DR 98-192
Connecticut Valley Electric Company Inc.
1999 Conservation and Load Management Percentage Adjustment
Order Approving Stipulation
O R D E R N O. 23,167
March 22, 1999
APPEARANCES: Kenneth C. Picton, Esq., for Connecticut
Valley Electric Company Inc.; Wynn E. Arnold, Esq., for the
Governor's Office of Energy and Community Services; Kenneth E.
Traum for the Office of the Consumer Advocate for residential
ratepayers; and Michelle A. Caraway and Paul S. Keller for the
Staff of the New Hampshire Public Utilities Commission.
I. PROCEDURAL HISTORY
On November 4, 1998, Connecticut Valley Electric
Company Inc. (CVEC) filed with the New Hampshire Public Utilities
Commission (Commission) its Proposal for 1999 Conservation and
Load Management (C&LM) Percentage Adjustment (C&LMPA).
By an Order of Notice issued November 30, 1998, the
Commission scheduled a prehearing conference for January 4, 1999,
set deadlines for intervention requests and objections thereto,
outlined a procedural schedule, and required the parties and
Commission Staff (Staff) to summarize their positions with regard
to the filing for the record. On December 30, 1998, the
Governor's Office of Energy and Community Services (ECS) filed a
late Motion for Full Intervention. There were no objections to
ECS' motion to intervene. The Office of the Consumer Advocate
(OCA) is a statutorily recognized intervenor. On January 11,
1999, the Commission issued Order No. 23,103 granting ECS's
motion to intervene and approving the procedural schedule.
Pursuant to the approved procedural schedule, CVEC,
ECS, the OCA and Staff engaged in formal discovery. On January
25, 1999, ECS, the OCA and Staff submitted prefiled direct
testimony. A settlement conference was scheduled for February 5,
1999, but was canceled by the parties as a result of telephonic
conferences. On February 17, 1999, CVEC, the OCA, and Staff
entered into a Stipulation. The Stipulation addresses all of the
issues raised by the OCA and Staff. ECS was not a signatory to
the Stipulation. On February 18, 1999, a hearing was held before
the Commission.
II. POSITIONS OF THE PARTIES AND STAFF
A. Connecticut Valley Electric Company, Inc.
CVEC proposed a 1999 C&LMPA which is substantially
composed of the collection of the net present value of the net
revenue loss (NRL) for the 1999-2024 period. CVEC stated that
the benefits from accelerated recovery derive from the
elimination of administrative expenses associated with the annual
C&LMPA filing and the monthly variance reports. CVEC ramped down
its C&LM programs during 1997, as authorized by the Commission in
Order No. 22,536 (March 31, 1997). The proposed 1999 C&LMPA
recovers no direct program spending, only the net present value
of future NRL, as well as 1999 administrative costs and prior
period over/undercollections. The 1999 C&LMPA is also proposed
to be applicable only to off-season billings in the March through
November 1999 period. No C&LMPA billing is proposed for the peak
season months of January, February, and December 1999. The
proposed C&LMPAs are 2.32% for the Residential rate class and
4.37% for the Commercial/Industrial rate class.
CVEC does not propose any C&LM programs for 1999. In
response to a provision of the Stipulation, CVEC provided
testimony at the hearing regarding various C&LM programs offered
by other New Hampshire utilities as well as its parent company,
Central Vermont Public Service (CVPS), and the feasibility of
CVEC either piggybacking on those programs or having those
utilities actually provide the programs to CVEC's customers.
However, CVEC recommended that the Commission wait until the New
Hampshire Energy Efficiency Working Group (Working Group)
completed its discussions before deciding whether CVEC should
reintroduce C&LM programs for its customers.
B. Governor's Office of Energy and Community Services
ECS has two primary concerns related to CVEC's filing.
First, ECS did not support CVEC's proposal for accelerated
recovery of NRL for the period 1999-2024. ECS is "concerned that
CVEC's proposal could provide the Company with opportunities for
inappropriate recovery and/or double recovery of certain costs,
including costs that the company might end up recovering in
future rate cases or through potential stranded cost recovery
charges. We are concerned that the proposed amount of NRL may
include generation-related revenues that the Commission would not
allow a future stand-alone transmission and distribution company
to collect... we are concerned about basing payment of NRL on
estimated measure savings over the next several decades without
periodically updating these estimates to account for new
information that may be relevant to actual savings" (Ex. 5 at 2).
ECS was also concerned that CVEC ramped down its C&LM
programs in 1997 and is not proposing any programs for 1999. ECS
recommended that the Commission authorize CVEC to initiate C&LM
programs using the infrastructure currently in place for CVEC's
parent company, CVPS, or by piggybacking off regional
initiatives; for example, the TumbleWash program. Should the
Commission authorize CVEC to provide programs for 1999, ECS
recommended that supplemental testimony should be filed to
address program design and funding levels.
C. Office of the Consumer Advocate
The OCA was not supportive of CVEC's filing in two
respects. First, OCA disagreed with CVEC's proposal for
accelerated recovery of NRL through the 1999 C&LMPAs. Instead,
the OCA recommended that the Commission continue to authorize NRL
on an annual basis until CVEC's next base rate case. Second, the
OCA stated that it "supports programs that are cost effective, as
well as those targeting low income ratepayers and ones educating
ratepayers on the benefits of conservation" (Ex. 4 at 3) but
expected that CVEC would have proposed such programs for 1999.
D. Staff
Staff's concerns also focused on the accelerated
recovery of NRL and the reintroduction of C&LM programs for 1999.
Staff's position on NRL was consistent with ECS' and OCA's.
Staff also emphasized that the Working Group was directed by the
Commission to address the treatment of lost revenues as part of
its discussions.
In regard to program delivery, Staff did not support
the reintroduction of C&LM programs in CVEC's service territory.
Staff noted that the Commission allowed CVEC to phase out its
C&LM programs in 1997 and reaffirmed that decision by Order No.
22,892 (April 1, 1998). Staff recommended that the Commission
defer its decision on the provision of C&LM programs until the
Working Group completes its discussions and provides its
recommendations on whether and how energy efficiency programs
should be delivered in a restructured electric environment.
III. STIPULATION
CVEC, the OCA and Staff agree that CVEC's C&LMPA
proposal, as set forth in CVEC's November 4, 1998 filing, is in
the public interest and should be approved, subject to the
following modifications:
1. The 1999 amounts to be collected through the C&LMPA consist of
$16,600 for C&LM costs, $91,729 for NRL and $1,471 for interest.
The prior period over/undercollections are from the actual 1998
C&LMPA reconciliations using actual data through December 31,
1998.
2. The C&LMPA rates are to be applied only to billings rendered
during the off season. The C&LMPAs will not be applied to peak
season billings. For all rate classes except Rate T, such
billings occur from March through November. For Rate T, such
billings occur from April through December.
3. The 1999 Residential C&LMPA is 0.57%. The 1999 Commercial/
Industrial C&LMPA is 1.10%.
4. Net Revenue Loss (NRL) for 1999 for program measures installed
before 1998 will be recovered through the 1999 C&LMPAs. Subject
to annual filings and Commission approval, NRL for the years
2000-2024 will be collected annually until the effective date of
rates from CVEC's next base rate case, at which time the recovery
of NRL from pre-1998 C&LM programs is accomplished through a base
rate change and the C&LMPA recovery of NRL will cease.
5. In the event the New Hampshire Energy Efficiency Working Group
recommends utility-sponsored C&LM programs, CVEC will work with
the parties to implement practicable programs in CVEC's service
territory, and will consider the implementation of an Interim
C&LMPA to recover the costs of these or any other interim programs
as ordered by the Commission. No C&LM programs will be undertaken
by CVEC in 1999 unless specifically ordered by the Commission.
6. CVEC will continue to track inquiries it receives for its C&LM
programs, including number of inquiries, nature of inquiries, and
specific programs inquired about by the customer.
7. Pilot tariffs shall be adjusted in accordance with the C&LMPA
rates stated above and with past practice. Upon approval of this
Stipulation by the Commission, CVEC shall file tariff pages for
C&LMPA and adjusted Pilot Program rates to be effective on bills
rendered on or after March 1, 1999, or such later date as ordered
by the Commission.
8. The approved C&LMPAs and related Pilot tariff will be implemented
on a bills rendered basis, consistent with prior approved C&LMPAs
and Pilot tariffs, and in accordance with CVEC's request in its
November 4, 1998 filing. To accomplish this result, CVEC, the OCA
and Staff request that the Commission waive the application of
N.H. Admin. Rules, Puc 1203.05(a), which generally requires that
rate changes be implemented on a service rendered basis, and allow
CVEC to implement this C&LMPA and related Pilot tariff on a bills
rendered basis.
9. At the hearing on February 18, 1999, CVEC will summarize its
discussions with adjacent New Hampshire utilities on the
feasibility of having one of those utilities expand their existing
low-income or other programs to serve the CVEC service territory.
Each party shall have an opportunity at the hearing to make
recommendations relating to such information provided by CVEC.
10. As provided on the proposed tariff page attached to the
Stipulation, variance reports will be filed with the Commission on
a quarterly basis, as opposed to the monthly reports currently
being submitted.
IV. COMMISSION ANALYSIS
After careful review of the record in this docket, we
find that the Stipulation filed by CVEC, the OCA and Staff is
reasonable and is in the public good. We will approve CVEC's
1999 C&LMPA filing as modified by the Stipulation.
We find that the Stipulation addresses the concerns
raised by ECS, the OCA and Staff regarding the accelerated
recovery mechanism of NRL. Although the magnitude of NRL for
CVEC pales in comparison to amounts requested for recovery by
other New Hampshire utilities, we refrain from deciding at this
time whether such a recovery mechanism provides the appropriate
assurances that neither ratepayers nor shareholders are unjustly
burdened. Our decision today should not prevent any party or
Staff from recommending this mechanism or other mechanisms in a
future C&LM proceeding or within the Working Group itself. We
are interested in the Working Group's considerations of the
benefits and disadvantages associated with mechanisms to phase
out and/or eliminate NRL on a forward-going basis.
Further, we will not require CVEC to reintroduce C&LM
programs in its service territory at this time. Through our
Order on Rehearing in DR 96-150 (March 20, 1998), we created a
Working Group of interested parties to address several issues
related to energy efficiency programs. The Working Group is
expected to submit its recommendations in the near future and we
anticipate taking action on those recommendations in time to
provide guidance for the 2000 filings.
However, the Commission emphasizes that, although we
are not requiring CVEC to implement any new C&LM programs or to
continue programs previously offered, we expect that the results
of the Working Group would produce some information that we could
review to assist us in deciding how energy efficiency products
and services could best be provided in the future consistent with
legislative directions and sound public policy. Although the
Stipulation discusses introducing programs that are recommended
by the Working Group and approved by the Commission, that does
not limit the types of programs that we may consider
implementing; i.e, there may be programs not recommended by the
Working Group, or there may not be agreement by the Working
Group, yet there may be programs the Commission finds
appropriate.
Through Order No. 22,892, we directed CVEC to track the
inquiries it receives for its C&LM programs to assist us in
determining the extent to which customers are expecting energy
efficiency programs to be offered by their local distribution
companies. Although the Stipulation states that CVEC will
continue to track such inquiries, at the hearing CVEC stated that
it did not have a formal tracking process. CVEC stated that
customers inquire about services from various CVEC employees.
Therefore, developing a tracking program must integrate work
processes of several departments. Since the Commission is not
requiring CVEC to implement C&LM programs in 1999, we continue to
believe that the information we required of CVEC for 1998 will
continue to assist us as we contemplate the future of
ratepayer-funded, utility-sponsored energy efficiency programs.
Therefore, we direct CVEC to continue to track such inquiries as
directed by Order No. 22,892 and to develop a more formal system
that will allow CVEC to compile the data in a timely and reliable
manner.
Through Order No. 23,155 (February 26, 1999), the
Commission suspended the C&LMPAs proposed by CVEC in both the
November 4, 1998 filing and the Stipulation due to Commission
commitments which prevented deliberations and the issuance of a
final order in this proceeding before March 1, 1999, the proposed
effective date for the C&LMPAs. Therefore, we direct CVEC to
recalculate the C&LMPAs for the Residential and
Commercial/Industrial rate classes to reflect the estimated
revenues to be collected over the remaining non-peak months of
1999 and to implement those rates effective April 1, 1999.
Finally, we waive the application of N.H. Admin. Rules,
Puc 1203.05(a), which requires generally that rate changes be
implemented on a service-rendered basis, and will allow CVEC to
implement its C&LMPAs on a bills-rendered basis. This waiver,
pursuant to Puc 201.05, produces a result consistent with the
principles embodied in Puc 1203.05(b), which sets forth
exceptions for allowing rate changes on a bills-rendered basis,
and is in the public interest because it eliminates consumer
confusion and reduces administrative costs.
Based upon the foregoing, it is hereby
ORDERED, the CVEC's 1999 C&LMPA proposal, as filed on
November 4, 1998 and as modified by the Stipulation, is APPROVED;
and it is
FURTHER ORDERED, that CVEC's 1999 C&LMPAs are approved
as modified by this order effective April 1, 1999 on a
bills-rendered basis; and it is
FURTHER ORDERED, that CVEC shall file compliance tariff
pages no later than ten days from the date of this order.
By order of the Public Utilities Commission of New
Hampshire this twenty-second day of March, 1999.
Douglas L. Patch Susan S. Geiger Nancy Brockway
Chairman Commissioner Commissioner
Attested by:
Thomas B. Getz
Executive Director and Secretary