DR 97-238 Connecticut Valley Electric Company Inc. 1998 Conservation and Load Management Filing Order Approving Filing O R D E R N O. 22,892 April 1, 1998 APPEARANCES: Kenneth C. Picton, Esq. for Connecticut Valley Electric Company Inc. and Michelle A. Caraway for the Staff of the New Hampshire Public Utilities Commission. I. PROCEDURAL HISTORY On November 14, 1997, Connecticut Valley Electric Company Inc. (CVEC) filed with the New Hampshire Public Utilities Commission (Commission) a petition for approval of its 1998 Conservation and Load Management (C&LM) Proposal for C&LM Percentage Adjustment (C&LMPA) Effective January 1, 1998. The C&LMPA includes recovery of C&LM costs related to regulatory reporting, net lost revenues, incentive share and applicable interest. By Order No. 22,810 (December 24, 1997), the Commission scheduled a prehearing conference for January 13, 1998, set deadlines for intervention requests and objections thereto, outlined a proposed procedural schedule, and required the Parties and Commission Staff (Staff) to summarize their positions with regard to the filing for the record. There were no Motions to Intervene filed. The Office of the Consumer Advocate is a statutorily recognized intervenor. On January 27, 1998, the Commission issued Order No. 22,842 approving the procedural schedule. Pursuant to the approved procedural schedule, CVEC and Staff engaged in formal discovery and technical sessions. On March 3, 1998, Staff filed a letter with the Commission stating that Staff did not file testimony in this proceeding and that Staff and CVEC agreed that it was not necessary to proceed with the Settlement Conference scheduled for March 9, 1998. Instead, Staff and CVEC believed that the Commission would be served best by presenting the filing at the March 24, 1998. A hearing was held on March 24, 1998 before the Commission at which CVEC presented two witnesses supporting the filing. II. 1997 CONSERVATION & LOAD MANAGEMENT PROGRAM By Commission Order No. 22,536 (March 31, 1997) issued in DR 96-362, CVEC's 1997 C&LM Program docket, the Commission approved a Stipulation entered into between CVEC and Staff. Based primarily on the Commission's Restructuring New Hampshire's Electric Utility Industry: Final Plan (Final Plan), CVEC and Staff stipulated that CVEC would be allowed to use the 1997 program year to ramp down all existing C&LM programs that it offered while completing installations of those measures to which it had already made commitments. The goal of ramping down the programs was to end program expenditures and funding as of January 1, 1998, or as soon thereafter as practicable. The 1997 C&LMPAs were established at a level to collect an estimated $250,000 of C&LM direct costs, net lost revenues and financial incentives. III. 1998 CONSERVATION & LOAD MANAGEMENT PROGRAM At the March 24, 1998 hearing, the Company presented two witnesses, K. Dean Pierce, Manager of Market Planning, and Carl Scott, Consultant, Revenue Requirements, to describe and support CVEC's 1998 C&LMPA filing. For 1998, carry-over direct program costs, costs for regulatory reporting, and recovery of net lost revenues and financial incentives represent approximately $127,000 of the amounts to be collected through the C&LMPAs. Per the Stipulation approved by Order No. 22,536, CVEC used 1997 to ramp down its C&LM programs. CVEC is not proposing any programs for 1998. Direct program costs incurred in January through March 1998 represent the remaining costs of serving participants CVEC had made commitments to in 1997. For 1998, CVEC proposes only $5,000 of direct costs related to monthly regulatory reporting and the filing of the 1999 C&LMPA by November 1, 1998. Witness Pierce described a proposal to eliminate the C&LMPAs in the future. As described in his written testimony, CVEC presently projects net lost revenues to be collected through the year 2024. Given that all measure installations are known, CVEC could project the stream of net lost revenues based on all measures installed through 1997. If that stream of revenues was discounted, that present value could be recovered in a single year and the C&LMPAs could be reduced or eliminated if no further C&LM costs were incurred. Ex. 1 at p. 10. CVEC Witness Scott stated that CVEC's response to a data request estimated the net present value of net lost revenues for the period 1999 through 2024 to be approximately $510,000. Witness Scott also stated that CVEC was not requesting that this proposal be approved in this docket and that CVEC and Staff did not fully explore the implications of implementing this proposal for 1998. On March 20, 1998, the Commission issued its rehearing order, Order No. 22,875 in Docket DR 96-150, Electric Utility Restructuring. CVEC witnesses were not prepared to answer how Order No. 22,875, as it pertains to energy efficiency programs, applies to CVEC except to state that CVEC currently has no plans to reinstate its C&LM programs in 1998. Commissioner Geiger asked the witnesses if CVEC is currently tracking customer requests for its C&LM programs. Witness Pierce stated that such inquiries are not being tracked by CVEC but that they could be tracked as long as the capability existed with CVEC's parent company, Central Vermont Public Service. The revised C&LMPA calculation, Tariff 10th Revised Page 20, was presented at the hearing. Ex. 4. The C&LMPAs were calculated using actual data known through February 1998. Additionally, the total estimated revenues for April through December 1998, which is the denominator used to calculate the C&LMPAs, are based on the frozen Fuel Adjustment Clause (FAC) and the Purchased Power Cost Adjustment (PPCA) rates for 1998 as ordered by the Commission in Order No. 22,815 (December 31, 1997) in Docket DR 97-241. CVEC proposes a Residential C&LMPA of 0.34% and a Commercial and Industrial (C&I) C&LMPA credit of (0.78%). These compare to C&LMPAs of 0.82% and 2.51% for the Residential and C&I classes respectively. The Residential C&LMPA of 0.34% equates to a weighted annual average decrease of 32 cents ($0.32) on a monthly 500 kilowatt-hour bill. Ex. 4, Revised Attachment CJF-5. CVEC and Staff also request that the Commission waive the application of N.H. Admin. Rules, Puc 1203.05(a) so that the 1998 C&LMPAs may be effective on a bills rendered basis. IV. COMMISSION ANALYSIS After careful review of the November 14, 1997 filing, supporting testimony at the March 24, 1998 hearing and the exhibits, we find that CVEC's proposed C&LMPAs, as revised at the hearing, are reasonable and in the public good. Consistent with Order No. 22,536, CVEC used 1997 to ramp down its C&LM programs to effectively terminate them on January 1, 1998. The termination of CVEC's C&LM programs is not inconsistent with the Commission's stated policy objectives regarding energy efficiency programs in either the Final Plan or Order No. 22,875 issued March 20, 1998. The rehearing order stated our belief that "it is appropriate to move as quickly as possible from the payment of lost revenues as part of any DSM program." We are searching for ways to eliminate lost revenues and direct CVEC and Staff to consider the proposal detailed above along with other possible alternatives which may achieve our goal. CVEC and Staff can use the working group that is to be established as part of Order No. 22,875 as a forum to discuss different methods with other parties. CVEC and Staff should carefully consider of the rate impact of all alternatives considered. A discussion of the methods considered and the impacts of each should be incorporated in CVEC's 1999 C&LMPA filing. Additionally, we direct CVEC to track the inquiries it receives for its C&LM programs. Minimally, CVEC must maintain a log of the number of inquiries it receives, the nature of the inquiries and the specific programs that the customers are asking about. This information shall assist us in determining the extent to which customers are expecting energy efficiency programs to be offered by their local distribution companies. CVEC Witness Scott described that the revenues used in the calculation of the C&LMPAs were based on the frozen FAC and PPCA rates. Should the Commission authorize any dramatic change to the FAC and/or PPCA rates during the April through December 1998 period which would have a material effect on the projected over/undercollection at December 31, 1998, CVEC shall consider filing for an interim C&LMPA. Finally, consistent with treatment we have recently allowed for Granite State Electric Company in Docket DR 97-211 in Order No. 22,818 (January 2, 1998), we waive the application of N.H. Admin. Rules, Puc 1203.05(a), which requires generally that rate changes be implemented on a service rendered basis, and will allow CVEC to implement its C&LMPAs on a bills rendered basis. This waiver, pursuant to Puc 201.05, produces a result consistent with the principles embodied in Puc 1203.05(b), which sets forth exceptions for allowing rate changes on a bills rendered basis, and is in the public interest because it eliminates consumer confusion and reduces administrative costs. Based upon the foregoing, it is hereby ORDERED, that the proposed C&LMPAs, as revised at the March 24, 1998 hearing, are hereby APPROVED on a bills rendered basis; and it is FURTHER ORDERED, that CVEC shall track, to the best of its abilities, the number of inquiries it receives for C&LM programs, the nature of the inquiries, and the specific programs that the customers are asking about. A summary of this information shall be included in CVEC's 1999 C&LMPA filing; and it is FURTHER ORDERED, that CVEC shall submit its 1999 C&LMPA filing by November 1, 1998; and it is FURTHER ORDERED, that CVEC shall file compliance tariff pages within ten days of the date of this order. By order of the Public Utilities Commission of New Hampshire this first day of April, 1998. Douglas L. Patch Bruce B. Ellsworth Susan S. Geiger Chairman Commissioner Commissioner Attested by: Thomas B. Getz Executive Director and Secretary