DR 98-202
New Hampshire Electric Cooperative, Inc.
Power Cost Recovery
Order Approving Power Cost Recovery
O R D E R N O. 23,091
December 21, 1998
APPEARANCES: Dean, Rice and Kane by Mark W. Dean, Esq.
on behalf of the New Hampshire Electric Cooperative, Inc.; Office
of the Consumer Advocate by Kenneth E. Traum on behalf of
residential ratepayers; and, Tracy B. Guyette, Thomas C. Frantz,
and James J. Cunningham, Jr. for the Staff of the New Hampshire
Public Utilities Commission.
I. PROCEDURAL HISTORY
On November 24, 1998, the New Hampshire Electric
Cooperative, Inc. (NHEC) filed with the New Hampshire Public
Utilities Commission (Commission) a request and supporting
testimony and exhibits to decrease its Stranded Cost Charge from
$0.01920 per kilowatt-hour to $0.01343 per kilowatt-hour,
increase each of its Default Power Service Charges by $0.00577
per kilowatt-hour, and defer $195,000 in power costs for effect
January 1, 1999 to June 30, 1999. NHEC also filed short-term
rates for purchases from Qualifying Facilities (QF). The
proposed QF rates are based on the short-term avoided energy
rates of each of the four utilities from which NHEC purchases
power. A duly noticed hearing was held before the Commission on
December 14, 1998.
II. POSITIONS OF THE PARTIES AND STAFF
A. NHEC
In its pre-filed testimony, NHEC proposed to maintain
its current Power Cost Recovery Charge (PCR)(consisting of a
Stranded Cost Charge and a Default Power Service Charge) by
decreasing the Stranded Cost Charge by $0.00577 per kilowatt-hour
and increasing the Default Power Service Charge by $0.00577 per
kilowatt-hour. NHEC bases its 6-month PCR on a one-year forecast
of Stranded Cost and Default Power Service Cost. The Stranded
Cost forecast for 1999 is $9,178,936 and the Default Power Cost
forecast is $54,149,157. The Cooperative is seeking to defer
$195,000 into the year 2000 in order to ensure rate continuity.
The deferral has the effect of reducing the PCR by $0.00035 per
kilowatt-hour. Overall NHEC's filing has no effect on rates for
this PCR period from January 1, 1999 to June 30, 1999.
The Stranded Cost Charge is composed of the
non-incremental components of the wholesale power contracts
through which NHEC obtains power. These elements include
delivery point charges from Public Service New Hampshire (PSNH)
and Green Mountain Power, minimum charges from Central Vermont
Public Service, and billings from the New England Power Pool. In
addition, the Stranded Cost Charge includes PSNH Demand Ratchet
Charges. Total Default Power Service Charges are calculated by
subtracting assumed Stranded Cost Charges from total forecast
power recovery requirements. At the time customers are able to
choose a competitive electricity supplier, the competitive power
price will replace the Default Power Service Charge for those
customers who switch to a competitive supplier, but all customers
will still pay the Stranded Cost Charge.
Currently, NHEC is awaiting an order from the Federal
Energy Regulatory Commission (FERC) to resolve the dispute
between NHEC and PSNH over interpretation of the Amended Partial
Requirements Agreement (APRA). If NHEC receives a favorable
ruling from the FERC, NHEC expects consumers who choose a
competitive supplier to see substantial rate decreases. In its
filing, NHEC assumed that all customers will choose a competitive
supplier by January 1, 1999. This assumption creates no change
to the PCR total but reallocates collections, effectively
decreasing the Stranded Cost Charge and increasing the Default
Power Service Charge.
Numerous adjustments, both increasing and decreasing,
caused changes in the PCR. These changes, which balance each
other out, include:
1. A change in PSNH's Wholesale Fuel and Purchased Power
Adjustment Clause (FPPAC) rate, approved by FERC, plus a
PSNH FPPAC deferral, to be collected in the upcoming period,
cause an increase to the PCR of $0.00020 per kilowatt-hour.
2. An increase in PSNH's base energy charges from $0.0802 per
kilowatt-hour to $0.0822 per kilowatt-hour for calender year
1999 in accordance with the APRA will increase the PCR
requirement by $0.00189 per kilowatt-hour.
3. QF purchases, at rates less than short-term avoided cost,
with a strong likelihood of occurring are included in the
PCR forecast, resulting in a decrease of $0.00310 per
kilowatt-hour.
4. A predicted under-recovery of $919,139 as of January 1,
1999, offset by the collection of an under-recovery of
$435,277 in the period July 1, 1998 to December 31, 1998,
results in a PCR increase of $0.0004 per kilowatt-hour.
5. The interest charge in the proposed PCR offset by the
interest in the current PCR results in a $0.00014 per
kilowatt-hour increase.
6. The proposed deferral of $195,000 creates a decrease of
$0.00035 per kilowatt-hour.
In November of 1998, PSNH made an offer to NHEC to
collect the FPPAC under-recovery balance, previously deferred, as
a line item on customers' bills over 12 months without interest
as opposed to the standard method of 6 months with interest. The
Cooperative declined the offer because special contract ski area
customers, whose rates are dependent upon FPPAC, would not pay
any of the under-recovery under PSNH's proposed methodology of
collecting the deferral through a line item charge on tariff
customers' bills rather than through FPPAC.
Based on a contractual dispute between NHEC and other
"secondary purchasers" of Maine Yankee, NHEC has stopped making
payments to Maine Yankee. NHEC has not included any Maine Yankee
costs in the 1999 PCR forecast.
B. OCA
The OCA did not file testimony, but questioned NHEC's
witness about PSNH's FPPAC offer to NHEC, possible increases in
QF purchases, and the effect of changing the assumption that all
customers will choose a competitive supplier on January 1, 1999.
The OCA also requested that NHEC ask PSNH if it would consider an
interest free deferral recovery using a collection methodology
which would be more acceptable to NHEC.
OCA recommended approval of the proposed rates in the
interest of rate continuity. The OCA expressed concern that
tariff ratepayers were not able to benefit from PSNH's offer to
collect deferred FPPAC payments without interest due to
mechanisms in the ski area special contracts.
B. Staff
Staff did not file testimony, but questioned NHEC's
forecast of PSNH Demand Ratchet Charges, the effect of assuming
all customers will choose a competitive supplier on January 1,
1998, purchases from New England Power, and steps NHEC is taking
to mitigate power costs.
Staff recommended that the Commission approve NHEC's
proposed Stranded Cost Charge and Default Power Service Charge as
filed. Staff stated it believed allowing NHEC to defer the
proposed $195,000 in order to prevent a rate increase is
appropriate at this time given that NHEC is in QF negotiations
which would lower its energy costs and that it is still awaiting
a decision from the FERC over interpretation of the APRA.
III. COMMISSION ANALYSIS
Pursuant to Order No. 23,013 (September 8, 1998) in
docket DR 98-097, NHEC unbundled its Power Cost Recovery into its
two component parts, namely, Stranded Cost and Default Power, and
calculated the component rates. Based on the record in this
proceeding, we find the proposed allocation of the PCR between
the two component parts just and reasonable given the current
over-recovery of the Stranded Cost component and the current
under-recovery of the Default Power Cost component. Taking into
consideration NHEC's high rates, the possibility of lower cost QF
power in the near future, and the possibility of lower cost power
once the FERC issues an order on the APRA issue, we find it in
the public interest for NHEC to defer the proposed $195,000 in
order to keep PCR rates constant for the period January 1, 1999
to June 30, 1999.
We also agree with the OCA that NHEC should discuss
with PSNH whether there is a mechanism to take advantage of
PSNH's FPPAC offer without bypassing special contract customers.
Based upon the foregoing, it is hereby
ORDERED, that the New Hampshire Electric Cooperative,
Inc. is authorized to increase its Default Power Service Charge
by $0.00577 per kilowatt-hour and decrease its Stranded Cost
Charge by $0.00577 per kilowatt-hour to $0.01343 per
kilowatt-hour for the period January 1, 1999 to June 30, 1999;
and it is
FURTHER ORDERED, that the short-term avoided cost rate
for Qualifying Facilities is set at the following prices per
kilowatt-hour for the period January 1, 1999 to June 30, 1999 at
the respective delivery points:
Public Service Company of NH Base Energy 8.347¢
FPPAC 1.050¢
Central Vermont Public Service Base Energy 3.204¢
New England Power Company Base Energy
On-Peak 2.782¢
Off-Peak 1.766¢
Green Mountain Power Corporation Base Energy 3.960¢
Fuel Charge varies monthly;
and it is
FURTHER ORDERED, that NHEC file with the Commission a
letter summarizing the result of discussions with PSNH regarding
FPPAC deferral payments.
By order of the Public Utilities Commission of New
Hampshire this twenty-first day of December, 1998.
Douglas L. Patch Susan S. Geiger Nancy Brockway
Chairman Commissioner Commissioner
Attested by:
Thomas B. Getz
Executive Director and Secretary