DR 98-025
New Hampshire Electric Cooperative, Inc.
Petition to Increase Base Rates
Order Accepting Temporary Rates Settlement and Adopting a
Procedural Schedule
O R D E R N O. 23,032
October 5, 1998
APPEARANCES: Dean, Rice and Kane by Mark W. Dean, Esq.
for the New Hampshire Electric Cooperative, Inc.; Office of the
Consumer Advocate by Kenneth Traum for residential ratepayers;
and, Eugene F. Sullivan III, Esq. for the Staff of the New
Hampshire Public Utilities Commission.
I. PROCEDURAL HISTORY
On April 14, 1998, NHEC filed with the New Hampshire
Public Utilities Commission (Commission) a petition seeking an
increase in permanent retail rates of approximately $4.68 million
or 5.1%, effective July 1, 1998, with supporting testimony and
exhibits pursuant to RSA 378 and N.H. Admin. R., Puc Chapter
1600. Subsequently, on April 15, 1998, NHEC submitted a motion
requesting that its proposed permanent rate increase be set as
temporary rates pursuant to RSA 378:27 for effect on July 1,
1998.
On May 12, 1998, the Commission issued Order No. 22,926
which, inter alia, suspended the implementation of the proposed
rate increase for investigation pursuant to RSA 378:6, scheduled
a prehearing conference for June 10, 1998, and set a hearing on
the issue of temporary rates for July 15, 1998.
On June 5, 1998, Public Service Company of New
Hampshire (PSNH) filed a motion to intervene. The Office of
Consumer Advocate (OCA) is a statutorily recognized intervenor.
On June 10, 1998, the Commission held the duly noticed
prehearing conference at which PSNH's Motion to Intervene was
granted without objection. The parties stated their initial
positions on the proposed rate increase and the parties adopted
the proposed procedural schedule to govern the Commission's
investigation. A technical session followed the prehearing
conference.
On June 2, 1998, Commission Staff pre-filed the
testimony of Henry J. Bergeron of the Commission Finance
department recommending that the Commission grant NHEC a
temporary rate increase of 4.51% for effect on August 1, 1998.
The 4.51% rate increase represented a Times Interest Earning
Ratio (TIER) of 1.25.
On June 2, 1998, the OCA pre-filed the testimony of
Kenneth Traum, Finance Director of the OCA. Mr. Traum's
testimony suggested that current rates serve as temporary rates
in the interest of rate continuity. Mr. Traum testified that the
Federal Energy Regulatory Commission (FERC) had recently issued
two decisions resolving certain disputed issues between NHEC and
PSNH that could result in substantial rate reductions to NHEC
customers. Thus, Mr. Traum recommended holding current rates
constant rather than implementing a rate increase to be followed
shortly thereafter by a rate decrease. Mr. Traum further
recommended that current rates only serve as temporary rates
until October 1, 1998, to allow implementation of the FERC
Orders. If the FERC orders have not been implemented by that
time, Mr. Traum suggested that new increased temporary rates
could then be implemented.
II. SETTLEMENT
In principle, the Settlement adopts the recommendation
of the OCA. In the event NHEC customers are able to access their
own suppliers of energy and related products prior to October 1,
1998, a temporary rate increase of $4.146 million will take
effect at the time of customer choice. If retail access
"customer choice" has not occurred by October 1, 1998, a
temporary rate increase of $4.146 million will take effect on
October 1, 1998. In either case, permanent rates will be
reconciled to August 1, 1998. The temporary rate increase will
be implemented proportionately across all rate classes or on an
"across the board" basis.
III. COMMISSION ANALYSIS
The Commission may implement temporary rates to take
effect pending investigation and consideration of a request to
permanently increase rates if it finds such an increase is in the
public interest and determines that such rates will yield "a
reasonable return on the cost of the property of the utility used
and useful in the public service . . .". RSA 378:27
Based on the testimony of NHEC and Staff, we find the
proposed temporary rate increase just and reasonable. We reach
this conclusion subject to the qualification that this finding is
made prior to a thorough investigation of the requested rate
increase and is based on the reports of the utility currently on
file with the Commission.
With regard to the proposed effective date for
implementation of the proposed increase in rates, we believe the
methodology for effectuating a temporary rate increase as set
forth in the testimony of the OCA and adopted in the Settlement
serves the public interest. This methodology better provides for
rate continuity. Thus, we will approve the Settlement.
Based upon the foregoing, it is hereby
ORDERED, that the New Hampshire Electric Cooperative,
Inc.'s request to increase its revenues by $4.146 million
pursuant to RSA 378:27 on a temporary basis in the manner set
forth in the Settlement is GRANTED; and it is
FURTHER ORDERED, that this rate increase shall be
implemented proportionately across all rate classes; and it is
FURTHER ORDERED, that the procedural schedule set forth
in the Order of Notice is adopted to govern the Commission's
investigation into the proposed rate increase.
By order of the Public Utilities Commission of New
Hampshire this fifth day of October, 1998.
Douglas L. Patch Bruce B. Ellsworth Susan S. Geiger
Chairman Commissioner Commissioner
Attested by:
Thomas B. Getz
Executive Director and Secretary