DR 97-195
Concord Electric Company
and Exeter & Hampton Electric Company
Pilot Program Administrative Service Charge
Order Approving Stipulation
O R D E R N O. 22,844
January 30, 1998
APPEARANCES: Meabh Purcell, Esq. For Concord Electric
Company (CECo) and Exeter & Hampton Electric Company
(collectively the Companies) and Robert Frank, Attorney for the
Staff of the New Hampshire Public Utilities Commission.
I. PROCEDURAL HISTORY
On September 22, 1997, after the Commission Audit Staff
completed its audit of the Companies' 1996 Pilot Program
administrative expenses, Concord Electric Company (CECo) and
Exeter & Hampton Electric (E&H) filed with the Commission a
petition for approval of its 1996 Pilot Program Administrative
Cost Charge, effective for the period November 1, 1997 through
October 31, 1998. The filing included proposed tariffs and
supporting testimony. The Company proposes to recover $522,649
in administrative costs associated with the Pilot Program, with
CECo ratepayers paying 45 percent of the costs and E&H ratepayers
paying 55% of the costs. CECo proposes to recover its portion via
a surcharge of $0.00048 per kWh and E&H proposes to recover its
portion via a surcharge of $0.00055 per kWh.
The Commission suspended the proposed tariffs and
scheduled a prehearing conference and a technical session for
January 5, 1998. The Companies duly gave public notice of the
hearing, but no parties petitioned to intervene. At the
technical session, the Companies provided oral responses to Staff
questions and, on January 13, 1998, the Companies filed written
responses.
During the course of discovery, a recommendation was
made to combine the surcharge calculations to recover Pilot
Program costs for 1996 and 1997. The 1997 costs (estimated to be
roughly 10 percent of combined 1996 and 1997 expenses) are
subject to audit by the Commission's Finance Department, and, as
with the 1996 costs, are fully reconcilable. This combined
surcharge eliminates the need to have a second hearing for 1997
Pilot Program expenses and saves regulatory commission expenses
for the preparation of the 1997 filing as well as legal costs to
bring the filing before the Commission. The combined surcharge
would also reduce interest costs that would otherwise begin to
accrue on 1997 Pilot Program expenses pending audit and approval
by the Commission.
Based on the above, Staff believes that it is
reasonable to allow a surcharge calculation based on the combined
Pilot Program administrative expenses for calendar year 1996 and
1997. The surcharge for Concord Electric Company is $0.00058 per
kWh and the recalculated surcharge rate for Exeter & Hampton
Electric Company is $0.00067 per kWh. These surcharges are
designed to be recovered from all customers and are effective for
the eleven-month period of February 1,1998 through December 31,
1998.
On January 16, 1998, the Companies filed a letter with
the Commission summarizing the agreement reached between the
Companies and Staff and, on January 20, 1998, the Commission held
a hearing to receive evidence and testimony in support of this
agreement. At the hearing, the Commission requested that the
Companies and Staff file a written stipulation. Following is a
summary of this stipulation.
II. STIPULATION
The Companies and Staff agree that the Pilot Program
administrative service charges as set forth in the Companies'
September 22, 1997 filing be approved, subject to the following
modifications:
1. The Companies and Staff agree that all 1996 Pilot Program
costs included in the proposed surcharge are incremental in
accordance with the Commission Order No. 22,033, dated February
28, 1996, in Docket DR 95-250. That is, the Commission auditors
have allowed costs only to the extent that these costs pertain to
incremental costs specifically associated with the establishment
and implementation of the Pilot Program.
2. The Companies and Staff agree that 1996 Pilot Program
administrative expenses have been booked as deferred costs. This
accounting treatment avoids the potential for double recovery of
costs. That is, if any costs had been expensed in 1996 rather
than deferred, and year 1996 is a test year in a base rate
proceeding, double recovery of costs could result: once in the
surcharge to be effective in February 1998 and again in the 1996
test year used in a base rate proceeding, if the costs were not
properly proformed out.
3. The Companies and Staff agree that 1997 Pilot Program costs
have been accounted for in a manner consistent with the
Companies' 1996 Pilot Program costs and in accordance with items
(1) and (2) above. The portion of the surcharge representing the
estimated 1997 Pilot Program costs is based on preliminary
figures which are subject to a final audit by the Commission's
Finance Department and which, like the 1996 costs, will be fully
reconciling.
4. The Companies and Staff agree that, given the opportunity to
save administrative and legal time and expense, along with
interest costs, the 1997 Pilot Program costs, subject to
commission audit, should be combined with the 1996 Pilot Program
costs such that the surcharge includes the total Pilot Program
costs for 1996 and 1997.
5. The Companies and Staff agree that all 1996 and 1997 Pilot
Program costs should be recovered on a bills-rendered basis, over
the eleven-month period of February 1, 1998 through December 31,
1998. Pilot Program costs for 1996 and 1997 are recoverable from
all customers in accordance with the Commission Order No. 22,119,
dated April 29, 1996 in Docket DR 95-250.
6. The Companies and Staff agree that the Pilot Program costs
for 1996, with interest applied from November 1997, combined with
the preliminary costs for 1997, with interest applied from
January, 1998, result in surcharge rates as follows:
CECo Surcharge Rate $0.00058 per kWh
E&H Surcharge Rate $0.00067 per kWh
The 1997 costs are preliminary and are subject to a final audit
by the Commission's Finance Department, but any over or under
recovery of 1997 costs based on the approved surcharge rate would
be trued-up.
7. The Companies and Staff agree that monthly reports will be
filed which summarize the amounts recovered each month and the
balance remaining to be recovered, with interest applied. All
such recoveries will be subject to true-up, with any over or
under recoveries refunded to or collected from ratepayers in next
year's surcharge calculation.
8. Pursuant to the proposed tariff pages, next year's surcharge
would use the same mechanism and would be filed with the PUC for
approval and would include the Companies' 1998 costs subject to
PUC Finance Department audit and Commission approval.
9. The Companies and Staff agree to expedite the audit of final
1997 Pilot Program administrative costs such that the
Commission's Finance Department can complete its review by March
31, 1998.
10. Upon order of the Commission, the Companies shall file
tariff pages in compliance with this settlement.
III. COMMISSION ANALYSIS
We find that the Companies' proposed Pilot Program
Administrative Service Charges, as modified by the Stipulation,
are reasonable and in the public good. The Pilot Program
administrative expenses are for incremental costs in accordance
with our Order No. 22,033, dated February 28, 1996, in Docket DR
95-250. Specifically, these costs are associated with the
establishment and implementation of the Pilot Program. Recovery
of these costs had been deferred pending the Commission's
decision in this case. Further, these costs are recoverable from
all customers in accordance with our Order No. 22,119 (April 29,
1996), in Docket DR 95-250.
We note that estimated 1997 costs are roughly 10
percent of the combined actual 1996 and estimated 1997 costs.
Given this relatively small weighting, coupled with the
commitment by the Company and the Staff to expedite its audit of
these costs, it is appropriate to combine the estimated 1997
costs with the actual and audited 1996 costs. Also, we find that
the eleven-month recovery period of February 1998 through
December 1998 is fair and reasonable.
Based upon the foregoing, it is hereby
ORDERED, that the Companies' proposed Pilot Program
Surcharges, as amended by the Stipulation, are hereby APPROVED;
and it is
FURTHER ORDERED, that the approved Pilot Program
Surcharge for Concord Electric Company of $0.00058 per kWh and
Exeter & Hampton of $0.00067 per kWh be recovered from all
customers on a bills rendered basis effective for the period
February 1, 1998 through December 31, 1998; and it is
FURTHER ORDERED, that Concord Electric Company and
Exeter & Hampton Electric Company file monthly reports
summarizing the status of the actual revenue collections and the
unrecovered balance; and it is
FURTHER ORDERED that the Companies file compliance
tariffs no later than 15 days from the date of this order.
By order of the Public Utilities Commission of New
Hampshire this thirtieth day of January, 1998.
Douglas L. Patch Bruce B. Ellsworth Susan S. Geiger
Chairman Commissioner Commissioner
Attested by:
Thomas B. Getz
Executive Director and Secretary