DR 96-150
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
Interim Stranded Cost Charges
Order Amending Rehearing Schedule
O R D E R N O. 23,101
January 11, 1999
This order schedules a prehearing conference to
establish a procedural schedule for completing the rehearing
process relating to the establishment of interim stranded cost
(ISC) charges for Public Service Company of New Hampshire (PSNH).
As explained below, in the amended rehearing schedule, PSNH and
other parties will be provided an opportunity to update and
supplement their prior testimony in light of the interlocutory
decision issued by the New Hampshire Supreme Court on December
23, 1998. The Commission will hold a prehearing conference to
address any procedural matters on Wednesday, January 20, 1999 at
2:00 p.m.
I. BACKGROUND
On February 28, 1997, the Commission issued a Statewide
Electric Utility Restructuring Plan (the Plan) and five
utility-specific interim stranded cost orders (ISC orders)
pursuant to RSA 374-F. Although the Plan established generic
restructuring policies, Order No. 22,875 at 8, the legal analysis
accompanying the Plan addressed specific arguments advanced by
PSNH in support of its request for ISC charges that reflect full
stranded cost recovery. See Plan, Legal Analysis, pp. 57-92.
Generally, PSNH asserted various legal rights which derived from
the 1989 Rate Agreement reviewed by the Commission in DR 89-244.
Specifically, the Commission rejected PSNH's assertions that: (a)
RSA 362-C limits the Commission's discretion in setting PSNH's
ISC charges; (b) the confirmation order issued by the United
States Bankruptcy Court requires the Commission to provide PSNH
its requested stranded cost recovery; (c) the Rate Agreement
constitutes an enforceable contract with the State of New
Hampshire which affords PSNH the right to its requested stranded
cost recovery, and (d) Order No. 22,512 otherwise violates the
Takings Clause of the United States Constitution and the parallel
protections under the New Hampshire Constitution. See Plan,
Legal Analysis, pp. 57-92.
In Order No. 22,548 (April 7, 1997), the Commission
suspended and stayed the Plan and ISC orders, including Order No.
22,512 (PSNH's ISC order), pending the disposition of rehearing
requests. In the same order, the Commission specifically
granted PSNH's request for rehearing on two discrete issues. The
Commission articulated those issues as follows:
Whether the methodology utilized by the Commission in
the Final Plan to establish PSNH's interim stranded
costs charges requires PSNH, or any affiliated company,
to write off any FAS 71 regulatory asset, and in turn,
whether such accounting adjustment(s) violate(s) debt
covenants in PSNH's credit facilities or those of any
affiliate; and
Whether our decision relative to the Rate Agreement in
Order 22,514 repudiates an enforceable obligation of
the State, which in turn may cause violations of PSNH
debt covenants or those of any affiliate.
Order 22,548 at 3. The Commission subsequently expanded the
scope of the rehearing to allow parties to make specific
proposals for setting PSNH's ISC charges using cost-based
methodologies. Order No. 22,766 (October 24, 1998). After
granting two continuances, the Commission held evidentiary
hearings and accepted briefs on the foregoing issues during
November and December of 1997.
On February 20, 1998, in lieu of issuing rulings on the
rehearing issues, the Commission transferred two questions of law
to the New Hampshire Supreme Court pursuant to RSA 365:20.
Essentially, the transferred questions sought interlocutory
rulings on whether the Rate Agreement or RSA 362-C created
private rights that conflict with the restructuring policies and
standards for stranded cost recovery set forth in RSA 374-F. The
questions specifically invited the Court to evaluate the validity
of PSNH's claim that the Rate Agreement and RSA 362-C created
certain enforceable contractual rights.
On December 23, 1998, the Supreme Court issued a
decision addressing the transferred questions. The Court stated
that the language of the Rate Agreement was "arguably ambiguous"
and noted that "the proper resolution of the rate agreement's
contractual character and scope may well require a review of the
facts and circumstances beyond the four corners of the rate
agreement itself." In re New Hampshire Public Utilities
Commission Statewide Electric Utility Restructuring Plan, slip
op. (December 23, 1998), p. 6. The Court concluded that it was
unable to determine whether the Rate Agreement created a binding
contract because the record was "incomplete" for that purpose.
Id. at 5-6.
Although the Court left open the contract issue, it
provided guidance on the interplay between RSA 362-C and RSA
374-F for purposes of determining the extent to which PSNH is
allowed to recover stranded costs. According to the Court,
[T]he PUC must consider State obligations under RSA
Chapter 362-C and the rate agreement, if any, when
determining whether, and to what extent, PSNH receives
an award of stranded costs...the [Commission] can award
PSNH only those stranded costs, including deferred
assets under the rate agreement, that comport with the
standard mandated by the legislature in RSA 374-F:4, V
and VI. Accordingly, PSNH's ability to recover the
deferred assets under the rate agreement through
stranded cost recovery charge [sic] is limited by that
standard.
Id. at 8. The Court explained further,
Reading the enabling statute and the restructuring
statute as consistent in the prescribed manner permits
the State to attempt to honor its obligation, if any,
under RSA chapter 362-C and the rate agreement while
still effectuating the legislature's intent to provide
electric rate relief to New Hampshire citizens through
the deregulation of generation services.
Id. at 8-9.
To date, the Commission has issued no decision on the
rehearing requests relating to PSNH's ISC charges. PSNH's
initial ISC order, and those portions of the Plan's legal
analysis pertaining to PSNH, remain suspended pursuant to RSA
541:5.
II. DISCUSSION
In light of the passage of time and the Supreme Court's
recent interlocutory decision, we have determined that it is
necessary and appropriate to conduct additional evidentiary
hearings before issuing a decision setting PSNH's ISC charges.
The primary purpose of these proceedings will be to allow PSNH
and other parties to update and supplement their prior testimony.
In addition, we will permit PSNH and parties to submit additional
testimony and evidence specifically addressing the deficiencies
in the record noted by the Court. We note that the issues to be
decided in the rehearing proceeding remain the same as defined in
Order No. 22,548 and Order No. 22,766.
It is our intent to expeditiously complete the
rehearing process and issue a final order establishing PSNH's ISC
charges. We will hold a prehearing conference on Wednesday,
January 20, 1999 at 2:00 p.m. to establish a procedural schedule
and to address any questions regarding the scope of the evidence
to be presented at the supplemental rehearings.
Based upon the foregoing, it is hereby
ORDERED, that a Prehearing Conference, pursuant to N.H.
Admin. Rules Puc 203.05, be held before the Commission located at
8 Old Suncook Road, Concord, New Hampshire on Wednesday, January
20, 1999 at 2:00 p.m.
By order of the Public Utilities Commission of New
Hampshire this eleventh day of January, 1999.
Douglas L. Patch Susan S. Geiger Nancy Brockway
Chairman Commissioner Commissioner
Attested by:
Thomas B. Getz
Executive Director and Secretary