DR 98-139
Public Service Company Of New Hampshire
Special Contract Service Rates
Order Approving Stipulation and Offer of Settlement
O R D E R N O. 23,139
February 8, 1999
APPEARANCES: Gerald M. Eaton, Esq. for Public Service
Company of New Hampshire; Lisa Shapiro, Ph.D. and David
Garfunkel, Esq. for Wausau Paper of N.H., Timken MPB and American
Tissue; Dom S. D'Ambruoso, Esq. for Anheuser-Busch, Monadnock
Paper Mills, Portland Pipeline Corp., Textron and Teradyne, Inc.;
James Monahan for Cabletron Systems; Hugh T. Lee, Esq. for
Heidelberg Web Press; Senator Fred W. King from Senate District
1; Representative Jeb E. Bradley from Carroll County District 8;
Henry Veilleux from the Business & Industry Association; Gary
Gilmore from the Campaign for Ratepayers' Rights; Michael W.
Holmes, Esq. and Kenneth E. Traum, Finance Director of the Office
of the Consumer Advocate on behalf of residential ratepayers; and
Eugene F. Sullivan, III, Esq. for the Staff of the New Hampshire
Public Utilities Commission.
I. PROCEDURAL HISTORY
In Docket No. DR 98-014, Public Service Company of New
Hampshire's (PSNH) semi-annual Fuel and Purchased Power Cost
Adjustment (FPPAC) filing, the New Hampshire Public Utilities
Commission (Commission) approved an FPPAC rate of $0.00383 per
kWh. The rate reflects an increase to the Base Amount(BA)
component of the FPPAC formula to reflect the complete
amortization of half of the Acquisition Premium. See Order No.
22,946 (May 29, 1998). The Commission also ordered PSNH to put
into effect the special contract rates it had proposed on a
temporary basis pending further consideration in another docket
of the effects that changes to FPPAC BA have on special contract
customers.
On May 31, 1998, PSNH initiated this proceeding by
filing tariff revisions designed to modify certain special
contracts. The tariffs of these special contracts are tied to
changes in FPPAC to reflect the reduction in base rates caused by
the complete amortization of half of the Acquisition Premium. An
Order of Notice was issued on July 31, 1998 scheduling a
pre-hearing conference for August 25, 1998.
A Motion to Intervene was filed by Representative Jeb
E. Bradley on August 8, 1998. On August 17, 1998, a Petition for
Intervention was filed by Anheuser-Busch, Inc. Elliott &
Williams Roses requested full intervenor status on August 19,
1998. On August 20, 1998, motions for intervention were filed by
Campaign for Ratepayers' Rights, F. Anne Ross, Esq., Wausau
Papers of New Hampshire, Cabletron Systems, Inc., James Rodier,
Esq., and the Business and Industry Association of New Hampshire
(BIA).
On September 8, 1998, the Commission issued Order No.
23,012. This Order scheduled a meeting of the Parties and Staff
for October 6, 1998 to discuss a schedule for the remainder of
the proceeding and submit it to the Commission for consideration.
Order No. 23,012 also granted the pending motions for
intervention, ordered PSNH to notify all special contract
customers affected by the proceeding and directed PSNH to notify
all parties to DR 96-150, the electric restructuring docket, and
other parties holding special contracts of the proposed changes
to the special contracts.
On September 11, 1998, Anheuser-Busch and Wausau
petitioned the Commission to modify Order No. 23,012 to maintain
the FPPAC BA at its currently frozen level pending resolution of
the proceeding. On October 10, 1998, the Commission issued an
Executive Letter which established a procedural schedule for the
remainder of the proceeding. On October 22, 1998, late-filed
Petitions for Intervention were filed on behalf of Portland
Pipeline Corporation, Monadnock Paper Mills, Inc., and Textron
Automotive Company. Hitchiner Manufacturing Company and Nashua
Corporation submitted late-filed Petitions to Intervene on
October 29, 1998. A Motion for Protective Order was filed by
PSNH on October 29, 1998. On the same day, Motions for Late
Intervention were filed by Timken Aerospace and Super Precision
Bearings. American Tissue Mills of New Hampshire, Inc. filed a
Motion for Late Intervention on October 30, 1998.
On November 2, 1998, an Executive Letter was issued by
the Commission expressing concern about the scope of the
proceeding and ordering a hearing on scope for November 13, 1998.
The Executive Letter also stated that the proposed procedural
schedule would be held in abeyance pending the outcome of the
November 13, 1998 hearing. On November 2, 1998, the Commission
received a late-filed Motion to Intervene from Summit Packaging
Systems, Inc.
On November 13, 1998, a hearing was held to examine the
scope of the proceeding.
On December 1, 1998, the Commission issued Order No.
23,072 concerning the scope of the proceeding and setting
deadlines for filing a stipulation and any supporting or opposing
testimony. Order No. 23,072 also granted the late-filed motions
to intervene by Timken, Super Precision Bearings, Textron
Automotive, Portland Pipeline, Monadnock Paper, Summit Packaging,
American Tissue, Hitchiner Manufacturing and Nashua Corporation.
On December 4, 1998, PSNH submitted the testimony of
Stephen R. Hall, Manager of Rates, along with a Stipulation and
Offer of Settlement, including a Model Form of Amendment to the
special contracts. On December 8, 1998, five signature pages to
the Stipulation and Offer of Settlement were filed on behalf of
Anheuser-Busch, Inc., Monadnock Paper Mills, Inc., Textron
Automotive Company, Portland Pipe Line Corporation and Teradyne
Inc. by their attorney who requested the signatures be made part
of the Stipulation and Offer of Settlement. Also on December 8,
1998, PSNH filed a Supplement to the Stipulation and Offer of
Settlement. The Stipulation and Offer of Settlement indicates
that the BA should remain at 4.955 cents per kilowatt-hour and
the FPPAC rate shall remain at 0.383 cents per kilowatt-hour
until (1) retail choice is available to other PSNH customers of
similar size and load characteristics, and (2) the special
contract is amended or altered by Commission order in compliance
with an approved restructuring plan.
On December 14, 1998, the Commission issued Order No.
23,085 which granted PSNH's Motion for Protective Order. On
December 16, 1998, the BIA pre-filed the testimony of Henry
Veilleux in support of the Stipulation and Offer. A letter in
support of the Stipulation and Offer of Settlement was filed by
Executive Councilor Raymond S. Burton on December 18, 1998.
At the December 22, 1998 hearing, testimony in support
of the Stipulation and Offer was provided by Mr. Hall. BIA and
Representative Bradley made statements in support of the
Stipulation and Offer. No Party to the proceeding opposed the
Stipulation and Offer. Staff did not file testimony in the
proceeding nor take a position concerning the Stipulation and
Offer. On December 23, 1998, the Commission received a letter in
support of the Stipulation and Offer of Settlement from Senator
Frederick W. King.
II. STIPULATION AND OFFER OF SETTLEMENT
The Stipulation and Offer of Settlement, including the
Model Form of Amendment, provides that customers receiving
service under special contracts tied to a formula for determining
the energy portion of their bill will not see any changes in the
formula due to changes in the FPPAC BA or FPPAC rate during the
period the Stipulation and Offer of Settlement is effective.
Absent these changes, the 35 customers receiving service under
these Special Contracts would have incurred increased energy
charges of 1.326 cents per kWh due to the change in the FPPAC BA
which increased it from 4.955 cents per kWh to 6.281 cents per
kWh. Total FPPAC costs, currently 6.664 cents per kWh, include
the FPPAC BA of 6.281 cents per kWh and the FPPAC rate of 0.383
cents per kWh.
Other than the fixing of the FPPAC BA and the FPPAC
rate at 4.955 cents per kWh and 0.383 cents per kWh,
respectively, all other provisions of the special contracts
remain the same; however, the Model Amendment provides that the
special contract will remain in effect until either the special
contract expires or retail competition is available for
non-special contract PSNH customers similar in size and load
characteristics to the special contract customers and the special
contract is amended by the Commission as part of an approved
restructuring compliance plan.
III. COMMISSION ANALYSIS
The issue for our consideration is whether to accept
the Stipulation and allow a modification to these 35 special
contracts to provide these customers with the rate relief
experienced by other customers taking service pursuant to the
generally applicable rates of PSNH, rate relief which these 35
customers would not otherwise receive under the terms of their
current contracts.
All 35 of the special contracts were approved by
Commission order in accordance with RSA 378:18. Pursuant to RSA
365:28 the Commission may "alter, amend, suspend, annul, or
otherwise modify any order made by it." This Commission has
previously recognized that it retains jurisdiction over all
contracts filed with it for its approval. Re Town of Derry, 77
NH PUC 4 (1992).
In the case at hand, the Stipulation and Offer of
Settlement provides that, from June 1, 1997, until retail choice
applies for customers similar in size and load characteristics of
the special contract customers, for the purposes of calculating
the energy charge component in the special contracts of these
thirty-five customers, the FPPAC rate will be fixed at 0.383
cents per kWh and BA will be fixed at 4.955 cents. The energy
component of these contracts, therefore, will be fixed for as
long as the contracts remain in effect. Thus, the contracts will
not reflect increases or decreases in the FPPAC rate, base rates,
or BA.
As part of the Stipulation and Offer of Settlement,
PSNH must notify eligible special contract customers of the
change in their special contract within 14 days from the
effective date of this order and PSNH and the special contract
customers shall have a total of 60 days from the effective date
of this order to execute and return the Model Amendment. In
order to avail themselves of the new rate, special contract
customers must execute and return the Model Amendment.
PSNH testified that there are sufficient revenues under
each special contract to cover total FPPAC costs, currently 6.664
cents per kWh. PSNH agreed to "hold harmless" its non-special
contract customers by calculating and reconciling its FPPAC rates
from now until retail choice day arrives as if the special
contract customers had contributed the full FPPAC BA level and
paid the applicable FPPAC rate. In essence, PSNH states it will
accept the risk of changes in FPPAC costs in the future.
Although we believe the consequences of the manner in
which the energy charges were established under the original
contract terms were foreseeable, we also believe the proposed
modification to the terms and conditions of the contracts is just
and in the public interest. We make this finding, in large part,
based on PSNH's willingness to hold all other customers harmless
in the event revenues under the modified contracts are
insufficient to cover FPPAC and BA costs.
Furthermore, based on our review of the Stipulation and
Offer of Settlement, we find that it meets the concerns we stated
in our December 1, 1998 order on the scope of the proceeding,
namely, that any settlement shall not prevent customers from
participating in retail electric choice when it becomes
available. We believe this Stipulation and Offer of Settlement
meets that objective. At the same time, it will provide these
customers with stable rates, at least between now and the advent
of retail choice.
We note, however, that in exchange for rate stability
these customers have agreed to forgo the benefits of any
reduction in the FPPAC rates or base rates over the term of the
contracts. Thus, we would not expect to see any other attempts
to modify these contracts based on any such reductions in rates.
Finally, we appreciate the substantial efforts of the
Parties and Staff to resolve this difficult issue in a manner
that provides benefits to the special contract customers without
harming non-special contract customers or impeding retail
competition.
Based upon the foregoing, it is hereby
ORDERED, that the Stipulation and Offer of Settlement
as amended by the Supplement to Stipulation is APPROVED and that
the 35 special contracts at issue are modified in accordance with
its terms and conditions; and it is
FURTHER ORDERED, the rates contained in the Stipulation
and Offer of Settlement shall remain in effect pursuant to the
terms contained in the Stipulation and Offer of Settlement until
the Commission orders otherwise in compliance with an approved
restructuring plan; and it is
FURTHER ORDERED, that Public Service Company of New
Hampshire notify eligible special contract customers of the
change in their special contract within 14 days from the
effective date of this order and that PSNH and the special
contract customers shall have a total of 60 days from the
effective date of this order to execute and return the Model
Amendment; and it is
FURTHER ORDERED, that PSNH shall file with the
Commission a copy of all properly executed Model Amendments to
the special contracts within 14 days from the receipt of the
executed Model Amendment; and it is
FURTHER ORDERED, that this order is effective February
9, 1999.
By order of the Public Utilities Commission of New
Hampshire this eighth day of February, 1999.
Douglas L. Patch Susan S. Geiger Nancy Brockway
Chairman Commissioner Commissioner
Attested by:
Thomas B. Getz
Executive Director and Secretary