DR 98-195 ENERGYNORTH NATURAL GAS, INC. Petition for Authority to Operate in the City of Berlin Order Approving Interventions and Deferral of Procedural Schedule O R D E R N O. 23,142 February 9, 1999 APPEARANCES: McLane, Graf, Raulerson & Middleton by Steven V. Camerino, Esq. on behalf of EnergyNorth Natural Gas, Inc.; Upton, Sanders and Smith by Robert Upton, Esq. on behalf of the City of Berlin, NH; the Office of the Consumer Advocate by Kenneth E. Traum on behalf of residential utility consumers; and Larry S. Eckhaus, Esq. for the Staff of the New Hampshire Public Utilities Commission. I. PROCEDURAL HISTORY On November 3, 1998, EnergyNorth Natural Gas, Inc. (ENGI or the Company) filed with the New Hampshire Public Utilities Commission (Commission), pursuant to RSA 374:22 and 26, a Petition for Authority to Operate in the City of Berlin (Petition) accompanied by the prefiled testimony of Rate Analyst Mark Savoie. According to the Petition, natural gas supplies will be provided by interconnection with the Portland Natural Gas Transmission System (PNGTS), presently under construction. The Company is negotiating with PNGTS for an interconnection and supply. The impetus for the Petition is the construction of the North Country Medium Security Prison (Prison) in Berlin. Staff promulgated a series of thirty-two (32) interrogatories intended to elicit additional information regarding the proposal on November 6, 1993. On November 13, 1998, the Commission issued an Order of Notice for a Prehearing Conference on December 11, 1998 and for a public hearing in Berlin on January 6, 1999. II. PREHEARING CONFERENCE - DECEMBER 11, 1998 1. Positions Of The Parties And Staff a. EnergyNorth ENGI reports that the State of New Hampshire Department of Corrections (DOC) is currently constructing in Berlin a new prison complex, which the Department intends to equip with facilities that utilize natural gas. The Prison will be located approximately one-half mile from the PNGTS pipeline, which is currently under construction, and the DOC is presently in negotiation with ENGI to provide natural gas service to the Prison. ENGI also states that it anticipates additional development around the prison complex as well as interest from governmental and private organizations in the City of Berlin which over time may result in extension of the gas distribution system. Consequently, ENGI asks that it be granted the service territory for the entire City of Berlin. Moreover, as there appears to be no opposition to ENGI's serving the Prison, it seeks expeditious treatment regarding the prison even if it requires bifurcation to address, first, service to the Prison and, later, the remainder of the City. b. City of Berlin On November 10, 1998, the Berlin City Manager wrote the Commission supporting and endorsing the Petition on behalf of the Mayor and City Council of Berlin. Subsequently, on December 7, 1998, the City filed a Motion to Intervene partially in favor of the Petition, but subject to certain conditions and concerns which were restated at the Prehearing Conference, including: limiting the extent of the franchise to an area encompassing the Prison which will be constructed in 1999; reserving to the City of Berlin certain areas of the City for the delivery of wholesale natural gas; establishing the appropriate rates for the service area which may, or may not, be ENGI's existing rates; determining whether the federal and state tariffs for service from the take station will provide the maximum benefit possible for the City into the future; ensuring that the take station constructed by PNGTS will be appropriately sized and will not be for the exclusive use of ENGI; and, requiring that approval of this Petition would not ultimately impose any interference with propane or petroleum distillate storage or distribution in the City. The City did agree that it seemed appropriate to proceed expeditiously with service to the Prison and did not disagree with the Company's dual track suggestion. c. Office of Consumer Advocate The OCA is very supportive of bringing natural gas to the north country and supports the Petition, but raises questions similar to those posed by the City as well as whether there will be any improper or unreasonable subsidization of ENGI's activities by ratepayers. d. Staff Staff noted the basic issues related to whether ENGI has the managerial, technical and financial capability to operate the proposed service territory and whether granting the proposed service territory would be for the public good. In addition, Staff raised questions concerning: the present and future plans to serve the City; whether the contract with the Prison will be a special contract pursuant to Puc 1606.01 and the Company's tariff; the costs of the main extension to the Prison; whether there are any bypass issues; and, whether cogeneration will be installed at the Prison. e. Other Comments Prior to the prehearing conference on December 11, 1998, letters in support of ENGI's petition were received from District 1 Executive Councilor Raymond S. Burton, District One Senator Frederick W. King, Hank Risley, Commissioner of the Department of Corrections, George M. Bald, Commissioner of the Department of Resources and Economic Development, and the Northern White Mountain Chamber of Commerce. 2. Procedural Schedule Following the Prehearing Conference, the parties and Staff met in a Technical Session to discuss the above issues and develop a procedural schedule to govern the remainder of this proceeding. III. PUBLIC HEARING, BERLIN - JANUARY 6, 1999 At the Public Hearing in Berlin, the Company reiterated its proposal to initially serve the Prison and later the rest of the City of Berlin as the opportunity presents itself, noting that expansion to the whole City may not be economical and ENGI looks forward to a partnership arrangement with the City and others to help make the investment to bring natural gas to other parts of the City. The Company stated that it had met with business leaders, the Chamber of Commerce and the City Council, in addition to the support from others referred to above. Mr. Richard Demers, ENGI Vice President of Marketing, stated that the City Council had voted unanimously in support of the Company's franchise request. Interim City Manager Robert Theberge confirmed the City Council's full support of the proposed franchise. Mr. Hank Risley, DOC Commissioner, indicated that the Prison was sited and designed to use natural gas because of the proximity of the PNGTS pipeline. The current schedule was to have gas available by October, 1999 in time for completion of the Prison by December, 1999. Mr. Demers stated that the Company is planning to install the main from the PNGTS pipeline to the Prison in the spring of 1999 to meet DOC's timetable. Mr. Albin Johnson, Berlin Water Works Superintendent submitted comments relating to the location of the take station and protection of the municipal well and aquifer recharge area, and the possibility of the Water Works becoming a customer. IV. COMMISSION ANALYSIS 1. Interventions At the prehearing conference, the Commission approved the intervention of the City of Berlin, there being no objections. The Office of the Consumer Advocate (OCA) appeared on behalf of residential utility consumers pursuant to RSA 363:28 II. 2. Procedural Schedule Inasmuch as the contracts between ENGI and the DOC, and ENGI and PNGTS, have not been finalized, the Parties and Staff agreed to defer establishing a procedural schedule until the contract(s) were executed and filed with the Commission. At that time, the Parties and Staff will develop a procedural timetable recognizing ENGI's and the DOC's construction and service requirements. Based upon the foregoing, it is hereby ORDERED, the Commission will await the recommendation of the Parties and Staff regarding the procedural schedule for the remainder of this proceeding. By order of the Public Utilities Commission of New Hampshire this ninth day of February, 1999. Douglas L. Patch Susan S. Geiger Nancy Brockway Chairman Commissioner Commissioner Attested by: Thomas B. Getz Executive Director and Secretary