DR 98-096 CONCORD ELECTRIC COMPANY and EXETER & HAMPTON ELECTRIC COMPANY Fuel Adjustment Clause and Purchased Power Adjustment Clause Order Approving Charges O R D E R N O. 22,966 June 29, 1998 APPEARANCES: LeBoeuf, Lamb, Greene & MacRae by Scott J. Mueller, Esq. on behalf of Concord Electric Company and Exeter & Hampton Electric Company; and Henry J. Bergeron and Todd M. Bohan for the Staff of the New Hampshire Public Utilities Commission. I. PROCEDURAL HISTORY On June 1, 1998, Unitil Service Corporation, (Unitil), on behalf of Concord Electric Company (CEC) and Exeter & Hampton Electric Company (E&H) (collectively the Companies), filed with the New Hampshire Public Utilities Commission (Commission) revised tariff pages, supporting testimony, and exhibits for proposed revisions to the Companies' retail fuel adjustment clauses (FAC) and purchased power adjustment clauses (PPAC) and short-term purchased power rates for qualifying facilities (QFs) for the period of July 1, 1998 through December 31, 1998. II. POSITIONS OF THE PARTIES AND STAFF A. The Companies Unitil presented calculations supporting CEC's request for a FAC credit of ($0.00425) per kWh and a PPAC charge of $0.00276 per kWh. The combined effect of the two rates is to decrease a typical 500 kWh residential customer's bill by $3.45 per month, or 6.24%. Unitil also presented calculations in support of E&H's request for a FAC credit of ($0.00407) per kWh and a PPAC charge of $0.00266 per kWh. The combined effect of the two rates is to decrease a typical 500 kWh residential customer's bill by $5.06 per month, or 9.23%. Unitil witness Scott A. Long, Senior Energy Analyst for Unitil Service Corp., presented the July 1998 through December 1998 Unitil Power Corporation (UPC) production plan, associated costs, and estimated short-term avoided cost rate in his direct testimony. The UPC production plan is the basis for UPC's fuel, purchased power, and transmission service costs, and is used in developing UPC's wholesale rates which it charges CEC and E&H under the Unitil System Agreement for firm service. UPC's demand charge is $22.01/kW-Month, the base energy charge is $0.0057/kWh, and the fuel charge is $0.02069/kWh. The demand charge is decreasing from $26.35/kW-Month primarily due to an anticipated over recovery on June 30, 1998. This over recovery was caused by lower than expected refueling and outage costs associated with major unit outages occurring in the period, lower than forecast capacity costs associated with cost of service contracts, and lower than forecast short-term capacity costs. The base energy charge is decreasing from $0.00632/kWh due to an over recovery associated with unplanned outages of the Seabrook and Bay State Agawam units. Since the plants did not run as planned, lower than expected costs were realized. The fuel charge is decreasing due primarily to low projected oil prices and the effect of no significant outages to major units over the July 1, 1998 to December 31, 1998 filing period. Oil prices are expected to remain at current low levels over the summer period and are projected to rise slightly toward the last part of the year. UPC's proposed rates represent a 16.45% decrease in demand charges (from $26.35 to $22.01), a decrease of 9.69% in base energy charges (from $0.00632 to $0.00570), and a decrease in fuel charges of 7.9% (from $0.02247 to $0.02069). In her prefiled testimony, Linda S. Hafey, Project Leader of Regulatory Operations for Unitil Service Corp., provided an explanation of the Companies' Mitigation Proceeds Credit (MPC), the Sales Margin Retention Credit (SMRC), and the Participation Incentive Credit (PIC) as well as the Non-Participant Protection Adjustment (NPA) for the Retail Competition Pilot Program. This included an explanation of how the NPA protects non-participating customers from unrecovered power supply costs due to customer participation in CEC's and E&H's Retail Competition Pilot Program. The Companies also filed revised tariffs for short-term power purchase rates for Qualifying Facilities as follows: Energy Rates on Peak 3.04 cents per kWh Off Peak 2.22 cents per kWh All Hours 2.53 cents per kWh Capacity Rates $0.00 per kW-year B. Commission Staff Staff did not provide testimony or oppose the Companies' filings but did conduct cross examination on a number of issues: 1) the causes of the reductions in the demand charges, 2) the erroneous billing by ISO-New England to Public Service Company of New Hampshire which was later correctly billed to UPC, 3) the impact on the Companies of the Maine Yankee shutdown, and 4) the projected growth figures for the year 1998 over 1997. III. COMMISSION ANALYSIS We have reviewed all the testimony and exhibits in this case, including the responses provided by the Companies. Based on our review of the record, we find that the FAC for the July 1, 1998 through December 31, 1998 period will be a credit of ($0.00425) per kWh for CEC and a credit of ($0.00407) per kWh for E&H. For the same period, the PPAC will be $0.00276 per kWh for CEC and $0.00266 per kWh for E&H. For a typical CEC residential customer using 500 kWh per month, the net result of the FAC and PPAC changes is a $3.45 decrease to the monthly bill. For a typical E&H residential customer using 500 kWh per month, the net result of the FAC and PPAC changes is a $5.06 decrease to the monthly bill. We find that the proposed short-term avoided capacity and energy rates are just and reasonable. Based upon the foregoing, it is hereby ORDERED, that Concord Electric Company's Fuel Adjustment charge for the period of July 1, 1998 through December 31, 1998, shall be a credit of ($0.00425) per kWh while its Purchased Power Adjustment charge shall be $0.00276 per kWh; and it is FURTHER ORDERED, that Exeter & Hampton Electric Company's Fuel Adjustment charge for the period of July 1, 1998 through December 31, 1998, shall be a credit of ($0.00407) per kWh while its Purchased Power Adjustment charge shall be $0.00266 per kWh; and it is FURTHER ORDERED, that Concord Electric Company and Exeter & Hampton Electric Company file revised tariff pages in compliance with this order on or before July 13, 1998. By order of the Public Utilities Commission of New Hampshire this twenty-ninth day of June, 1998. Douglas L. Patch Bruce B. Ellsworth Susan S. Geiger Chairman Commissioner Commissioner Attested by: Thomas B. Getz Executive Director and Secretary