DR 97-212 GRANITE STATE ELECTRIC COMPANY Cooperative Interruptible Service Compliance Filing Order Nisi Approving Update of Cooperative Interruptible Service Credits and Non-Compliance Charges for the 1997/98 Program Year O R D E R N O. 22,889 March 30, 1998 On October 1, 1997, Granite State Electric Company (Granite State or the Company) filed with the New Hampshire Public Utilities Commission (Commission) an update of the short-term value of capacity and a review of the long-term value of capacity used to calculate customer credits in Granite State's Cooperative Interruptible Service (CIS) Program. The Company's CIS Program provides credits to large commercial and industrial customers based on the customer's ability and willingness to interrupt load as requested by Granite State during capacity shortages. Under the Settlement Agreement between Granite State and Commission Staff (Staff) approved by Order No. 20,684 (November 30, 1992) in Docket DR 92-188, Granite State is required to file updated short-term and long-term avoided costs and to recalculate the credits on or before October 1st of each year. Granite State's CIS program consists of two types of contracts, CIS-1 and CIS-2. Through CIS-1, a customer commits to a firm interruptible load level with a seven year notice of termination provision, is paid regardless of whether or not an interruption actually occurs and is penalized in the event that an interruption is called and the customer fails to comply. CIS-2 does not require a commitment for a firm interruptible load level by the customer. Rather, the contract is performance-based, with higher credits paid in months when the company requests an interruption and the customer agrees to the request. Both contracts offer three options which differ in terms of frequency, duration and interruption notification period. A different credit is paid for each option. In its October 1, 1997 filing, Granite State updated the data on program expenses and the total credited interruptible load to calculate new program cost factors which were then used to update the credit calculations. The long-term avoided cost value, used in establishing the credit levels in CIS-1 contracts, remained unchanged from 1996/97 at a level of $65.10 per kW. Granite State proposes two changes to its CIS Programs. First, the Company proposes to close the CIS-1 Program to any new customers. Second, the Company proposes eliminating the CIS-2 Program in its entirety. Granite State recommends these changes on the basis of impending retail access, under which the Company will not, with the exception of default power, be selling electricity to its customers. Granite State proposes the following credits ($/kW-Month) and non-compliance charges ($/kW-Day), depending upon which option the customer chooses. The proposed CIS-1 credits and non-compliance charges are approximately 2 percent higher than the 1996/97 charges. CIS-1 Non-Compliance Credit Charge Option 1 $ 4.33 $ 5.20 Option 2 $ 4.75 $ 5.70 Option 3 $ 3.25 $ 3.90 On February 13, 1998, Staff issued data requests to Granite State requesting additional information regarding the Company's CIS Program filing. On February 20, 1998, the Company filed responses which served to clarify issues about Granite State's CIS Program expenses. The Commission has reviewed Granite State's filing and will approve the updated avoided costs, credits and non-compliance charges. We find that the credits have been calculated in accordance with the formulas approved in Order No. 20,684. We are satisfied that Granite State's CIS-1 Program continues to provide value to the Company and its ratepayers as the industry makes the transition to increased competition and that the updated avoided costs and resulting credits are reasonable. We find that elimination of the CIS-2 Program will not impact current ratepayers because Granite State has no customers in the CIS-2 Program. We further find that elimination of the CIS-2 Program is consistent with the Commission's efforts to move forth with retail choice. Based upon the foregoing, it is hereby ORDERED NISI, that Granite State's request for approval of its updated CIS-1 Credits and elimination of the CIS-2 Program is GRANTED; and it is FURTHER ORDERED, that pursuant to N.H. Admin. Rules, Puc 1601.05, Granite State shall cause a copy of this Order Nisi to be published once in a statewide newspaper of general circulation, such publication to be no later than April 6, 1998 and to be documented by affidavit filed with this office on or before April 13, 1998; and it is FURTHER ORDERED, that Granite State serve a summary of its proposed rate change and a copy of this Order Nisi on all current CIS-1 and CIS-2 customers by first class U.S. Mail, postmarked no later than April 13, 1998; and it is FURTHER ORDERED, that all persons interested in responding to this petition be notified that they may submit their comments or file a written request for a hearing on this matter before the Commission no later than April 20, 1998; and it is FURTHER ORDERED, that any party interested in responding to such comments or request for hearing shall do so no later than April 27, 1998; and it is FURTHER ORDERED, that this Order Nisi shall be effective April 30, 1998, unless the Commission provides otherwise in a supplemental order issued prior to the effective date; and it is FURTHER ORDERED, that Granite State shall file a compliance tariff with the Commission on or before April 30, 1998, in accordance with N.H. Admin. Rules, Puc 1601.04(b). By order of the Public Utilities Commission of New Hampshire this thirtieth day of March, 1998. Douglas L. Patch Bruce B. Ellsworth Susan S. Geiger Chairman Commissioner Commissioner Attested by: Thomas B. Getz Executive Director and Secretary