DE 98-138
                                     
         New Hampshire Electric Cooperative/Granite State Electric
                                     
     Petition to Establish Parallel Service in Joint Service Territory
                                     
                    Order Adopting Procedural Schedule
                                     
                         O R D E R   N O.  23,076
                                     
                             December 7, 1998

         APPEARANCES: Dean, Rice and Kane by Mark X. Dean, Esq.
     on behalf of the New Hampshire Electric Cooperative, Inc.; Carlos
     X. Gavilondo, Esq. on behalf of Granite State Electric Co., Inc.,
     Gerald M. Eaton, Esq. on behalf of Public Service Company of New
     Hampshire, Inc.; Dr. Robert Cimis on behalf of himself and other
     residents; Eugene F. Sullivan III, Esq. for the Staff of the New
     Hampshire Public Utilities Commission.
     
     I.   PROCEDURAL HISTORY
               On January 28, 1998, Dr. Robert Cimis filed a complaint
     with the New Hampshire Public Utilities Commission (Commission)
     on behalf of himself and numerous neighbors concerning the
     quality of service provided in the Methodist Hill area of the
     Town of Enfield, New Hampshire by the New Hampshire Electric
     Cooperative, Inc. (NHEC).  Dr. Cimis complained that he and his
     neighbors experienced numerous electric outages while nearby
     customers of Granite State Electric (Granite State) did not
     experience these outages.  Dr. Cimis requested that he and his
     neighbors be allowed to receive service from Granite State
     thereby allowing them to receive the same quality of service
     provided nearby commercial customers of Granite State.
     
               Commission Staff attempted to bring the matter to a
     consensual resolution through the adjustment of service territory
     lines between Granite State and NHEC.  See DE 95-290.  These
     attempts ultimately proved unsuccessful, culminating in a vote of
     the NHEC Board of Directors to oppose any readjustment of the
     service territory lines in the Methodist Hill area.
               On October 27, 1998, the Commission issued an Order of
     Notice initiating an investigation into the adequacy of service
     provided in the Methodist Hill area of Enfield and whether a
     transfer of the territory was in the public interest.  The Order
     of Notice made NHEC, Granite State, Public service Company of new
     Hampshire (PSNH) mandatory parties and scheduled a prehearing
     conference for November 19, 1998.  NHEC, Granite State, PSNH, Dr.
     Cimis and a number of residents of Methodist Hill and Staff
     appeared at the prehearing conference.  
               NHEC, Granite State and PSNH stated that they had
     entered into an agreement that would resolve the issue of the
     adequacy of service provided to the residential customers and
     presented an outline of the agreement.  The agreement provided
     that Granite State would continue to serve all existing and new
     "three phase" customers in the Methodist Hill area while NHEC
     would continue to serve all existing and new single phase
     customers in the same service area.  NHEC would no longer provide
     service from the distribution line currently providing service,
     however, which is the cause of the numerous service outages. 
     Rather, NHEC and Granite State would establish a new single phase
     delivery point in the Methodist Hill area of the GSEC system.  
               Dr. Cimis and the residents expressed general
     dissatisfaction with the quality of service they are receiving
     which consisted of numerous outages while they could see the
     lights of the commercial establishments served by Granite State. 
     The customers also objected to the rate discrimination that would
     result from the proposed agreement.  That is, the customers did
     not believe it was appropriate that they should pay NHEC rates
     while commercial customers received substantially lower charges
     from Granite State.  
               Staff also objected to the proposed settlement because
     it would create unnecessarily redundant distribution systems in
     the Methodist Hill area and is inconsistent with the planning
     practices for the distribution system reorganization set forth by
     NHEC and Granite State in DE 95-290 that resulted in Granite
     State providing three phase service in the Methodist Hill area. 
     See, Re New Hampshire Electric Cooperative, Inc. 80 NH PUC 732
     (1995).
     
               The utility parties, at the request of the presiding
     Commissioner, agreed that NHEC and Granite State would establish
     the new delivery point in the Methodist Hill area within two
     weeks of the prehearing conference via which NHEC will draw power
     from the GSEC system on a temporary basis, pending the outcome of
     the hearing on the merits, so that service quality to the
     affected residents can be substantially corrected, and not wait
     until the final disposition of the case.  The utility parties
     agreed that they could implement this reinforcement of the
     physical delivery system (and make interim arrangements for the
     wholesale pricing and relative rights and obligations of the
     utilities) for a de minimus cost, and would agree to reserve the
     question of the merits of their proposed settlement until the
     hearing on the merits.
               Following the prehearing conference the parties and
     Staff concurred in the following procedural schedule to govern
     the Commission's investigation into this matter:
          Joint testimony NHEC/GSEC               December 9, 1998
          Data requests for NHEC/GSEC
           (via facsimile)                        December 14, 1998
       
          Data responses from NHEC/GSEC           December 21, 1998
     
          Staff testimony                         January 4, 1999
     
     
          NHEC and GSEC separate 
          rebuttal testimony                      January 11, 1999  
     
          Hearing on the merits                   January 14, 1999
     
     II.  COMMISSION ANALYSIS
               We find the proposed procedural schedule to be
     reasonable and will approve it as filed.  With regard to the
     issue of service, we believe the parties need to address the
     Commission's decision in Re New Hampshire Electric Cooperative,
     Inc. 80 NH PUC 732 (1995) in their testimony.
               We also find that the interim arrangement under which
     NHEC will draw power from the GSEC system on a temporary basis
     pending the outcome of the hearing on the merits is appropriate
     and reasonable.
               Based upon the foregoing, it is hereby 
               ORDERED, the procedural schedule set forth above is
     APPROVED; and it is
               FURTHER ORDERED, that the interim arrangement described
     above is approved.
     
               By order of the Public Utilities Commission of New
     Hampshire this seventh day of December, 1998.
     
                                                                  
       Douglas L. Patch                          Nancy Brockway
           Chairman                               Commissioner
     
     
     Attested by:
     
     
     
                                      
     Thomas B. Getz
     Executive Director and Secretary