383 per
     kWh.  The rate reflects an increase to the Base Amount(BA)
     component of the FPPAC formula to reflect the complete
     amortization of half of the Acquisition Premium. See Order No.
     22,946 (May 29, 1998). The Commission also ordered PSNH to put
     into effect the special contract rates it had proposed on a
     temporary basis pending further consideration in another docket
     of the effects that changes to FPPAC BA have on special contract
     customers.  
               On May 31, 1998, PSNH initiated this proceeding by
     filing tariff revisions designed to modify certain special
     contracts.  The tariffs of these special contracts are tied to
     changes in FPPAC to reflect the reduction in base rates caused by
     the complete amortization of half of the Acquisition Premium.  An
     Order of Notice was issued on July 31, 1998 scheduling a
     pre-hearing conference for August 25, 1998.  
               A Motion to Intervene was filed by Representative Jeb
     E. Bradley on August 8, 1998.  On August 17, 1998, a Petition for
     Intervention was filed by Anheuser-Busch, Inc.  Elliott &
     Williams Roses requested full intervenor status on August 19,
     1998.  On August 20, 1998, motions for intervention were filed by
     Campaign for Ratepayers' Rights, F. Anne Ross, Esq., Wausau
     Papers of New Hampshire, Cabletron Systems, Inc., James Rodier,
     Esq., and the Business and Industry Association of New Hampshire
     (BIA). 
               On September 8, 1998, the Commission issued Order No.
     23,012.  This Order scheduled a meeting of the Parties and Staff
     for October 6, 1998 to discuss a schedule for the remainder of
     the proceeding and submit it to the Commission for consideration. 
     Order No. 23,012 also granted the pending motions for
     intervention, ordered PSNH to notify all special contract
     customers affected by the proceeding and directed PSNH to notify
     all parties to DR 96-150, the electric restructuring docket, and
     other parties holding special contracts of the proposed changes
     to the special contracts. 
               On September 11, 1998, Anheuser-Busch and Wausau
     petitioned the Commission to modify Order No. 23,012 to maintain
     the FPPAC BA at its currently frozen level pending resolution of
     the proceeding.  On October 10, 1998, the Commission issued an
     Executive Letter which established a procedural schedule for the
     remainder of the proceeding.   On October 22, 1998, late-filed
     Petitions for Intervention were filed on behalf of Portland
     Pipeline Corporation, Monadnock Paper Mills, Inc., and Textron
     Automotive Company.  Hitchiner Manufacturing Company and Nashua
     Corporation submitted late-filed Petitions to Intervene on
     October 29, 1998.  A Motion for Protective Order was filed by
     PSNH on October 29, 1998.  On the same day, Motions for Late
     Intervention were filed by Timken Aerospace and Super Precision
     Bearings.  American Tissue Mills of New Hampshire, Inc. filed a
     Motion for Late Intervention on October 30, 1998.  
     
               On November 2, 1998, an Executive Letter was issued by
     the Commission expressing concern about the scope of the
     proceeding and ordering a hearing on scope for November 13, 1998. 
     The Executive Letter also stated that the proposed procedural
     schedule would be held in abeyance pending the outcome of the
     November 13, 1998 hearing. On November 2, 1998, the Commission
     received a late-filed Motion to Intervene from Summit Packaging
     Systems, Inc.
               On November 13, 1998, a hearing was held to examine the
     scope of the proceeding.   
               On December 1, 1998, the Commission issued Order No.
     23,072 concerning the scope of the proceeding and setting
     deadlines for filing a stipulation and any supporting or opposing
     testimony.  Order No. 23,072 also granted the late-filed motions
     to intervene by Timken, Super Precision Bearings, Textron
     Automotive, Portland Pipeline, Monadnock Paper, Summit Packaging,
     American Tissue, Hitchiner Manufacturing and Nashua Corporation.  
               On December 4, 1998, PSNH submitted the testimony of
     Stephen R. Hall, Manager of Rates, along with a Stipulation and
     Offer of Settlement, including a Model Form of Amendment to the
     special contracts.  On December 8, 1998, five signature pages to
     the Stipulation and Offer of Settlement were filed on behalf of
     Anheuser-Busch, Inc., Monadnock Paper Mills, Inc., Textron
     Automotive Company, Portland Pipe Line Corporation and Teradyne
     Inc. by their attorney who requested the signatures be made part
     of the Stipulation and Offer of Settlement.  Also on December 8,
     1998, PSNH filed a Supplement to the Stipulation and Offer of
     Settlement.  The Stipulation and Offer of Settlement indicates
     that the BA should remain at 4.955 cents per kilowatt-hour and
     the FPPAC rate shall remain at 0.383 cents per kilowatt-hour
     until (1) retail choice is available to other PSNH customers of
     similar size and load characteristics, and (2) the special
     contract is amended or altered by Commission order in compliance
     with an approved restructuring plan.  
               On December 14, 1998, the Commission issued Order No.
     23,085 which granted PSNH's Motion for Protective Order.  On
     December 16, 1998, the BIA pre-filed the testimony of Henry
     Veilleux in support of the Stipulation and Offer.  A letter in
     support of the Stipulation and Offer of Settlement was filed by
     Executive Councilor Raymond S. Burton on December 18, 1998.
               At the December 22, 1998 hearing, testimony in support
     of the Stipulation and Offer was provided by Mr. Hall.  BIA and
     Representative Bradley made statements in support of the
     Stipulation and Offer.  No Party to the proceeding opposed the
     Stipulation and Offer.  Staff did not file testimony in the
     proceeding nor take a position concerning the Stipulation and
     Offer.  On December 23, 1998, the Commission received a letter in
     support of the Stipulation and Offer of Settlement from Senator
     Frederick W. King.
          II.  STIPULATION AND OFFER OF SETTLEMENT 
               The Stipulation and Offer of Settlement, including the
     Model Form of Amendment, provides that customers receiving
     service under special contracts tied to a formula for determining
     the energy portion of their bill will not see any changes in the
     formula due to changes in the FPPAC BA or FPPAC rate during the
     period the Stipulation and Offer of Settlement is effective. 
     Absent these changes, the 35 customers receiving service under
     these Special Contracts would have incurred increased energy
     charges of 1.326 cents per kWh due to the change in the FPPAC BA 
     which increased it from 4.955 cents per kWh to 6.281 cents per
     kWh.  Total FPPAC costs, currently 6.664 cents per kWh, include
     the FPPAC BA of 6.281 cents per kWh and the FPPAC rate of 0.383
     cents per kWh.  
               Other than the fixing of the FPPAC BA and the FPPAC
     rate at 4.955 cents per kWh and 0.383 cents per kWh,
     respectively, all other provisions of the special contracts
     remain the same; however, the Model Amendment provides that the
     special contract will remain in effect until either the special
     contract expires or retail competition is available for
     non-special contract PSNH customers similar in size and load
     characteristics to the special contract customers and the special
     contract is amended by the Commission as part of an approved
     restructuring compliance plan.   
     III. COMMISSION ANALYSIS
               The issue for our consideration is whether to accept
     the Stipulation and allow a modification to these 35 special
     contracts to provide these customers with the rate relief
     experienced by other customers taking service pursuant to the
     generally applicable rates of PSNH, rate relief which these 35
     customers would not otherwise receive under the terms of their
     current contracts. 
               All 35 of the special contracts were approved by
     Commission order in accordance with RSA 378:18.  Pursuant to RSA
     365:28 the Commission may "alter, amend, suspend, annul, or
     otherwise modify any order made by it."  This Commission has
     previously recognized that it retains jurisdiction over all
     contracts filed with it for its approval.  Re Town of Derry, 77
     NH PUC 4 (1992). 
               In the case at hand, the Stipulation and Offer of
     Settlement provides that, from June 1, 1997, until retail choice
     applies for customers similar in size and load characteristics of
     the special contract customers, for the purposes of calculating
     the energy charge component in the special contracts of these
     thirty-five customers, the FPPAC rate will be fixed at 0.383
     cents per kWh and BA will be fixed at 4.955 cents.  The energy
     component of these contracts, therefore, will be fixed for as
     long as the contracts remain in effect.  Thus, the contracts will
     not reflect increases or decreases in the FPPAC rate, base rates,
     or BA.
               As part of the Stipulation and Offer of Settlement,
     PSNH must notify eligible special contract customers of the
     change in their special contract within 14 days from the
     effective date of this order and PSNH and the special contract
     customers shall have a total of 60 days from the effective date
     of this order to execute and return the Model Amendment.  In
     order to avail themselves of the new rate, special contract
     customers must execute and return the Model Amendment. 
               PSNH testified that there are sufficient revenues under
     each special contract to cover total FPPAC costs, currently 6.664
     cents per kWh. PSNH agreed to "hold harmless" its non-special
     contract customers by calculating and reconciling its FPPAC rates
     from now until retail choice day arrives as if the special
     contract customers had contributed the full FPPAC BA level and
     paid the applicable FPPAC rate.  In essence, PSNH states it will
     accept the risk of changes in FPPAC costs in the future.   
               Although we believe the consequences of the manner in
     which the energy charges were established under the original
     contract terms were foreseeable, we also believe the proposed
     modification to the terms and conditions of the contracts is just
     and in the public interest.  We make this finding, in large part,
     based on PSNH's willingness to hold all other customers harmless
     in the event revenues under the modified contracts are
     insufficient to cover FPPAC and BA costs.
               Furthermore, based on our review of the Stipulation and
     Offer of Settlement, we find that it meets the concerns we stated
     in our December 1, 1998 order on the scope of the proceeding,
     namely, that any settlement shall not prevent customers from
     participating in retail electric choice when it becomes
     available.  We believe this Stipulation and Offer of Settlement
     meets that objective.  At the same time, it will provide these
     customers with stable rates, at least between now and the advent
     of retail choice. 
               We note, however, that in exchange for rate stability
     these customers have agreed to forgo the benefits of any
     reduction in the FPPAC rates or base rates over the term of the
     contracts.  Thus, we would not expect to see any other attempts
     to modify these contracts based on any such reductions in rates.  
               Finally, we appreciate the substantial efforts of the
     Parties and Staff to resolve this difficult issue in a manner
     that provides benefits to the special contract customers without
     harming non-special contract customers or impeding retail
     competition.  
               Based upon the foregoing, it is hereby 
               ORDERED, that the Stipulation and Offer of Settlement
     as amended by the Supplement to Stipulation is APPROVED and that
     the 35 special contracts at issue are modified in accordance with
     its terms and conditions; and it is
               FURTHER ORDERED, the rates contained in the Stipulation
     and Offer of Settlement shall remain in effect pursuant to the
     terms contained in the Stipulation and Offer of Settlement until
     the Commission orders otherwise in compliance with an approved
     restructuring plan; and it is
               FURTHER ORDERED, that Public Service Company of New
     Hampshire notify eligible special contract customers of the
     change in their special contract within 14 days from the
     effective date of this order and that PSNH and the special
     contract customers shall have a total of 60 days from the
     effective date of this order to execute and return the Model
     Amendment; and it is 
               FURTHER ORDERED, that PSNH shall file with the
     Commission a copy of all properly executed Model Amendments to
     the special contracts within 14 days from the receipt of the
     executed Model Amendment; and it is 
               FURTHER ORDERED, that this order is effective February
     9, 1999.
               By order of the Public Utilities Commission of New
     Hampshire this eighth day of February, 1999.
     
     
     
                                                                      
           Douglas L. Patch       Susan S. Geiger     Nancy Brockway
               Chairman           Commissioner          Commissioner
     
     Attested by:
     
     
     
                                      
     Thomas B. Getz
     Executive Director and Secretary