DR 97-059
Public Service Company of New Hampshire
Investigation into Base Rates
Prehearing Conference Order
O R D E R N O. 23,080
December 8, 1998
APPEARANCES: Gerald M. Eaton, Esq. for Public Service
Company of New Hampshire; Morrison & Foerster, L.L.P. by Andrew
D. Weissman, Esq. for Cabletron Systems, Inc.; Anne Ross, Esq.
for the Retail Merchants Association; McLane, Graf, Raulerson &
Middleton by Steve V. Camerino, Esq. for Great Bay Power
Corporation; Assistant Attorney General Wynn Arnold, Esq. for the
Governor's Office of Energy and Community Services; Gary Gilmore
for the Campaign for Ratepayers' Rights; Charles Clough for
Freedom Partners; O'Neill, Grills & O'Neill by Peter Grills, Esq.
for the City of Manchester; Hon. Jeb Bradley; Dean, Rice and Kane
by Mark Dean, Esq. for the New Hampshire Electric Cooperative;
Henry Veilleux for the Business and Industry Association of New
Hampshire; Michael Holmes, Esq. for the Office of Consumer
Advocate on behalf of residential ratepayers; Eugene F. Sullivan
III, Esq., for the Staff of the Public Utilities Commission.
I. PROCEDURAL HISTORY
This proceeding was initiated on March 31, 1997, upon
the filing by Public Service Company of New Hampshire (PSNH or
Company) of a Notice of Intent to File Rate Schedules with the
New Hampshire Public Utilities Commission (Commission) pursuant
to N.H. Admin. R., Puc 1603.02. On May 2, 1997, PSNH filed
testimony, exhibits, schedules, work papers and the filing
requirements of Puc Chapter 1600 supporting an increase in base
rates.
Subsequently, on May 9, 1997, PSNH filed a motion with
the Commission which, among other things, requested that the
Commission suspend the proceedings in this docket to allow a
mediation process relative to Docket No. DR 96-150 to move
forward. By Order No. 22,605, issued May 25, 1997, the
Commission granted the motion and stayed its investigation of the
base rate filing. This stay was lifted by the Commission in its
Order No. 22,669, issued on July 23, 1997.
Pursuant to RSA 378:27, temporary rates were
established by the Commission in its Order No. 22,784, issued on
November 6, 1997. Under this temporary rate order, rates for the
period July 1, 1997 through November 30, 1997 were set at the
level of permanent rates then in existence. For the period from
December 1, 1997 forward, rates were lowered by approximately
6.87 percent, to be reconciled back to July 1, 1997.
The procedural schedule was again suspended and the
proceeding stayed by the Commission at the request of the New
Hampshire Public Utilities Commission Staff (Staff). Staff had
requested the suspension pending receipt of an anticipated
decision by the New Hampshire Supreme Court on questions
submitted by the Commission in the Restructuring Docket, DR
96-150, related to the 1989 "Rate Agreement" between PSNH and the
State of New Hampshire.
On October 20, 1998, the Secretary and Executive
Director of the Commission, Thomas B. Getz, notified the parties
to this proceeding that the Commission had not intended that the
previously granted suspension last for an extended period, and
that the Commission was concerned about the effect a long delay
would have on the proceeding. Accordingly, the Commission
determined that on November 17, 1998, Staff and the parties
should meet to discuss resuming the Rate Case in the absence of a
ruling from the Supreme Court, and submit a recommendation on how
to proceed to the Commission. In addition, the Commission
directed Staff and the parties to hold a technical session to
address issues of updating discovery, accounting for known and
measurable changes and proper use of test year data.
On November 5, 1998, a petition was filed by Cabletron
Systems, Inc. (Cabletron), and supported by a number of other
parties, requesting a reduction in temporary rates and
establishment of an expedited procedural schedule for completion
of the pending rate case. By letter from the Executive Director
of November 10, 1998, the Commission notified the parties that it
would cancel the technical session and hear argument on the
petition on November 17, 1998.
At the November 17, 1998 hearing, argument was heard by
the Commission on the issue of the appropriateness of reducing
the current temporary rates, and on setting an expedited
procedural schedule. At the end of the hearing, the Commission
requested that parties file pleadings setting forth their
position on revising the current temporary rates, the need to
revise the test year data and a recommended schedule for
resumption of the base rate investigation. Pursuant to this
request, pleadings were filed by PSNH, Cabletron, the Office of
Consumer Advocate (OCA), the Governor's Office of Energy and
Community Services (GOECS), the Business and Industry
Association, the City of Manchester, and the Staff.
II. POSITIONS OF THE PARTIES
In their submissions, several intervenors have
requested that the Commission reduce PSNH's base rates
immediately. The Office of Consumer Advocate suggests that
adjustments derived from PSNH's accounts, without needing further
evidence, would permit a base rate reduction of 5 percent. OCA
argues that additional reductions could be warranted after some
further factual investigation. Cabletron and the parties who
support its petition urge the Commission to institute immediate
reductions of 20 to 40 percent in PSNH's base component of rates.
These parties variously argue that the following items justify
their claims:
1) Rate base reductions relating to the Acquisition
Premium, Small Power Producer (SPP) deferrals, and
non-Fuel and Purchase Power Adjustment Clause (FPPAC)
utility plant;
2) Increased retail sales levels;
3) Non-FPPAC O&M expense decreases resulting from
lower North Atlantic Energy Service Company (NAESCO)
billings;
4) Lower equity returns appropriate for the
Acquisition Premium and SPP deferrals;
5) Discounts on Special Contracts;
6) Prior over-collections of temporary rate levels;
7) Lower cost of capital on a going forward basis;
and
8) Imprudence disallowances for rate base associated
with power plants that arguably should have been sold.
In response, the Company strongly disagreed with this
analysis and argues that these claimed bases for reduction in
rates are mere "folderol." The Company also raises the threshold
question of whether the Commission has the legal authority to
change temporary rates once such rates have been set in a rate
case proceeding.
The GOECS proposed that the Commission defer
consideration of whether to revise temporary rates until after
the Company has filed updated accounts.
The proponents of establishing new or revised temporary
rates argue that the Commission's comprehensive authority to
establish or modify rates in order to ensure that rates are just
and reasonable, avoid excessive charges to customers, and serve
the public interest, along with the specific grants of authority
to alter or modify prior orders and terminate existing temporary
rates, provide the Commission the requisite authority to modify
temporary rates. The Company argues that the Commission is a
statutorily created body endowed with only those powers expressly
granted to it by the Legislature. According to the Company, the
Commission's authority is unambiguously limited by the plain
meaning of RSA 378:27 and RSA 378:29 which require the temporary
rates to remain in effect for the duration of the proceeding.
III. COMMISSION ANALYSIS
Some of the issues raised by those seeking lower
temporary rates have potential merit. On the other hand, the
Company has advanced sound arguments to suggest that some of the
proposed reductions are more properly FPPAC issues than base rate
issues, and has offered plausible responses to other reductions.
Additionally, some of the potentially valid non-FPPAC issues
raised by the intervenors could require extensive evidentiary
hearings to address adequately.
The Commission is mindful of the need to conclude the
base rate case and institute new permanent rates for PSNH as soon
as possible. The City of Manchester and others argued that a
proceeding on temporary rates would inevitably cause a delay in
completing the permanent rate case. With this concern in mind,
the Commission will defer its determination of whether to hold
hearings on any additional reductions in temporary rates until
after the Company has submitted an updated filing and schedules
on January 29, 1999, as provided in the permanent rate case
schedule below. We note that we have previously established a
reconciliation date of July 1, 1997 for permanent rates to ensure
that whatever rate is ultimately determined to be appropriate
would be reconciled to that date, affording protection to both
customers and the Company.
Upon receipt of the updated filing, the Commission will
review it to determine whether it is advisable to open further
proceedings on revised temporary rates or whether it is
preferable to proceed on the permanent rate case without adding
the burden of additional proceedings on the parties. Any
proceeding involving further revision to temporary rates would be
held in parallel with the schedule outlined below for the
permanent rate case. Our primary objective is to conclude the
rate case as quickly as possible, consistent with the need to
develop a sound record on which to make a decision, and to
provide the parties the process required by law. Accordingly, we
will not look favorably upon any requests for extensions of the
deadlines set forth herein. This is especially so given that the
June 1, 1999 effective date for any rate change is meant to
coincide with the beginning of the next FPPAC period.
We reserve the right to require PSNH to post a bond,
pursuant to RSA 378:30, should circumstances require. At this
time, we will adopt and order as an additional reasonable
protection the recommendation of several parties that interest be
included on any over- or underrecoveries of base rates, at an
appropriate interest rate to be determined during the hearings
set out below.
We adopt the recommendation of the OCA that the test
year be the period of October 1, 1997 through September 30, 1998,
based upon actual data, pro-formed as necessary for known and
measurable changes after that period. PSNH shall only be
required to update and refile its testimony and schedules
concerning rate-base and operation and maintenance expenses. An
update to the cost-of-service study previously filed is not
necessary at this time.
Pursuant to RSA 363:17 and RSA 363:30 VI, we have
designated the Commission's General Counsel as "Presiding
Officer" for the limited purposes of discovery and schedule
disputes in the first instance, so that parties who are unable to
resolve such matters after good faith negotiations can have a
speedy resolution, subject to an appeal to the full Commission.
Schedule
The schedule in this case is as follows:
Item
Date
PSNH files updated testimony
and schedules based on test
year 10/1/97 to 9/30/98
1/29/99 - same day delivery to
all parties
Rolling discovery on revenue
requirements testimony and
rolling responses (10 day
turn-around, 5 days to lodge
objections)
1/29 - 2/22 to propound
discovery (technical sessions
to be scheduled as necessary)
Intervenor and Staff testimony
on revenue requirements
3/8/99 - same day delivery to
all parties
Rolling discovery on
Intervenor and Staff revenue
requirements testimony and
rolling responses (10 day
turn-around, 5 days to lodge
objections)
3/8-3/26 to propound discovery
(technical sessions to be
scheduled as necessary)
Rebuttal testimony from all
parties
4/2 - same day delivery to all
parties
Settlement Conference
4/6 - 9:00 a.m.
Prehearing conference:
Establish list of issues;
schedule of witnesses;
presentation of
cross-examination; preliminary
list of exhibits; rule on any
outstanding motions
4/6 - 1:30 p.m.
Deadline for submission of
settlement agreement, if any
4/8
Hearings
4/12-4/16, 4/19-4/23 9:00
a.m. - 5:00 p.m.
Briefs: pursuant to page limit
and issues outline
5/10
Reply Briefs: pursuant to page
limit and issues outline
5/17
Deliberations and Final Order
6/1
Based upon the foregoing, it is hereby
ORDERED that the suspension of the procedural schedule
granted pursuant to the Secretarial Letter of June 16, 1998 is
set aside, and a new procedural schedule is established as set
forth above; and it is
FURTHER ORDERED that consideration of the Petition of
Cabletron to Reduce Temporary Rates is deferred pending receipt
and review of the revised filings and schedules of PSNH; and it
is
FURTHER ORDERED, that the parties are to recommend to
the Commission by January 4, 1999, suggested dates for the
holding of technical sessions to discuss the revised data,
testimony and rebuttal testimony to be filed pursuant to the
schedule set forth above; and it is
FURTHER ORDERED, pursuant to RSA 363:17 and RSA 363:30
VI, that the Commission's General Counsel is appointed Presiding
Officer for the limited purpose of hearing discovery and schedule
disputes.
By order of the Public Utilities Commission of New
Hampshire this eighth day of December, 1998.
Douglas L. Patch Susan S. Geiger Nancy Brockway
Chairman Commissioner Commissioner
Attested by:
Thomas B. Getz
Executive Director and Secretary