DR 95-250
RETAIL COMPETITION PILOT PROGRAM
Order Extending Term of Pilot Program
O R D E R N O. 22,945
May 20, 1998
This order addresses the numerous inquiries
received in recent months by the New Hampshire Public
Utilities Commission (Commission) concerning the scheduled
termination of the Retail Electric Competition Pilot Program
(Pilot). The Pilot, which commenced during June and July,
1996, was originally scheduled to operate for a two-year
period. Order No. 22,033 (Final Guidelines) at 18
(February 28, 1996). By Secretarial Letter issued on March
11, 1998, the Commission solicited public comments from the
participating electric utilities and interested members of
the public concerning whether to continue the Pilot beyond
the two-year term. The Commission also held a hearing on
May 12, 1998 to accept public comments on whether to
continue the Pilot, and if so, under what terms and
conditions.
The written and oral public comments offered by
various stakeholders nearly unanimously support a
continuation of the Pilot. Several parties suggest that
customer eligibility for participation in the Pilot should
be expanded beyond the 3% load limitation established in the
Final Guidelines. The electric utilities participating in
the Pilot are split on the issue, and below, we briefly
summarize their respective positions.
Two utilities, Public Service Company of New
Hampshire (PSNH) and the Unitil Companies (Unitil), have
offered to voluntarily extend the Pilot. Unitil has agreed
to extend the Pilot under all existing terms and conditions.
See Order No. 22,210 (July 1, 1996). PSNH proposed to
extend the Pilot subject to several modifications to the
existing Guidelines. These proposed modifications (with one
exception) were agreed to by the City of Manchester and were
presented to the Commission during the May 12th hearing.
See, Exhibit PH-1.
Two participating utilities, Granite State
Electric Company (GSEC) and Connecticut Valley Electric
Company (CVEC), oppose continuation of the Pilot. According
to GSEC, "the Pilot should be terminated to avoid confusion
and administrative difficulties on the eve of choice in New
Hampshire." GSEC Letter (March 27, 1998). CVEC argues that
the Pilot has served its objectives, and any attempt to
extend the Pilot would "re-raise" the same complex and
contentious issues that...are part and parcel of
implementing retail competition." CVEC Letter (March 20,
1998).
During the May 12th hearing, the New Hampshire
Electric Cooperative, Inc. (NHEC) advised the Commission
that its members are still unable to participate in the
Pilot due to the pendency of a proceeding at the Federal
Energy Regulatory Commission (FERC) concerning NHEC's
wholesale requirements agreement with PSNH. (Public
Service Company of New Hampshire v. New Hampshire Electric
Cooperative, Inc., FERC Docket No. EL96-53-000). In
addition, NHEC contends that its members have been required
to subsidize the participation of PSNH's Pilot customers
because FERC has failed to act upon an amendment to its
wholesale requirements agreement with PSNH.
At the outset, we recognize that some aspects of
the Pilot are controlled by the joint recommendations which
we conditionally approved in utility-specific orders. See,
Order No. Order No. 22,029 (February 28, 1996) Order No.
22,037 (March 4, 1996); Order No. 22,081 (March 29, 1998);
and Order No. 22,210 (July 1, 1998). However, the
aforementioned orders did not relinquish the Commission's
authority to exercise ongoing control over the Pilot
consistent with the Legislature's broad delegation of
authority under RSA 374:26-a. Rather, the primary function
of the joint recommendations, from the Commission's
perspective, was to consensually establish utility-specific
stranded cost charges or other rate mechanisms which were
designed to achieve a minimal level of savings for Pilot
customers who select a competitive electricity supplier.
See e.g., Order No. 22,029 at 10. From the utilities'
standpoint, the joint recommendations approved by the
Commission provided a mechanism for limiting the financial
impact of the Pilot associated with stranded cost exposure.
We do not intend to impose a financial burden
After considering the written comments and public
statements made during the May 12th hearing concerning this
matter, and while recognizing the purpose of the joint
recommendations, we are persuaded that it is in the public
interest to extend the Pilot on a statewide basis albeit
under the revised terms and conditions specified below.
First, we will not compel any utility to continue
to offer the "participation incentive credit" (PIC) or a
reduced stranded cost charge which is designed to guarantee
customers the 10% savings contemplated by the joint
recommendations. We recognize that each utility agreed to
a PIC (or reduced stranded cost charge) based on an
assumption that the Pilot would be limited in duration to
two-years. However, we strongly encourage each of the
utilities to extend this aspect of the Pilot. In that
regard, we commend Unitil for agreeing to continue the Pilot
under all existing terms and conditions and urge the other
utilities to adopt the same approach. Any utility that is
unwilling to continue to offer Pilot customers a PIC (or in
GSEC's case, a reduced stranded cost charge) must inform all
of its Pilot customers through a direct mailing.
Second, we will continue to allow customers who
qualify as "new load" to participate in the Pilot under the
more specific definition offered by Manchester.
Specifically, new load for purposes of Pilot eligibility
will be limited to large customers who locate at facilities
that have not been provided with utility service for at
least six months prior to the new account being established.
Although we understand PSNH's concern about the
administrative burdens associated with this aspect of the
Pilot, we believe that any such burdens are far outweighed
by the benefits of allowing new large customers to gain
experience in the direct access market.
Although the foregoing discussion does not
specifically address the PSNH-Manchester proposal, our
decision today is consistent with that proposal except for
new load eligibility. Thus, with that limited exception, we
approve the remainder of PSNH-Manchester proposal outlined
in Exhibit PH-1. Specifically, we also adopt their
suggestion to (a) limit eligibility to "existing accounts at
existing locations," (b) require customers who terminate
service with a competitive supplier to choose a new supplier
within two full billing cycles, and (c) notify Pilot
customers of the foregoing modifications in the program.
Each of the foregoing modifications shall also apply to
Unitil, CVEC, and NHEC.
Finally, we share NHEC's frustration that FERC has
not yet issued a decision concerning either the APRA dispute
or the amendment to the wholesale Fuel and Purchase Power
Adjustment Clause (FPPAC). The latter is necessary to
neutralize the rate effects of the Pilot on NHEC. It is our
understanding that PSNH and NHEC both agree that an
adjustment to the wholesale FPPAC formula is necessary. If
FERC does not issue its decision on that filing within the
next several months, we will consider taking further action
to urge such action.
Based upon the foregoing, it is hereby
ORDERED, that CVEC, GSEC, Unitil and PSNH are
directed to extend the Pilot, under the terms specified
herein, until such time as the Commission orders otherwise;
and it is
FURTHER ORDERED, that NHEC's members shall remain
eligible for the Pilot in the event that FERC issues its
decision relative to the APRA as discussed in the Final
Guidelines.
By order of the Public Utilities Commission of New
Hampshire this twentieth day of May, 1998.
Douglas L. Patch Bruce B. Ellsworth Susan S. Geiger
Chairman Commissioner Commissioner
Attested by:
Thomas B. Getz
Executive Director and Secretary