DR 97-249
Granite State Electric Company
First Half 1998 Fuel Adjustment Clause and Qualifying
Facility Power Purchase Rate
Order Approving Changes to FAC and QF Rates
O R D E R N O. 22,817
December 31, 1997
APPEARANCES: Carlos A. Gavilondo, Esquire on behalf of
Granite State Electric Company; and, James J. Cunningham, Jr. and
Todd M. Bohan for the Staff of the New Hampshire Public Utilities
Commission.
I. PROCEDURAL HISTORY
On November 26, 1997, Granite State Electric Company
(GSEC or Company) filed with the Commission its Testimony and
Schedules in support of its First Half 1998 Fuel Adjustment
Clause (FAC) and Qualifying Facility (QF) Power Purchase Rate.
GSEC is proposing an FAC factor of $0.01193 per kWh for the
period January 1, 1998 through June 30, 1998. The FAC factor
represents an increase of $0.00138 per kWh over the currently
effective FAC factor of $0.01055 per kWh. The FAC proposed by
the Company would increase the typical monthly bill of a
residential customer using 500 kWhs per month by $0.69.
Regarding its QF energy rates, GSEC is proposing rates
at the sub-transmission level of $0.03697 per kWh on-peak,
$0.02965 per kWh off-peak and $0.03303 per kWh on average for the
first half of 1998. At the primary distribution level, the
proposed rates are $0.03971 per kWh on-peak, $0.03111 per kWh
off-peak and $0.03508 per kWh on average. The proposed QF rates
for the secondary distribution level are $0.04111 per kWh on-peak, $0.03184 per kWh off-peak and $0.03612 per kWh on average.
GSEC is proposing a capacity rate of $2.32 per kW-mo at the sub-transmission level, $2.54 per kW-mo at the primary distribution
level and $2.65 per kW-mo for secondary distribution for the
first half of 1998. The value of capacity used to determine the
Company's QF capacity rate is $26.94 per kW-yr.
II. POSITIONS OF THE PARTIES AND STAFF
A. GSEC
At the hearing, the Company presented witnesses in
support of its proposals. Jose A. Rotger, Senior Rate Analyst
for New England Power Service Company, supported GSEC's proposed
FAC factor and QF rates. Jeffrey Van Sant, Vice President and
Director of Fuel Supply and Risk Management for New England Power
Company (NEP), supported GSEC's fuel price projections for the
first half of 1998. Mr. Rotger summarized the Company's proposed
FAC factor and QF rates. The proposed FAC factor is $0.01193 per
kWh, an increase of $0.00138 per kWh. The proposed QF rates for
the first half of 1998 at sub-transmission voltage are 3.697
cents per kWh on-peak, 2.965 cents per kWh off-peak and 3.303
cents per kWh on average.
The increase in the factor is primarily attributable to
increased forecast fuel costs for the first half of 1998. There
are two principal reasons for this increase. First, forecast
prices for both oil and gas are higher for the first half of 1998
than the estimates in the last filing. Second, the forecast
period contains scheduled maintenance outages for several NEP
base load and intermediate generating units. The increase in
fuel costs is partially offset by forecast coal prices which are
lower than the estimates reflected in the present factor.
Regarding QF rates, the Company indicated that the
value of capacity used to determine GSEC's capacity rate is
$26.94 per kW-year. This rate is the estimated market value of
short term capacity sales and purchases recently consummated by
NEP.
B. Staff
At the hearing, Staff questioned the Company about a
number of issues pertaining to the potential July 1, 1998 over or
under collection of the FAC resulting from the impact of certain
restructuring matters including the following: the treatment of
changes in the assessment mechanism used to calculate funding of
the Independent System Operator (ISO); and, refunds and spent
nuclear fuel cost adjustments with the Department of Energy for
the period ending June 30, 1998. Staff is concerned that any
credits due GSEC ratepayers should be passed back in a
reconciliation adjustment which will true-up any amounts owed to
GSEC ratepayers at the end of the first half of 1998.
Also, Staff is concerned about the Hydro-Quebec Energy
Savings Credit (i.e., the New Hampshire Host State Bonus Share
mechanism). Specifically, Staff is concerned that, subsequent to
divestiture, New Hampshire ratepayers may lose the Savings
Credit. In its response to Staff data request DR-STAFF-11,
Exhibit No. 3 as marked at the hearing, the Company stated that
NEP customers "will receive no savings credit". Staff is
concerned that this savings credit belongs to the ratepayers of
the state of New Hampshire and it may be at risk in the
divestiture of NEP's assets.
III. COMMISSION ANALYSIS
The Commission shares Staff concerns about reconciling
adjustments. However, the Commission notes the Company response
to Staff data request DR-STAFF-14, one of the data responses
contained in Exhibit No. 2 as marked at the hearing, wherein it
states that, "upon the commencement of retail access for GSEC
customers, any over-collection of the fuel clause balance will be
refunded to customers and any under-collection will be recovered
through a fuel reconciliation factor. GSEC will make a filing
with the Commission prior to the retail access date in which the
Company will make a specific proposal for refunding any over-collection or recovering any under-collection".
Regarding Staff's concern about the potential loss of
the New Hampshire Bonus Share, the Commission notes that it will
have to review and approve the NEP divestiture and as part of
this process it will examine the New Hampshire Bonus Share.
Based on the above, and based on the careful review of
the record in this case, we believe that the Company's proposed
FAC and QF are fair and reasonable and we will approve the rates
as proposed.
Based upon the foregoing, it is hereby
ORDERED, that the FAC for bills rendered on or after
January 1, 1998 of $0.01193 per kWh is approved; and it is
FURTHER ORDERED, that GSEC pay the QF rates as
proposed; and it is
FURTHER ORDERED, that GSEC file tariff pages in
compliance with this order no later than 15 days from the
issuance of this order.
By order of the Public Utilities Commission of New
Hampshire this thirty-first day of December, 1997.
Douglas L. Patch Bruce B. Ellsworth Susan S. Geiger
Chairman Commissioner Commissioner
Attested by:
Thomas B. Getz
Executive Director and Secretary