EASTERN UTILITIES ASSOCIATES, POS AMC, 1996-05-17

EASTERN UTILITIES ASSOCIATES
POS AMC, 1996-05-17
ELECTRIC SERVICES

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File No. 70-8769

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

POST EFFECTIVE AMENDMENT NO. 2

FORM U-1

APPLICATION-DECLARATION WITH RESPECT TO
THE ACQUISITION OF A SUBSIDIARY IN CONNECTION WITH
THE PROVISION OF POWER MARKETING AND OTHER SERVICES

UNDER

THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935

EASTERN UTILITIES ASSOCIATES
P.O. Box 2333, Boston, Massachusetts 02107

(Name of company filing this statement
and address of principal executive office)

EASTERN UTILITIES ASSOCIATES

(Name of top registered holding company parent of
applicant or declarant)

CLIFFORD J. HEBERT, JR., TREASURER
EASTERN UTILITIES ASSOCIATES
P.O. Box 2333, BOSTON, MASSACHUSETTS 02107

(Name and address of agent for service)

The Commission is requested to mail signed copies
of all orders, notices and communications to:

ARTHUR I. ANDERSON, P.C.
McDermott, Will & Emery
75 State Street
Boston, MA 02109

ITEM 2. FEES, COMMISSIONS, AND EXPENSES.

The fees, Commissions and expenses of the Applicant expected to be

paid or incurred, directly or indirectly, in connection with the

transactions described are as follows:

Fees of Company Counsel $ 7,500

ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS (* Filed herewith)

(a) Exhibits.

*D-1 Massachusetts Electric Company Retail Access Pilot Programs

*D-2 MDPU Letter of Approval dated April 3, 1996.

*D-3 NHPUC Order No. 22,033 Retail Competition Pilot Program Order

Establishing Fund Guidelines and Requiring Compliance Filings.

SIGNATURE

Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the undersigned Applicants have duly caused this statement to be
signed on their behalf by the undersigned duly authorized individuals.

EASTERN UTILITIES ASSOCIATES

By: /s/ Clifford J. Hebert, Jr.
Clifford J. Hebert, Jr.
Treasurer

Dated May 17, 1996

EXHIBIT D-1

RETAIL ACCESS PILOT
PROGRAMS

March 4, 1996

Submitted to:
Massachusetts Department of Public Utilities

Submitted by:
Massachusetts Electric Company
A New England Electric System Company

ATTACHMENT 1
3/4/96

Massachusetts Electric Company
Residential and Small Business Customers
Choice: New England - Pilot Program

Massachusetts Electric Company and its affiliates have developed a
plan for providing all customers choice in their power supplier
called Choice: New England. Choice: New England proposes that
all customers have the option of choosing their electricity
supplier beginning January 1, 1998. In the meantime, the pilot
will test the potential for customers to lower their electricity
bills in a competitive marketplace. It also will allow
Massachusetts Electric to work out the logistical and
administrative details of retail choice, such as metering and
billing, before implementing choice on a state-wide scale. The
pilot program for residential and small business customers will be
administered with the following terms:

1. Participation:

- Open to all residential R rate customers, and
commercial/industrial G1 or G2 customers receiving
electric service from Massachusetts Electric in the
cities of Lawrence, Lynn, Northampton, and Worcester.

- Total participation will initially be limited to 100
million kWh per year. 50 million kWh will be
specifically set aside for residential customers.

- MECo reserves the right to expand this program at a
later date or conduct additional pilot programs.

- If customers totaling more than 50 million kWh each for
residential and business customers ask to participate, a
lottery will be held to select participants.

2. Pilot Program Administration

- Massachusetts Electric will hire an Administrator, who
will be responsible for choosing the power supply
options, and marketing and administering the program for
customers. The Administrator will sign a contract
including all the terms in this description, as well as
provisions to protect customer information and
confidentiality.

Massachusetts Electric Company
Residential/Small Business Choice: New England Pilot
March 4, 1996
Page 2

- Massachusetts Electric will pay the Administrator a
fixed fee plus a bonus for delivering 100% of the 50
million Kwh participation for the business portion and
an incremental incentive for each residential customer
who chooses to receive power through one of the supply
options available. The total amount paid to the
administrator will not exceed $75,000. This amount will
be added to the generation price that customers pay.

3. Community Outreach

- Massachusetts Electric will send an initial letter to
all the approximately 140,000 eligible customers,
directing them to mail a postage paid card back to the
Administrator if interested. In this way, only
customers who give permission for their names,
addresses, phone numbers, and usage to be released will
be given to the Administrator.

- These cards also can be filled out and collected by
community agencies including neighborhood centers,
Community Development Corporations, local business
associations, public government offices, etc., and be
forwarded to the Administrator. Special efforts will be
made to work with agencies who represent seniors, low
income customers, customers who do not speak or read
English, electric heat customers, locally owned
businesses, etc.

- Massachusetts Electric will meet initially with local
community groups and officials to introduce the program
and the Administrator. All further outreach and
marketing activities will be conducted by the
Administrator.

- Massachusetts Electric promptly will refer any inquiries
from interested customers it receives directly to the
Administrator.

4. Start Date:

- The latter of September 1, 1996, or receipt of all
necessary regulatory approvals.

- This program shall continue through December 31, 1997.

Massachusetts Electric Company
Residential/Small Business Choice: New England Pilot
March 4, 1996
Page 3

- During the pilot, customers may opt to return to service
under their previous bundled tariff. Once they return
to bundled tariffs, they cannot rejoin the pilot.

5. Terms:

Massachusetts Electric will provide participating customers
access to alternative power suppliers on the terms specified
in Choice: New England as modified below:

- During the term of the pilot, customers will pay MECo
for Transmission, Distribution, and Access at the prices
specified in Attachments 1-5.

- The prices for Transmission and Distribution specified
in Attachments 1-5 are estimates of the unbundled prices
for those services. While MECo's prices remain bundled,
the prices specified in Attachment 1-5 shall increase or
decrease in proportion to overall increases or decreases
in the distribution portions of MECo's base rates
approved from time-to-time by the DPU.

6. Power Supply:

- The Administrator will solicit bids from alternative
power supplies on behalf of the customers participating
in the Pilot. The Administrator also will be
responsible for community outreach and marketing the
options to interested customers.

- All bids received shall be made public.

- All bids must specify a price or pricing schedule for
all requirements, firm power delivered to NEP's system
for an initial term of 12 months. After such initial
term, power supplies for Pilot participation may be
solicited for different durations, depending on the
availability of direct access on terms and conditions
approved by the DPU and FERC.

- The pilot will not be renewed if direct access will be
available to customers within a reasonable time period,
as determined by Massachusetts Electric.

- NEP specifically reserves the right to bid or not bid in
any such solicitation.

Massachusetts Electric Company
Residential/Small Business Choice: New England Pilot
March 4, 1996
Page 4

- Massachusetts Electric will assist the Administrator in
the preparation of the initial power supply Request For
Proposal. Massachusetts Electric will encourage the
creation of several supply options for each customer
class.

- To facilitate the pilot program during the period direct
access generally is not available to customers, NEP may
enter into contracts with the winning bidder to buy and
resell power to participating customers if it is not
practicable to conduct such transactions under
appropriate wheeling tariffs.

- Among other things, the RFP will require that each
winning bidder be a member of NEPOOL or, if not, have an
agreement with a NEPOOL member to include the load
served in the NEPOOL member's own-load dispatch. This
will ensure that appropriate NEPOOL requirements are met
and that if NEP does not bid or is not the winning
bidder, it will be relieved of responsibility to meet
the requirements of participating customers.

7. Metering/Billing/Customer Service

- MECo will continue to provide distribution services,
including DSM, to all customers participating in the
Pilot Program on the same terms and conditions generally
applicable to customers on their previous bundled
tariff.

- Detailed billing procedures will be developed to
coordinate arrangements between MECo and the generation
supplier. Among other things, these arrangements must
address compensation for losses, cash working capital,
and bad debts.

- Customers will use existing meters for pilot
participation unless they or their supplier elect to
install, at their own expense, alternative meters
acceptable to Massachusetts Electric. No new metering
will be installed as part of the pilot.

8. Regulatory Approval:

- Pilot program is subject to regulatory approval by the
DPU and FERC.

Massachusetts Electric Company
Residential/Small Business Choice: New England Pilot
March 4, 1996
Page 5

Attachment 1 - Rate: R1

Distribution Charges(1)

Customer Charge (inc. ESC)(2) $6.63 per month

Energy Charge $0.02294 per kWh

DSM/Renewables(3) $0.00271 per Kwh

Transmission Charge(1)

Energy Charge $0.00408 per Kwh

Access Charges

Energy Charge $0.03044 per Kwh

1. To be superseded when unbundled rates are generally
available.

2. Subject to adjustment based on base rate changes.

3. As approved by MDPU from time to time.

Massachusetts Electric Company
Residential/Small Business Choice: New England Pilot
March 4, 1996
Page 6

Attachment 2 - Rate: R2

Distribution Charges(1)

Customer Charge (inc. ECS)(2) $4.40 per month

Energy Charge $0.01731 per Kwh

DSM/Renewables(3) $0.00271 per Kwh

Transmission Charges(1)

Energy Charges $0.00308 per Kwh

Access Charges

Energy Charge: $0.02298 per Kwh

1. To be superseded when unbundled rates are generally
available.

2. Subject to adjustment based on base rate changes.

3. As approved by MDPU from time to time.

Massachusetts Electric Company
Residential/Small Business Choice: New England Pilot
March 4, 1996
Page 7

Attachment 3 - Rate: R4

Distribution Charges(1)

Customer Charge (inc. ECS)(2) $21.33 per month

Energy Charge $0.02429 per Kwh

DSM/Renewables(3) $0.00271 per Kwh

Transmission Charges(1)

Energy Charges $0.00376 per Kwh

Access Charges

Energy Charge: $0.030000 per Kwh

1. To be superseded when unbundled rates are generally
available.

2. Subject to adjustment based on base rate changes.

3. As approved by MDPU from time to time.

Massachusetts Electric Company
Residential/Small Business Choice: New England Pilot
March 4, 1996
Page 8

Attachment 4 - Rate: G1

Distribution Charges(1)

Customer Charge (inc. ECS)(2) $9.46 per month

Unmetered Charge $7.20 per month

Energy Charge $0.02573 per kWh

DSM/Renewables(3) $0.00583 per kWh

Transmission Charges(1)

Energy Charges $0.00519 per kWh

Access Charges

Energy Charge $0.030000 per kWh

1. To be superseded when unbundled rates are generally
available.

2. Subject to adjustment based on base rate changes.

3. As approved by MDPU from time to time.

Massachusetts Electric Company
Residential/Small Business Choice: New England Pilot
March 4, 1996
Page 9

Attachment 5 - Rate: G2

Distribution Charges(1)

Customer Charge (inc. ECS)(2) $17.14 per month

Demand $6.33 per kWh-Mo.

DSM/Renewables(3) $0.00281 per kWh

Transmission Charges(1)

Demand $1.48 per kWh-Mo.

Access Charges

Demand $2.25 per kWh-Mo.

Energy $0.02288 per kWh

1. To be superseded when unbundled rates are generally
available.

2. Subject to adjustment based on base rate changes.

3. As approved by MDPU from time to time.

ATTACHMENT 2

February 14, 1996

Mr. Howard P. Foley
President
Massachusetts High Technology Council, Inc.
Reservoir Place
1601 Trapelo Road
Waltham, Massachusetts 02154

Re: Choice: New England -- Pilot Program

Dear Mr. Foley:

As you are aware, Massachusetts Electric Company and its
affiliates have developed a plan for providing all customers true
choice in their power supplier called Choice: New England.
Although the schedule for implementation of the program is January
1, 1998, we are prepared to seek approval from the Department of
Public Utilities (DPU) to implement pilot programs for
representative groups of residential, small commercial, and high
technology customers that could begin as soon as July 1, 1996.
With respect to high technology customers, we are offering the
Massachusetts High Technology Council (MHTC) members a pilot
program on the following terms:

1. Participation:

- Open to MHTC members currently served by MECo on rate G-
3.

- MHTC members with more than one G-3 account can
designate accounts to participate in the Pilot. All
participating accounts shall be for all requirements
service.

- Total participation initially will be limited to 200
million kWh per year.

- MECO reserves the right to expand this Pilot at a later
date or conduct additional pilot programs.

- Allocation of available kWh among MHTC members to be
determined by MHTC.

Mr. Howard P. Foley
February 14, 1996
Page 2

2. Option to Improve Terms:

- MECo agrees that, between the effective date of this
Pilot and the time direct access is generally available
under terms and conditions approved by the DPU and the
Federal Energy Regulatory Commission (FERC), it will not
offer any customer, either individually or as part of a
group, direct access to alternative power suppliers on
terms more favorable than those contained herein without
first offering MHTC the opportunity to modify this Pilot
to conform to the terms of such other offer.

3. Start Date:

- The latter of July 1, 1996, or receipt of all necessary
regulatory approvals.

- This Pilot shall terminate when direct access is
generally available to customers on terms and conditions
approved by the DPU and FERC.

- During the term of this Pilot, MHTC members may opt to
return to service under MECO's G-3 rate, provided such
is consistent with the terms of any power supply
arrangement entered into by or on behalf of MHTC
members.

4. Terms:

- Massachusetts Electric will provide participating
customers access to alternative power suppliers on the
terms specified in Choice: New England as modified
below:

- During the term of the Pilot, customers will pay
MECo for transmission, distribution, and access at
the prices specified in Attachment 1.

- The prices for transmission and distribution
specified in Attachment 1 are estimates of the
unbundled prices for those services. While MECo's
prices remain bundled, the prices specified in
Attachment 1 shall increase or decrease in
proportion to overall increases or decreases in the
distribution portion of MECO's G-3 base rate
approved from time-to-time by the DPU.

Mr. Howard P. Foley
February 14, 1996
Page 3

- During the term of the Pilot, the access charges
specified in Attachment 1 shall be fixed through
December 31, 1998, thereafter they shall be
adjusted annually in accordance with the terms of
Choice: New England as proposed in MECo's February
16, 1996, filing with the DPU.

5. Rights Upon Termination:

- At such time as direct access is generally available to
customers on terms approved by the DPU and FERC, the
Pilot shall terminate and the prices specified on
Attachment 1 for transmission, distribution, and access
shall be superseded in their entirety by the generally
available prices for those services.

6. Power Supply:

- MHTC will be required to solicit bids from alternative
power suppliers on behalf of its members participating
in the Pilot.

- All bids received shall be made public.

- All bids must specify a price for all requirements, firm
power delivered to NEP's system for an initial period of
18 months. After such initial period, power supplies
for Pilot participants may be solicited for different
durations.

- NEP specifically reserves the right to bid or not bid in
any such solicitation.

- MHTC shall select only one supplier in response to each
solicitation conducted under the terms of this Pilot
program. If any supplier selected by MHTC is unable to
fulfill its obligations under a power supply agreement,
MHTC shall have the right to select a replacement
supplier.

- NEP agrees to reimburse MHTC for reasonable costs
incurred in connection with the development and
initiation of the Pilot and
preparation of the initial power supply RFP by an
independent consultant.

Mr. Howard P. Foley
February 14, 1996
Page 4

- To facilitate the Pilot program, NEP may enter into
contracts with the winning bidder to buy and resell
power to participating customers if it is not
practicable to conduct such transactions under
appropriate wheeling tariffs. To the extent possible,
any contract entered into by NEP in connection with this
Pilot will be assigned to the MHTC and/or its
participating members.

- The terms of any RFP issued shall be subject to NEP's
approval. Among other things, the RFP will require that
the winning bidder be a member of NEPOOL or, if not,
have an agreement with a NEPOOL member to include the
load served in the NEPOOL member's own-load dispatch.
This will ensure that appropriate NEPOOL requirements
are met and that if NEP does not bid or is not the
winning bidder, it will be relieved of responsibility to
meet the requirements of participating customers.

7. Metering/Billing/Customer Service:

- MECo will continue to provide distribution services,
including DSM, to all customers participating in the
Pilot program on the same terms and conditions generally
applicable to G-3 customers.

8. Miscellaneous Provisions:

- MECo agrees that MHTC members that have entered into
Service Extension Discount agreements with the Company
will be allowed to participate in the Pilot program.

- During the term of the Pilot program, the restrictions
contained in the Service Extension Discount agreements
with respect to purchasing electricity from alternative
suppliers shall be suspended for participating MHTC
members. Upon a participant's election to end its
participation in the Pilot, all obligations under the
Service Extension Discount agreements shall be
reinstated. MHTC members that participate in the Pilot
for its full term shall be relieved of all obligations
under Service Extension Discount agreements with MECo.

Mr. Howard P. Foley
February 14, 1996
Page 5

9. Regulatory Approval:

- Pilot program is subject to regulatory approval by the
DPU and FERC.

If the terms outlined above are acceptable to you, please so
indicate by countersigning a duplicate copy of this letter and
returning it to me.

Thank you for your corporation. I am looking forward to
working with you on this exciting endeavor.

Very truly yours,

MASSACHUSETTS ELECTRIC COMPANY

/s/ John H. Dickson
John H. Dickson, President

Agreed and Accepted:

MASSACHUSETTS HIGH TECHNOLOGY COUNCIL, INC.

/s/ Howard P. Foley, President
Howard P. Foley, President
Massachusetts High Technology Council, Inc.

Attachment 1

Distribution Charges

Customer Charge (inc. ECS)(1) $78.75 per month

Demand(1) $3.71 per kW-Mo.

DSM/Renewables(2) $.00483 per kWh

Transmission Charges

Demand(1) $1.75 per kW-Mo.

Access Charges

Demand $4.42 per kW-Mo.

Energy $.01934 per kWh

1. Subject to adjustment based on base rate changes.

2. As approved by DPU from time to time.

ATTACHMENT 3
<TABLE>

04-Mar-96 MASSACHUSETTS ELECTRIC COMPANY

BASE CHARGE ECS EFF. BASE CHARGE ECS EFF.
RATE BLOCKS @ W-95(S) CC FACTOR PRICE RATE BLOCKS @W-95(S) CC PRICE
FACTOR
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R-5 Customer Charge $6.42 $0.21 $6.63 G-7 Customer Charges $16.93 $0.21 $17.14
Transmission Charge $0.00408 Demand Charges
Access Charge $0.03044 $0.03044 Transmission Charge $1.48 $1.48
Distribution Charge $0.02294 $0.00271 $0.02565 Distribution Charge $6.33 $6.33
Interruptible Credit Access Charge $2.25 $2.25
IC-1 $0.78 $0.78 Energy Charges
IC-2 $2.62 $2.62 Access $0.02288 $0.02288
Distribution Charge $0.00000 $0.00281 $0.00281

R-6 Customer Charge $4.19 $0.21 $4.40 G-8 Customer Charge (1) $78.54 $0.21 $78.75
Transmission Charge $0.00308 $0.00308 Demand Charges
Access Charge $0.02298 $0.02298 Transmission Charge $1.75 $1.75
Distribution Charge $0.01731 $0.00271 $0.02002 Distribution Charge $3.71 $3.71
Interruptible Credit Access Charge $4.42 $4.42
IC-1 $0.78 $0.78 Energy Charges
IC-2 $2.62 $2.62 Access Charge
On-Peak $0.01934 $0.01934
Off-Peak $0.01934 $0.01934
R-7 Customer Charge $21.12 $0.021 $21.33 Distribution Charge $0.00483 $0.00483
Transmission Charge $0.00376 $0.00376
Access Charge
On-Peak $0.03000 $0.03000
Off-Peak $0.03000 $0.03000
Distribution Charge $0.00271 $0.02700

G-6 Customer Charge $9.25 $0.21 $9.46
Unmetered Charge $7.20 $0.21 $7.41
Transmission Charge $0.00519 $0.00519
Access Charge $0.03000 $0.03000
Distribution Charge $0.02573 $0.00583 $0.03156

Notes:

CC factors by rate class effective for usage on or after January 1, 1996 ECS factor per customer $0.21 Effective 7/01/95

Rate R-1/R-2/R-4 $0.00271 per kwh
Rate G-1 $0.00583 per kwh Note:
Rate G-2 $0.00281 per kwh 1/ Per Settlement Agreement with Mass High-Tech Council
Rate G-3/G-5 $0.00483 per kwh
</TABLE>

MASSACHUSETTS ELECTRIC COMPANY

Effective

Residential Regular R-5
Retail Wheeling Pilot Program Service
M.D.P.U. No. 939

Adjusted By:

Energy Conservation Service (ECS) Charge
Adjustment for Cost of Conservation and Loan Management

Monthly Charge as Adjusted

Customer Charge $6.63

Access Charge per kWh 3.044 cents

Transmission Service Charge per kWh 0.408 cents

Distribution Service Charge per kWh 2.565 cents

Interruptible Credits

IC-1 $0.78

IC-2 $2.62

Minimum Charge

The monthly Customer Charge.

Other Rate Clauses apply as usual.
M. D. P. U. No. 939

Sheet 1

MASSACHUSETTS ELECTRIC COMPANY

RESIDENTIAL REGULAR R-5
RETAIL WHEELING PILOT PROGRAM SERVICE

AVAILABILITY

Electric delivery service under this rate is available for
all domestic purposes in individual private dwelling or an
individual apartment and for church and farm purposes. The
Company may under unusual circumstances permit more than one set
of living quarters to be served through one meter under this
rate; but if so, the Customer Charge will be multiplied by the
number of separate living quarters so served. A church and
adjacent buildings owned and operated by the church may be served
under this rate, but any such buildings separated by public ways
must be billed separately.

Customers whose average monthly usage for the previous 12
months exceeds 2500 KWH per month may elect delivery service on
rate R-7, subject to the availability of the appropriate metering
equipment.

This rate is available only to participants of the Pilot
program filed by the Company with the Department of Public
Utilities on March 4, 1996, and service under this rate is
subject to the terms and conditions of the Pilot program included
in that filing.

MONTHLY CHARGE

The Monthly Charge will be the sum of the applicable
Customer and kWh Charges, less the applicable Interruptible
Credit, if any:

Customer Charge $ 6.42

Access Charge per kWh 3.044 cents

Transmission Service Charge per kWh 0.408 cents

Distribution Service Charge per kWh 2.294 cents

M. D. P. U. No. 939

Sheet 1 - Continued

Interruptible Credits

If the Customer has installed an electric water heater of a
type approved by the Company, and permits the Company to control
the operation of the water heater for the specified number of
hours per day and during emergency situations, the Customer will
receive the following credit each month:

Control hrs. / day Credit

IC-1 6 $0.78

IC-2 16 $2.62

M. D. P. U. No. 939

Sheet 2

MASSACHUSETTS ELECTRIC COMPANY

RESIDENTIAL REGULAR R-5
RETAIL WHEELING PILOT PROGRAM SERVICE

ADJUSTMENT FOR COST OF CONSERVATION AND LOAD MANAGEMENT

The distribution service charge under this rate as set forth
under "Monthly Charge" may be adjusted from time to time in the
manner described in the Company's Conservation Cost Factor
Provisions to reflect costs related to the Company's Conservation
and Load Management Programs.

MINIMUM CHARGE

The monthly minimum charges shall be the monthly Customer
Charge.

BIMONTHLY BILLING

The Company reserves the right to read meters and render
bills on a bimonthly basis. When bills are rendered bimonthly,
the Customer Charge, the Interruptible Credits, and the Minimum
Charge shall be multiplied by two.

TERMS AND CONDITIONS

The Company's Terms and Conditions in effect from time to
time where not inconsistent with any specific provisions hereof,
are a part of this rate.

Effective September 1, 1996

MASSACHUSETTS ELECTRIC COMPANY

Effective

Residential-Low Income R-6
Retail Wheeling Pilot Program Service
M.D.P.U. No. 940

Adjusted By:

Energy Conservation Service (ECS) Charge
Adjustment for Cost of Conservation and Load Management

Monthly Charges as Adjusted

Customer Charge $4.40

Access Charge per kWh 2.298 cents

Transmission Service Charge per kWh 0.308 cents

Distribution Service Charge per kWh 2.002 cents

Interruptible Credit

IC-1 $0.78

IC-2 $2.62

Minimum Charge

The monthly Customer Charge.

Other Rate Clauses apply as usual.

M. D. P. U. No. 940

Sheet 1

MASSACHUSETTS ELECTRIC COMPANY

RESIDENTIAL-LOW INCOME R-6
RETAIL WHEELING PILOT PROGRAM SERVICE

AVAILABILITY

Electric delivery service under this rate is available only
to currently qualified customers for all domestic purposes in an
individual private dwelling or an individual apartment, providing
such customer meets both of the following criteria:

1. Must be the head of a household or principal wage
earner.
2. Must be presently receiving Supplemental Security
Income from the Social Security Administration; one of
the following from the Massachusetts' Department of
Public Welfare: Medicaid, Food Stamps, General Relief,
or Aid to Families with Dependent Children; Low Income
Heating Energy Assistance Program (LIHEAP) from a
certified Community Action Program Agency; or Veteran's
Service Benefits (Chapter 115) from the Commonwealth of
Massachusetts's Veteran Services Administration.

It is the responsibility of the customer to annually
certify, by forms provided by the utility, the continued
compliance with the foregoing qualifications.

The Company may under unusual circumstances permit more than
one set of living quarters to be served through on meter under
this rate, but if so, the Customer Charge shall be multiplied by
the number of separate living quarters so served.

This rate is available only to participants of the Pilot
Program filed by the Company with the Department of Public
Utilities on March 4, 1996, and service under this rate is
subject to the terms and conditions of the Pilot program included
in that filing.

MONTHLY CHARGE

The Monthly Charge will be the sum of the applicable
Customer and kWh Charges, less the applicable Interruptible
Credit, if any:

Customer Charge $4.19

Access Charge per kWh 2.298 cents

Transmission Service Charge per kWh 0.308 cents

Distribution Service Charge per kWh 1.731 cents

Sheet 1 - continued
Interruptible Credits

Control hrs. / day Credit

IC-1 6 $0.78

IC-2 16 2.62

M. D. P. U. No. 940

Sheet 2

MASSACHUSETTS ELECTRIC COMPANY

RESIDENTIAL-LOW INCOME R-6
RETAIL WHEELING PILOT PROGRAM SERVICE

ADJUSTMENT FOR COST OF CONSERVATION AND LOAD MANAGEMENT

The distribution service charge under this rate as set forth
under "Monthly Charge" may be adjusted from time to time in the
manner described in the Company's Conservation Cost Factor
provisions to reflect costs related to the Company's Conservation
and Load Management programs.

MINIMUM CHARGE

The monthly minimum charge shall be the monthly Customer
Charge.

BIMONTHLY BILLING

The Company reserves the right to read meters and render
bills on a bimonthly basis. When bills are rendered bimonthly,
the Customer Charge, the Interruptible Credits and the Minimum
Charge shall be multiplied by two.

TERMS AND CONDITIONS

The Company's Terms and Conditions in effect from time to
time, where not inconsistent with any specific provisions hereof,
are a part of this rate.

Effective September 1, 1996

MASSACHUSETTS ELECTRIC COMPANY

Effective

Residential - Time-of-Use (Optional) R-7
Retail Wheeling Pilot Program Service
M.D.P.U. No. 941

Adjusted by:

Energy Conservation Service (ECS) Charge
Adjustment for Cost of Conservation and Load Management

Monthly Charge as Adjusted

Customer Charge $21.33

Access Charge per kWh

Peak Hours Use 3.000 cents
Off-Peak Hours Use 3.000 cents

Transmission Service Charge per kWh 0.376 cents

Distribution Service Charge per kWh 2.700 cents

Metering Charge

If applicable

Minimum Charge

The monthly Customer Charge plus the applicable Metering
Charge, if any.

Other rate clauses apply as usual.
M.D.P.U. No. 941

Sheet 1

MASSACHUSETTS ELECTRIC COMPANY

RESIDENTIAL - TIME-OF-USE (OPTIONAL) R-7
RETAIL WHEELING PILOT PROGRAM SERVICE

AVAILABILITY

Electric delivery service under this rate is available for
all domestic purposes in an individual private dwelling or an
individual apartment and for church and farm purposes. For
customers requiring special and complex metering for service, the
availability of this rate will be subject to the Company's
ability to render such service.

The Company may due to limitations of space, considerations
of safety, or an existing condition of the premises affecting the
delivery of electric service, permit more than one dwelling unit
to be served through one meter under this rate; but if so, the
Customer Charge shall be multiplied by the number of dwelling
units so served. A church and adjacent buildings owned and
operated by the church may be served under this rate, but any
such buildings separated by public ways must be billed
separately.

Any residential customer whose average usage exceeds 2500
KWH/month for a 12 month period may elect delivery service under
this rate effective with installation of appropriate metering.

The actual delivery of service and rendering of bills under
this rate is contingent upon the installation of the necessary
time-of-use metering equipment by the Company; subject to both
the availability of such meters from the Company's supplier and
the conversion or installation procedures established by the
Company. Until service can be provided under this rate, the
customer shall take delivery service under Rate R-5.

Sheet 1 - Continued

MONTHLY CHARGE

The Monthly Charge will be the sum of the applicable
Customer, Additional Metering, and kWh Charges.

Customer Charge $21.12

Access Charge per kWh

Peak Hours Use 3.000 cents
Off-Peak Hours Use 3.000 cents

Transmission Service Charge per kWh 0.376 cents

Distribution Service Charge per kWh 2.429 cents

Metering Charges

New customers requiring special or complex metering for
service shall pay a Metering determined on an individual
customer basis.
M.D.P.U. No. 941

Sheet 2

MASSACHUSETTS ELECTRIC COMPANY

RESIDENTIAL - TIME-OF-USE (OPTIONAL) R-7
RETAIL WHEELING PILOT PROGRAM SERVICE

PEAK AND OFF-PEAK PERIODS

Peak hours will be from 8:00 A.M. to 9:00 P.M. daily on
Monday through Friday, excluding holiday.

Off-Peak hours will be from 9:00 P.M. to 8:00 A.M. daily
Monday through Friday, and all day on Saturdays, Sundays, and
holidays.

The Company reserves the right to change these peak and off-
peak hours, but in no case will the off-peak hours be less than
eleven hours per day.

The holidays will be: New Year's Day, Washington's
Birthday, Memorial Day, Independence Day, Columbus Day, Labor
Day, Veteran's Day, Thanksgiving Day, and Christmas Day. All
holidays will be the nationally observed day.

ADJUSTMENT FOR COST OF CONSERVATION AND LOAD MANAGEMENT

MINIMUM CHARGE

The monthly minimum charge shall be the sum of the monthly
Customer Charge plus any applicable monthly Metering Charge.

M.D.P.U. No. 941

Sheet 3

MASSACHUSETTS ELECTRIC COMPANY

RESIDENTIAL - TIME-OF-USE (OPTIONAL) R-7
RETAIL WHEELING PILOT PROGRAM SERVICE

BIMONTHLY BILLING

The Company reserves the right to read meters and render
bills on a bi-monthly basis. When bills are rendered bi-monthly,
the Customer Charge, any applicable Metering Charge, and the
Minimum Charge shall be multiplied by two.

TERMS OF AGREEMENT

The agreement for service under this rate will continue for
an initial term of one year if electricity can be properly
delivered to a Customer without an uneconomic expenditure by the
Company. The agreement may be terminated at any time on or after
the expiration date of the initial term by twelve months' prior
written notice.

TERMS AND CONDITIONS

The Company's Terms and Conditions in effect from time to
time, where not inconsistent with any specific provisions hereof,
are a part of this rate.

Effective September 1, 1996
MASSACHUSETTS ELECTRIC COMPANY

Effective

General Service-Small Commercial & Industrial G-6
Retail Wheeling Pilot Program Service
M.D.P.U. No. 942

Adjusted By:

Energy Conservation Service (ECS) Charge
Adjustment for Cost of Conservation and Load Management

Monthly Charge as Adjusted

Customer Charge $9.46

Location Service Charge - For allowed unmetered service

$7.41

Access Charge per kWh 3.000 cents

Transmission Service Charge per kWh 0.519 cents

Distribution Service Charge per kWh 3.156 cents

Minimum Charge - The applicable monthly Customer Charge
or Location Service Charge, provided,
however if the KVA transformer capacity
needed to serve a customer exceeds 25
KVA, the minimum charge will be
increased by $1.75 for each KVA in
excess of 25 KVA.

Other Rate Clauses apply as usual.
M.D.P.U. No. 942

Sheet 1

MASSACHUSETTS ELECTRIC COMPANY

GENERAL SERVICE - SMALL COMMERCIAL AND INDUSTRIAL G-6
RETAIL WHEELING PILOT PROGRAM SERVICE

AVAILABILITY

Electric delivery service under this rate is available for
all purposes, subject to the provisions of this section. A new
customer will begin service on this rate if the Company estimates
that its average use will not exceed 10,000 kWh/month or 200 kW
of demand. A Customer may be transferred from rate G-6 at its
request or at the option of the Company if the customer's 12
month average monthly usage exceeds either 10,000 kWh/month or
200 kW of demand for 3 consecutive months.

A Municipality which owns and maintains streetlight fixtures
served by underground conduit may take delivery service under the
unmetered service provision of this rate if the Municipality
signs an Underground Electric Service for Non-Conforming
Streetlighting Contract with the Company for underground electric
delivery service for streetlighting.

MONTHLY CHARGE

The Monthly Charge will be the sum of the applicable
Customer or Location Service Charge, and the kWh Charges:

Customer Charge - applicable to metered service only.

Customer Charge $9.25

Location Service Charge - for unmetered service as defined
below.
$7.20

Access Charge per kWh 3.000 cents

Transmission Service Charge per kWh 0.519 cents

Distribution Service Charge per kWh 2.573 cents

M.D.P.U. No. 942

Sheet 2 - Continued

UNMETERED DELIVERY SERVICE

Unmetered delivery services usually are not permitted or
desirable. However, the Company recognizes that there are
certain instances where metering is not practical. Examples of
such locations are telephone booths and fire box lights. The
monthly bill generally will be computed by applying the rate
schedule to a sue determined by multiplying the total load in
kilowatts by 720 hours. However, the energy use may be adjusted
after tests of the unmetered equipment indicate lesser usage.

The kilowatthour use for underground electric service for
streetlighting shall be determined according tot he provisions of
the Contract for the service.

When unmetered service is provided the Customer Charge will
be waived and the Location Service Charge will be applied.

ADJUSTMENT FOR COST OF CONSERVATION AND LOAD MANAGEMENT

The prices under this rate as set forth under "Monthly
Charge" may be adjusted from time to time in the manner described
in the Company's Conservation Cost Factor Provisions to reflect
costs related to the Company's Conservation and Load Management
programs.

MINIMUM CHARGE

The monthly minimum charge will be the applicable monthly
Customer Charge or Location Service Charge.

However, if the KVA transformer capacity needed to serve a
customer exceeds 25 KVA, the minimum charge will be increased by
$1.75 for each KVA in excess of 25 KVA.

BI-MONTHLY BILLING

The Company reserves the right to read meters and render
bills on a bi-monthly basis. When bills are rendered bi-monthly,
the applicable Customer Charge or Location Service Charge, and
the Minimum Charge shall be multiplied by two.

M.D.P.U. No. 942

Sheet 2 - Continued

TERM OF SERVICE

Customers served under this rate must provide the Company
with two years prior written notice before installing or allowing
to be installed for its use a non-emergency generator with a
nameplate capacity greater than that in place on the Customer's
location as of October 1, 1993.

TERMS AD CONDITIONS

The Company's Terms and Conditions in effect from time to
time, where not inconsistent with any specific provisions hereof,
are a part of this rate.

Effective September 1, 1996

MASSACHUSETTS ELECTRIC COMPANY

Effective

General Service - Demand G-7
Retail Wheeling Pilot Program Service
M.D.P.U. No. 943

Adjusted By:

Energy Conservation Service (ECS) Charge
Adjustment for Cost of Conservation and Load Management

Monthly Charge as Adjusted

Customer Charge $17.14

Transmission Service Charge per kW $ 1.48

Distribution Service Charge per kW $ 6.33

Distribution Service Charge per kWh .281 cents

Access Charge per kW $ 2.25

Access Charge per kWh 2.288 cents

Minimum Charge

The Customer Charge plus the Demand Charge.

Other Rate Clauses apply as usual.
M.D.P.U. No. 943

Sheet 1

MASSACHUSETTS ELECTRIC COMPANY

GENERAL SERVICE - DEMAND G-7
RETAIL WHEELING PILOT PROGRAM SERVICE

AVAILABILITY

Electric delivery service under this rate is available for
all purposes, subject to the provisions of this section. A new
customer will begin delivery on this rate if the Company
estimates that its average use will exceed 10,000 kWh/month, but
not exceed 200 kW of Demand.

A Customer may be transferred from rate G-7 at its request
if the customer's 12 month average monthly usage either (a) is
less than 8,000 kWh/month or (b) exceeds 200 kW of Demand of 3
consecutive months. A Customer may be transferred at the option
of the Company if the Customer's 12 month average usage either
(a) is less than 8,000 kWh/month or (b) exceeds 200 kW of Demand
for 3 consecutive months.

MONTHLY CHARGE

The Monthly Charge will be the sum of the applicable
Customer Charge, kW Charges, and kWh Charge:

Customer Charge $16.93

Transmission Service Charge per kW $ 1.48

Distribution Service Charge per kW $ 6.33

Access Charge per kW $ 2.25

Access Charge per kWh 2.288 cents

M.D.P.U. No. 943

Sheet 2

MASSACHUSETTS ELECTRIC COMPANY

GENERAL SERVICE - DEMAND G-7
RETAIL WHEELING PILOT PROGRAM SERVICE

ADJUSTMENT FOR COST OF CONSERVATION AND LOAD MANAGEMENT

DEFINITION OF DEMAND

a) The greatest fifteen minute peak occurring during all
hours, Peak and Off-Peak, within such a month as measured in
kilowatts,

b) 90% of the greatest fifteen minute peak occurring
during all hours, Peak and Off-Peak, of such month as
measured in kilovolt-amperes,

c) 5 kilowatts

HIGH-VOLTAGE METERING ADJUSTMENT

The Company reserves the right to determine the metering
installation. Where delivery service is metered at the Company's
supply line voltage, in no case less than 2400 volts, thereby
saving the Company transformer losses, a discount of 1.0% will be
allowed from the amount determined under the preceding
provisions.

When the metering equipment is installed on the Customer's
side of the transformer and the nameplate transformer rating is
greater than 120 percent of the Customer's highest demand over
the last twelve months, the Company may adjust the Kw, Kva, and
Kwh meter registrations or adjust electronic meter program
settings to compensate for unmetered transformer losses.

CREDIT FOR HIGH VOLTAGE DELIVERY

If the Customer accepts delivery at the Company's supply
line voltage, not less than 2400 volts, and the Company is saved
the cost of installing any transformer and associated equipment,
a credit of 45 cents per kilowatt of billing demand for such
month shall be allowed against the amount determined under the
preceding provisions.

M.D.P.U. No. 943

Sheet 2 - Continued

MINIMUM CHARGE

The monthly Minimum Charge shall be the sum of the monthly
Customer Charge and Demand Charges.

TERMS OF SERVICES

TERMS AND CONDITIONS

The Company's Terms and Conditions in effect from time to
time, where not inconsistent with any specific provisions hereof,
are a part of this rate.

Effective September 1, 1996

MASSACHUSETTS ELECTRIC COMPANY

Effective

Time-of-Use - G-8
Retail Wheeling Pilot Program Service
M.D.P.U. No. 944

Adjusted By:

Energy Conservation Service (ECS) Charge
Adjustment for Cost of Conservation and Load Management

Monthly Charge as Adjusted

Customer Charge $78.75

Transmission Service Charge per kW $1.75

Distribution Service Charge per kW $3.71

Distribution Service Charge per kWh .483 cents

Access Charge per kW $4.42

Access Charge per kWh

Peak Hours Use 1.943 cents
Off-Peak Hours Use 1.934 cents

Minimum Charge

The monthly Customer Charge plus the Demand Charges.

Other Rate Clauses apply as usual.

M. D. P. U. No. 944

Sheet 1
MASSACHUSETTS ELECTRIC COMPANY

TIME-OF-USE - G-8
RETAIL WHEELING PILOT PROGRAM SERVICE

AVAILABILITY

Electric delivery service under this rate is available for
all purposes, subject to the provisions of this section. A new
customer will begin delivery service on this rate of the Company
estimates that its average use will exceed 200 kW of Demand.

A Customer may be transferred from rate G-8 at its request
if the customer's 12 month average monthly demand is less than
180 kW of Demand for 3 consecutive months. A customer may be
transferred from rate G-3 at the option of the Company if the
Customer's 12 month average monthly demand is less than 180 kW of
Demand for 3 consecutive months.

The actual delivery of service and the rendering of bills
under this rate is contingent upon the installation of the
necessary time-of-use metering equipment by the Company; subject
to both the availability of such meters from the Company's
supplier and the conversion or installation procedures
established by the Company.

All customers served on this rate must elect to take their
total electric delivery service under the time-of-use metering
installation as approved by the Company. If delivery is through
more than one meter, except at the Company's option, the Monthly
Charge for service through each meter shall be computed
separately under this rate.

MONTHLY CHARGE

The Monthly Charge will be the sum of the applicable
Customer, Demand, and Energy Charges.

Customer Charge $78.54

Transmission Service Charge per kW $ 1.75

Distribution Service Charge per kW $ 3.71

Access Charge per kWh $ 4.42

Peak Hours Use 1.934 cents
Off-Peak Hours Use 1.934 cents

M. D. P. U. No. 944

Sheet 2

MASSACHUSETTS ELECTRIC COMPANY

TIME-OF-USE - G-8
RETAIL WHEELING PILOT PROGRAM SERVICE

PEAK AND OFF-PEAK PERIODS

Peak hours will be from 8:00 A.M. TO 9:00 P.M. daily on
Monday through Friday, excluding holidays.

Off-Peak hours will be from 9:00 P.M. to 8:00 A.M. daily
Monday through Friday, and all day on Saturdays, Sundays, and
holidays.

The Company reserves the right to change these peak and off-
peak hours, but in no case will the off-peak hours be less than
eleven hours per day.

The holidays will be: New Year's Day, President's Day,
Memorial Day, Independence Day, Columbus Day, Labor Day,
Veteran's Day, Thanksgiving Day, and Christmas Day. All holidays
will be the nationally observed day.

ADJUSTMENT FOR COST OF CONSERVATION AND LOAD MANAGEMENT

DETERMINATION OF DEMAND

a) The greatest fifteen minute peak occurring during all
hours, Peak and Off-Peak, within such a month as measured in
kilowatts.

b) 90% of the greatest fifteen minute peak occurring during
all hours, Peak and Off-Peak, of such month as measured in
kilovolt-amperes.

M. D. P. U. No. 944

Sheet 3

MASSACHUSETTS ELECTRIC COMPANY

TIME-OF-USE - G-8
RETAIL WHEELING PILOT PROGRAM SERVICE

HIGH-VOLTAGE METERING ADJUSTMENT

When the metering equipment is installed on the Customer's
side of the transformers and the nameplate transformer rating is
greater than 120 percent of the Customer's highest demand over
the last twelve months, the Company may adjust the kW, kva, and
kWh meter registrations or adjust electronic meter program
settings to compensate for unmetered transformer losses.

CREDIT FOR HIGH VOLTAGE DELIVERY

If the Customer accepts delivery at the Company's supply
line voltage, not less than 2400 volts, and the Company is saved
the cost of installing any transformer and associated equipment,
a credit of 45 cents per kilowatt of the billing Demand for such
month shall be allowed against the amount determined under the
preceding provisions.

An additional credit of $2.14 per kilowatt of the billing
Demand for such month shall also be allowed if said customer
accepts delivery at not less than 115,000 volts, and the Company
is saved the cost of installing any transformer and associated
equipment.

TERM OF SERVICE

TERMS AND CONDITIONS

The Company's Terms and Conditions in effect from time to
time, where not inconsistent with any specific provisions hereof,
are a part of this rate.

Effective July 1, 1996

EXHIBIT D-2

April 3, 1996

Thomas G. Robinson, Esq.
Massachusetts Electric Company
25 Research Drive
Westborough, MA 01582

Re: Retail Access Pilot Programs

Dear Mr. Robinson:

On March 4, 1996, Massachusetts Electric Company ("MECo" or
"Company") submitted two retail access pilot programs to the
Department of Public Utilities ("Department") for review. In the
first pilot program, the Company proposes to implement retail
choice to residential and small commercial and industrial
customers in the communities of Lawrence, Lynn, Northampton, and
Worcester.(1) The second pilot program extends retail choice to
members of the Massachusetts High Technology Council ("MHTC") who
currently are served under the Company's G-3 rate.(2) The Company
proposes to commence the residential and small commercial and
industrial pilot effective September 1, 1996, and the MHTC pilot
effective July 1, 1996.(3) The Company has provided unbundled rates
for each pilot program and tie directly to its February 16, 1996
industry restructuring proposal. See D.P.U. 96-25, Exhibit PTZ-
13.

(1) The residential and small commercial and industrial pilot
would be available to customers currently served under the
R-1, R-2, R-4, G-1, and G-2 rates for up to 10,000 customers
representing 100 million kilowatthours per year (50 million
set aside for residential customers) of electricity usage.

(2) The second pilot program would provide retail choice for up
to 200 million kilowatthours of electricity usage.

(3) The residential and small commercial and industrial pilot
would terminate on December 31, 1997, and the MHTC pilot
would continue until direct access is generally available to
customers.

Massachusetts Electric Company Page 2
April 3, 1996

The Company stated that approval of the pilot programs is
appropriate for several reasons (MECo Cover Letter at 2). First,
the pilot programs will allow the Company to test the metering and
billing protocols that will be used to develop broader programs.
Second, the pilot programs will allow suppliers to aggregate
loads, transfer capability responsibilities, and work through the
NEPOOL settlement process. Third, the pilot programs will provide
a test of the market. In addition, the Company stated that,
because participation is voluntary and participants may return to
MECo's field rates at any time, customers will not be harmed by
the pilot programs. The Company also stated that, because New
England Power Company will bear the risk of any under-recovery,
non-participants will not be harmed by the pilot programs (DPU-IR-
3).

In the transition to a competitive market structure, the
pilot programs will provide valuable experience to the Company,
customers, and the other participants that will be active in a
competitive market. Accordingly, with the understanding that the
Company's customers that do not participate in the programs are
not harmed by their implementation, the Department approves the
pilot programs. In addition, the Department understands that the
Company will file a pilot distribution tariff with the Federal
Energy Regulatory Commission, with the rates, terms and conditions
approved by the Department. Finally, in approving the pilot
programs, the Department makes no findings on the merits of the
Company's restructuring proposal (D.P.U. 96-25).

Sincerely,

/s/ John B. Howe
John B. Howe, Chairman

/s/ Mary Clark Webster
Mary Clark Webster, Commissioner

/s/ Janet Gail Besser
Janet Gail Besser, Commissioner

cc: Mary L. Cottrell
George Dean, Assistant Attorney General

EXHIBIT D-3

NEW HAMPSHIRE PUBLIC UTILITIES COMMISSION

DR 95-250

Retail Competition Pilot Program
Order Establishing Final Guidelines and Requiring Compliance Filings

O R D E R N O. 22,033
February 28, 1996

I. INTRODUCTION

In June 1995, the New Hampshire Legislature directed the NHPUC to establish
a pilot program (Pilot) to examine the implications of retail competition in
the electric industry, provided that it is found to be "fair, lawful,
constitutional, consistent with RSA 378:37 and in the public good". NHRSA
374:26- a, Laws of 1995, Chapter 272, effective January 1, 1996, previously
referred to as Senate Bill 168-FN-A, 12. See Appendix A.

In response to this mandate, the NHPUC issued Preliminary Guidelines on
October 9, 1995, followed by First Revised Guidelines on November 20, 1995.
On January 23, 1996, the NHPUC issued Second Revised Guidelines which
addressed additional comments submitted by interested parties and the
recommendations which emerged from an intensive series of collaborative
meetings (the Collaborative) during late December 1995 and early January
1996. Hearings were held on the Second Revised Guidelines January 29,
1996. After considering all of the written comments and those offered at the
recent hearings, we issue the following Final Guidelines (Guidelines) for
the Pilot.

The purpose of these Guidelines is to prescribe how the Pilot will be
implemented in order to accomplish the objectives set forth below.
Nonetheless, the revised procedural schedule contained in Appendix B
provides for a number of joint working meetings with representatives from
Staff, franchised utilities and other Pilot participants to discuss
technical questions raised by these Guidelines. Franchised utilities will be
required to make compliance filings on or before March 15, 1996 and we will
conduct hearings on those filings April 1-5, 1996. We anticipate issuing
a final order on the compliance filings on April 15, 1996 and direct
utilities to commence the Pilot on May 28, 1996.

As stated in our Preliminary Guidelines and reaffirmed in the Revised
Guidelines, the Pilot is not necessarily a blueprint for industry
restructuring; rather, it should be viewed as an opportunity to examine the
implications of and obstacles to competition in retail electric markets.
Accordingly, the Pilot is limited in scope, size and duration. For instance,
although performance based regulation may be an effective means to regulate
certain segments of the industry which remain naturally monopolistic, it is
unnecessary to initiate such regulatory reforms in order to implement the
Pilot.

We issue these Guidelines with the expectation that stakeholders will take
advantage of the opportunity to gain first-hand knowledge of the problems
associated with introducing competition into what has previously been a
thoroughly regulated industry. We continue to believe that the Pilot should
be implemented in a manner which enables policymakers to gather meaningful
data without causing an unreasonable financial impact on the state's
electric utilities. It is not our intent or purpose to have the Pilot be the
battleground for recovery of stranded costs or the future shape of the
electric utility industry.

For the above reason, the Pilot can not be expected to yield empirical data
which will provide easy answers to all of the complex issues associated with
the establishment of full retail competition in the electric industry. While
some of the information which the Pilot will generate may be anecdotal in
nature, the Pilot will provide an opportunity to encounter first-hand many
of the realities competitive markets. As with all NHPUC orders or
directives, we reserve the right to revisit the issues discussed herein and
to make modifications as appropriate during the term of the Pilot.

Finally, we affirm our belief that consensus-building and cooperative
approaches should play an important role in any future restructuring of New
Hampshire's electric utility industry. Based upon the success of the Pilot
collaborative, we believe that such an approach should play a part in
resolving the many difficult and challenging issues which could delay the
introduction of meaningful competition and lower rates for New Hampshire's
citizens and businesses.

II. PILOT OBJECTIVES

The Pilot's primary objective is to determine whether retail competition in
the electric utility industry can promote lower retail rates for all
customers without compromising the reliability and safety of the power
supply system. Consistent with this view, we have developed these
Guidelines in order to test certain fundamental assumptions which underlie
the case for retail competition. For instance, the Pilot should provide
information regarding the level of demand among different customer classes
for competitively supplied electric services and the corresponding level of
interest among competitive generators to supply those services. The Pilot
should also test whether customers of all classes have sufficient bargaining
power to significantly benefit from a deregulated power market. Such
information potentially has great value since it may enable a competitor to
determine which markets are the most profitable to serve.

Likewise, we view the Pilot as an opportunity to test certain arguments
advanced by those who oppose retail competition or question whether the
benefits of competition will be shared by all customer classes.
Additionally, the Pilot should provide information relative to the potential
financial impact of retail competition on New Hampshire's electric
utilities.

Finally, the Pilot will allow the parties to gain experience in a broad
range of technical and administrative matters relating to competitive
markets including the design and costing of unbundled electric services.

As we stated in our last Report, we have decided that the Pilot is not the
appropriate forum to resolve all of the complex economic and legal issues
associated with the restructuring of the electric utility industry.
Nonetheless, a meaningful Pilot can not be implemented without specifying
the initial level of stranded cost recovery. In Section V we define stranded
costs and establish a preliminary level of recovery in order to move the
Pilot forward. We will address the broad legal and policy arguments
associated with the issue of stranded cost recovery for the Pilot and the
transition to full competition in a separate proceeding.

III. LEGAL ISSUES

A. Authority to Order Retail Wheeling

In our previous Reports in this proceeding, we set forth
the statutory basis for the establishment of a retail electric
competition pilot program. The authorizing legislation requires us
to establish a pilot program provided that it is found to be "fair,
lawful, constitutional, consistent with RSA 378:37 and in the
public good". NH RSA 374:26-a. We believe that, if properly
implemented by the state's franchised utilities, these Guidelines
are consistent with these conditions.

In addition to the express statutory authority to
establish the Pilot, we believe that the NHPUC has the existing
legal authority to introduce competition into the retail electric
markets within this state if we find it to be in the public good.
See, NHPUC Order No. 21,683, Re Freedom Electric Company, DE 94-163
(June 6, 1995). Moreover, unlike issues related to retail
transmission services, it is undisputed that the FERC has no legal
authority to prevent states from ordering retail wheeling. Any
disagreement with our position on this issue of state law will be
resolved when the New Hampshire Supreme Court issues its decision
in the Freedom Electric appeal.

B. Stranded Cost Recovery

In our previous Reports relative to the Pilot, we
discussed the legal and policy considerations which led to our
preliminary conclusion that utilities should not be entitled to
100% recovery of their stranded costs in a transition to retail
competition. We continue to hold this view and believe that it is
legally justified and premised upon sound public policy.
Nevertheless, for the reasons set forth below, our discussions in
previous Reports do not represent a final determination of this
important and contentious issue.

Not surprisingly, in response to our Preliminary
Guidelines relative to this issue, we received comments from
stakeholders which reflected either strong opposition or abundant
support for our position. Clearly, the issue of stranded cost
recovery in a full transition will present significant and complex
challenges for policy-makers. In light of the important interests
involved in such a debate, the Pilot could be delayed indefinitely
if any of the many stakeholders in this proceeding attempted to use
it as the forum to set precedent for the eventual restructuring of
the industry. After carefully considering our statutory mandate to
establish a Pilot which examines the "implications" of retail
wheeling, we have elected to reserve our final determinations
relative to stranded cost recovery until the conclusion of a
separate, generic restructuring proceeding. In that proceeding, we
intend to fully explore the legal and policy considerations
relative to stranded cost recovery and develop principles which
will guide our decisions concerning industry restructuring. For
those utilities that participate in the Pilot under the fifty-fifty
mechanism, that proceeding will provide an opportunity for the
reconciliation of stranded costs and revenues.

C. Jurisdiction over Intrastate Transmission

In order for Pilot customers to benefit from competition,
it is necessary for competing suppliers to have equal access to
transmission services in order to deliver power supplies to the
distribution systems of franchised utilities. While it is clear
that states have the requisite jurisdiction to regulate the rates,
terms and conditions of distribution services, the jurisdictional
boundaries are less clear relative to the transmission component.
As noted in our previous Reports, we continue to believe that
states maintain exclusive jurisdiction over the rates, terms and
conditions of the intrastate transmission, distribution and sale of
electric power to retail customers - whether those services are
provided in bundled or unbundled form. See, NHPUC Order No.
21,850, Cabletron Systems Inc., and Johnson Controls Inc., DE 95-95
(October 3, 1995).

Although we maintain our position that we have exclusive
jurisdiction over intrastate transmission facilities used to
provide electric service to retail customers, it is not our intent
to allow participants to convert this proceeding into the forum for
resolving the national debate over the respective roles of state
and federal regulatory agencies. It is unclear at this time how
that debate will proceed and the forum in which it will ultimately
be decided, but we do not believe that it is either necessary or in
the public interest to delay the Pilot until the jurisdictional
lines between state and federal regulators are more clearly
delineated. This approach is consistent with the one which we have
adopted for stranded costs. We intend to explore alternative
solutions to this problem with the FERC in order to implement the
Pilot without compelling us to assert our authority in this area.
We have established voluntary filing guidelines which are designed
to encourage such cooperation.

D. Filed Rate Doctrine
Several commenters suggest that the NHPUC lacks the
authority to deny utilities with FERC-approved purchase power

contracts the right to full recovery of power costs shifted to non-
participating customers through the application of fuel and
purchase power adjustment mechanisms. According to this argument,
the "filed rate doctrine" precludes the NHPUC from interfering with
the application of adjustment mechanisms. We disagree.

As we stated in the First Revised Guidelines, fuel and
purchased power adjustment mechanisms are designed to track
variations in power costs, not to insulate utilities from the risk
of financial loss resulting an inability to compete. This position
is consistent with the original NHPUC policy considerations which
approved fuel adjustment mechanisms. See, In re Public Service
Company of New Hampshire, 31 N.H.P.U.C. Rep. 83 (1949). Similarly,
the New Hampshire Supreme Court has observed that the "adjustment
clause is a recognized device, most commonly applied to fuel costs,
which shortcuts the time lag between changes in cost and the
collection of compensation during periods of rapidly changing
costs." Public Service Company of New Hampshire v State of New
Hampshire, 113 N.H. 497, 502 (1973). Thus, it is clear that fuel
and purchased power adjustment clauses are intended to provide
utilities with an opportunity to adjust rates for fluctuations in
power and not as a means to recover revenues lost as a result of
fluctuations in demand. While it has been the NHPUC's practice to
adjust rates for variations in supply costs and demand, we will not
permit costs to be shifted from Pilot participants to non-
participants.

We are setting forth our position relative to this issue
for purposes of the Pilot. It should not be viewed as our final
determination as to how we will treat the uneconomic costs
associated with wholesale power contracts in any transition to full
competition. As with other issues related to stranded costs, we
will investigate this issue fully in the context of a separate
restructuring proceeding.

E. PSNH Rate Agreement

We reiterate the our belief that the Rate Agreement
entered into between PSNH and the State of New Hampshire offers
PSNH no greater protection from competition than exists for the
state's other electric utilities. The basis for our position is
set forth in the First Revised Guidelines which we incorporate
herein by reference.

F. APRA

Similarly, we continue to maintain our belief that NHEC's
members may participate in the Pilot without causing NHEC to
violate the APRA. As we stated in the First Revised Guidelines,
nothing in the APRA prohibits NHEC's members from procuring power
supplies from alternative competitive sources in order to
participate in the Pilot.

IV. UNBUNDLED TRANSMISSION SERVICE

In order to introduce the beneficial forces of competitive markets into the
electric utility industry, it is essential to "unbundle" retail electric
services. These services consist of three main components: generation,
transmission and distribution which have traditionally been provided in
bundled form by one service provider. Generation service provides customers
with reliable capacity and energy from a utility's own power plants or from
generating facilities owned by other utilities. Transmission is the
backbone for the delivery of capacity and energy from generation sources to
main load centers and most large customers. Distribution involves the
delivery of capacity and energy from the transmission network to most small
and medium sized customers.

By unbundling the three components of electric service, customers gain
access to alternative sources of generation at market prices. Under this
scenario, competing suppliers who are located in or outside of the state
must utilize the networks of transmission-owning utilities in order to
deliver power to the main load centers where transmission interconnects with
distribution. Accordingly, the market price of power delivered to main load
centers will probably include the costs of such transmission service.

A necessary condition for fair competition in electric generation markets is
non-discriminatory transmission access and pricing. In simple terms, this
means that all suppliers must have an equal right and opportunity to utilize
the transmission network and pay the same rate to wheel power across it. In
the absence of such a policy, or a failure by regulators to implement it,
transmission-owning utilities would adopt restrictive transmission practices
which would distort the workings of the bulk power market and unfairly
increase the value of their excess generation resources.

In light of our intention to resolve the jurisdictional problem
cooperatively, we request that our jurisdictional utilities voluntarily file
retail transmission tariffs both at the FERC and the NHPUC. Such tariffs
shall be non-discriminatory and shall be available to competing suppliers on
the same terms and conditions which the utility extends to itself. To the
extent that the FERC requires approval of those tariffs before they are made
available to competing suppliers, we ask that the utilities seek the FERC 's
expedited approval.

V. STRANDED COST RECOVERY

As we stated above, we intend to investigate the issue of stranded cost
recovery generically and within a separate proceeding which relates to
industry restructuring. Nevertheless, as a practical matter utilities will
need some guidance on this issue in order to develop unbundled rates which
provide customers the necessary incentives to participate in the Pilot. Such
guidance must begin with a definition of stranded costs.

A. Definition of Stranded Costs

Stranded costs can be calculated in several ways, some of which are more
complex than others. For the purposes of the Pilot, stranded costs will be
defined and calculated by projecting the difference between the revenue
which a utility would have had an opportunity to collect at current rates,
in the absence of the Pilot, and the revenue which the utility expects to
collect during the term of the Pilot, including projected revenue from power
sales at market prices and from transmission and distribution service s.
The assumed market prices to be used in these calculations will be issued
following our consideration of the recently filed Joint Recommendation
between PSNH and the Staff. This definition means that a cost already on the
books but not approved for ratemaking purposes during the term of the Pilot
will not qualify as a stranded cost. In this calculation, no adjustment is
made for variable cost savings associated with lost load since we assume
that a franchised utility or its power marketing affiliate will continue to
sell to its Pilot customers at prevailing market rates.

B. Stranded Cost Recovery

After estimating the magnitude of stranded costs, the next step is to set
the level of recovery for the purposes of developing unbundled rates. We
have determined that in the absence of a negotiated resolution which sets
the level of recovery for each utility, a fifty-fifty division of stranded
costs between participating customers and investors is an equitable starting
point. The participating customers' share of these costs shall be recovered
via a usage-based surcharge on distribution service during the term of the
Pilot.

C. Separate Stranded Cost Docket

As stated in the First Revised Guidelines, we expressed our intent to open a
separate docket to determine on a utility-specific basis the appropriate
level of stranded cost recovery. As set forth above, utilities which fail
to submit or receive approval of an alternative stranded cost recovery
mechanism are required to develop unbundled rates which recover 50% of their
stranded costs. In order to minimize price uncertainty for participating
customers, the difference, if any, between the initial 50% recovery level
and the level ultimately found to be appropriate shall be shared among all
customers.

D. Mitigation Issues

We expect significant and aggressive efforts to mitigate above market costs
during the Pilot and in any transition to full competition. We recognize,
however, that costs incurred by a utility in the process of mitigating
strandable costs must receive different treatment. We believe the
appropriate way to address such costs is on a project specific basis. Along
these lines, full recovery of power costs associated with any small power
producer agreements which are subject to RSA 362-A:4-b shall be contingent
upon the outcome of our ongoing inquiry into those arrangements .

VI. RATES FOR UNBUNDLED SERVICES

As noted above, in order to allow customers to benefit from the forces of
competitive markets, franchised utilities must unbundle retail electric
services. While some argue that unbundling should simply be the functional
separation of generation from the remaining industry functions, we believe
that approach would result in the loss of valuable information regarding the
cost structures of jurisdictional utilities. We will require utilities
to disaggregate their bundled retail services into the following minimum
functions: customer service, transmission, distribution, C&LM and power
supply. The power supply function should be further disaggregated into a
market price component and a stranded cost component that reflects the
extent to which a utility's generation resources are uneconomic. The
overriding policy objectives governing this unbundling are: (i) the
provision of accurate market price signals for power supply services; (ii)
nondiscriminatory transmission and distribution access and pricing; and
(iii) the avoidance of cost shifting among classes or among customers within
a class.

Because transmission and distribution, and to a lesser degree customer
service, continue to exhibit natural monopoly characteristics, these rates
should be based on cost rather than the value of those services in the open
market. We will require an embedded cost approach to pricing customer
service, transmission, distribution and C&LM. Rather than update embedded
costs to a recent test year, the rates for such services shall reflect the
embedded costs in existing bundled retail rates. While this approach results
in embedded costs of different vintages, it levels the playing field by
ensuring that unbundled and bundled service customers in the same franchised
area and class pay the same rates for equivalent services. Finally, while
the costs embedded in existing bundled rates will be used as the basis of
unbundled rates for the Pilot, utilities will be permitted to revise those
rates during the life of the Pilot provided they are successful in gaining
rate relief in a general base rate case.

Because the purpose of the Pilot program is to obtain information to help
determine whether retail competition is in the public interest, we will
require that reasonable incremental costs incurred as a result of the Pilot
be recovered from all customers rather than participating customers alone.

VII. RESPONSIBILITIES OF PILOT CUSTOMERS

Under retail competition, customers will have increased opportunities to
lower their power costs by selecting among competing power suppliers.
However, commensurate with the opportunity for lower costs, customers also
will assume full responsibility and risk for the consequences of their
choices. For example, power may be offered as a discrete commodity without
transmission and distribution deliverability, at an apparent low cost.
However, under this option, customers must also secure and pay additional
amounts for the delivery of that commodity over transmission and
distribution systems. The aggregate cost and reliability of the delivered
commodity will be the customers' responsibility.

To avoid some of the decisions and risks involved in acquiring unbundled
generation, transmission, and distribution services, customers may opt to
purchase generation, transmission, and distribution services as a package
from a single broker, marketer or aggregator.

Under either approach, it is essential to recognize that the customer bears
all financial and reliability risk. As each customer addresses the decision
to secure resources from alternate suppliers, the customer must develop a
strong understanding of his economic decision-making function, including an
understanding of all needs, costs and risks.

Based upon these considerations, any customer selected to participate in the
Pilot will be responsible for the following:

A. Negotiation for Supply of Electric Power

The negotiation of a competitive supply of electric power may be done
directly by the customer or through an energy broker, marketer or other
agent. Electricity may also be purchased from a power marketer affiliated
with a franchised utility. The customer will pay for electric power at the
negotiated price. The NHPUC will not set or approve that price.

B. Back-Up and Emergency Service

Because of the requirement that competitive suppliers either be NEPOOL
members or contract with members for back-up bulk power service, there is no
need for Pilot customers to purchase, and utilities to offer, back-up and
emergency services. Those services will be bundled in firm power supplies
purchased from competitive suppliers.

C. Negotiation and Payment for Delivery of Power

Pilot customers their representatives must negotiate with competitive
suppliers for the delivery of electric power. Out-of-state power supplies
will be transmitted to the New Hampshire border under FERC-approved
transmission rates. Transmission and distribution within New Hampshire will
conducted under tariffs approved by both the FERC and the NHPUC.

VIII. PILOT DESIGN

A. Size and Duration

1. Franchised utilities under our jurisdiction shall permit competitive
suppliers non-discriminatory access to 3% of their 1994 peak retail load
for purposes of the Pilot. This load shall be distributed among the
classes in approximate proportion to the estimated peak load for each
class including load served under approved special contracts.

2. Any franchised utility seeking to designate a larger percentage of load
for the Pilot may make such a request in its March, 15, 1996 compliance
filing.

3. In addition to the 3% of existing load, competitive suppliers will also
be permitted to access the loads of new large commercial and industrial
customers. New large commercial and industrial customers are customers
who locate in a franchised utility's service territory on or after March
1, 1996 and who would otherwise be served under the applicable rate
schedules listed in Appendix D. Large commercial and industrial customers
switching from one New Hampshire service territory to another are not
eligible to participate in the Pilot under the new load category.

4. The approximate existing or old load to be allocated to the Pilot for
each franchised utility is as follows:

Concord Electric Company 2.75 MW
Connecticut Valley Electric Company 0.86 MW
Exeter and Hampton Electric Company 3.00 MW
Granite State Electric Company 3.75 MW
New Hampshire Electric Cooperative 5.25 MW
Public Service Company of New Hampshire 35.13 MW
Total 50.74 MW

5. The Pilot shall be implemented on May 28, 1996 and shall extend for a
period of two years from the date of implementation, unless further
ordered by the NHPUC.

6. At the conclusion of the Pilot, all negotiated terms and rates with
competitive suppliers shall terminate.

B. Customer Selection

The following guidelines shall control how customers will be selected to
participate in the Pilot.

Individual Selection

1. Consistent with RSA 374:26-a, customers in all electric utility
franchised areas and in all classes shall be eligible to be considered
for participation in the Pilot, unless they are contractually prohibited
from doing so as explained be low.

2. Customers with existing contractual obligations to franchised utilities
may participate in the Pilot only if by doing so they will not violate
their obligations under such contracts , or if they are able to
renegotiate the terms of those contracts. Those contracts fall into the
category of "special contracts" and contracts associated with approved
C&LM programs.

3. Individual customers who wish to participate in the Pilot must first
express this interest to their franchised utility. All eligible
customers should be afforded an opportunity to express such an interest
before the actual participants are selected. Although we are inclined to
require interested customers to submit some form of written expression of
interest to their franchised utility, we are cognizant of the potentially
high administrative costs associated with such a process. Accordingly, we
will entertain specific proposals from each utility relative to this
aspect of the selection process. We strongly encourage utilities to
expeditiously submit their preferred methods for customers to apply for
participation in the Pilot.

4. The selection of individual participating customers shall be conducted by
each utility under the oversight of the NHPUC Staff. We will not specify
how customers should be selected, although we have stated in previous
Reports that the process must be fair and random. Once a sufficient
number of customers has been selected to fill the requisite 3% load
requirement, utilities shall be under no further obligation to select
additional customers in the event that customers who are initially
selected continue to take bundled service.

5. The customers of municipal electric utilities may participate in the
Pilot provided that their utility provides access by developing unbundled
rates. A participating municipal electric utility means a non-
jurisdictional New Hampshire utility which currently provides bundled
retail electric service and which voluntarily allows its customers to
participate in the Pilot. If any such municipal utility elects to
facilitate the participation of its customers in the Pilot, it must agree
to develop non-discriminatory transmission and distribution services.

Group Selection

6. Approximately one half of the existing residential and small commercial
customer load earmarked for the Pilot shall be eligible to participate in
the Pilot through Geographic Areas of Choice (GACs). GACs are defined as
groups of residential and small commercial customers within a defined
geographic area.

7. GACs should be nominated by an appropriate government authority.

8. In order for a GAC to be considered for selection, there must be a
written expression of interest submitted to the franchised utility which
currently serves the geographic area by a date to be determined by the
NHPUC. The written expression of interest must include the following
information:

* location and geographic boundaries of proposed GAC
* estimated aggregate load of the GAC, broken down by customer
class;
* demographic profile of the GAC;
* number of potential participating customers by class

9. The selection of GACs shall be conducted in a random and fair manner from
a pool of volunteer GACs. As with individual selection, utilities should
expeditiously submit their preferred methods for GACs to apply for
participation in the Pilot. The minimum number of GACs per franchised
utility are as follows:

Connecticut Valley Electric - 1
Concord & Exeter Electric - 1
Granite State Electric - 1
New Hampshire Electric Coop - 2
Public Service of New Hampshire - 4

C. Supplier Eligibility

1. The potential array of suppliers who are eligible to participate in the
Pilot include generators, aggregators, marketers and brokers who seek to
supply electricity directly or indirectly to participating customers.
Such suppliers may include exempt wholesale generators, qualifying
facilities, non-jurisdictional utilities, jurisdictional utility
marketing affiliates and non-affiliated power marketers, all located both
within and outside the State of New Hampshire.

2. Competitive suppliers must obtain NEPOOL membership or contract with a
NEPOOL member in order to participate in the Pilot. This requirement will
ensure that competitive suppliers with firm load obligations have
adequate power supply resources to meet both their firm load and their
apportioned share of the NEPOOL required reserves. This requirement will
also ensure that competitive suppliers will gain access to NEPOOL
scheduled and unscheduled outage service.

3. Competitive suppliers are eligible to participate in the Pilot only after
registering with the NHPUC. Such suppliers must include the following
information in their registration:

(a) Name, business organization, principle place of business, and registered
New Hampshire agent;
(b) Evidence of eligibility to conduct business in New Hampshire;
(c) Evidence that supplier has obtained NEPOOL membership or has contracted
with a NEPOOL member for back-up power supply service.

Only after receiving confirmation of the receipt of such information from
the NHPUC may competing suppliers transact to sell power to participating
customers.

D. Load Aggregation

1. Pilot participants shall be allowed to aggregate their loads only for the
purpose of negotiating the purchase of power from competitive suppliers.

2. Given its unique circumstances, we will allow NHEC's management to
perform the role of a load aggregator/supply negotiator on behalf of
member participants who request this service.

E. Usage and Other Customer Data

To develop winning marketing strategies, competing suppliers must obtain
good information about the needs and usage patterns of customers. The
following guidelines will govern the release by franchised utilities of
customer-specific load and usage data to competitive suppliers.

1. Authorization must be obtained before customer-specific load and usage
data is made available to competitors. The nature of the required
authorization will differ depending upon the selection process used.

* Random individual selection - Authorization to release load and
usage data is assumed to be given when a customer is selected to
participate in the Pilot unless the customer indicates otherwise
in writing to its franchised utility. In that instance, the customer's
name and address will be released to competitive suppliers but only the
participant will receive his or her usage data.

* GAC selection -Authorization is automatically given to release
the names and addresses of customers located within the boundaries
of a chosen GAC. The availability of all other information shall
be subject to customer explicit authorization.

2. Customer-specific load and usage data released by a franchised utility
shall include:

(i) Customer's name, billing address, and location (if different).
(ii) The customer's kWh and kW (if applicable) consumption history
which is readily available on the franchised utility's computer
system.
(iii) Load management or other equipment (if any) installed at
customer's location.

3. Data for a prescribed area may be obtained from the franchised utility
upon request. Such data may include:

(i) Number of customers by class.
(ii) Typical load shapes.
(iii) Approximate kWh sales and kW load.

4. The incremental cost of producing and communicating customer specific or
area specific data may be recovered from competitive suppliers through
NHPUC approved charges.

F. Metering

1. In order to avoid the expense of installing hourly recording meters for
the Pilot we will allow participating customers to utilize currently
installed equipment. Bills for transmission, distribution and power
supply services should be calculated based on monthly metering data.

2. Franchised utilities will be required to estimate the hourly loads of
Pilot customers using load profiles for the relevant customer class, and
shall make this information available to competing suppliers. A
description of how one utility currently proposes to use load profiles to
estimate hourly loads is contained for informational purposes in Appendix
E.

3. Franchised utilities will be responsible for meter reading and
transferring data expeditiously to competitive power suppliers.

4. Franchised utilities may levy separate NHPUC approved charges to recover
reasonable incremental metering and data transfer costs not provided for
in unbundled rates.

5. Franchised utilities may separately bill a competitive supplier for
additional metering and communications expenses associated with the use
of more sophisticated metering equipment requested by supplier.

6. Although we are not requiring the installation of hourly metering as a
condition for participation in the Pilot, in order to assess the accuracy
of load estimates, we direct the franchised utilities to cooperate in a
collective effort to ins tall the necessary metering and communications
equipment to provide statistically valid hourly load data.

G. Billing

1. Competitive suppliers have the option to bill separately for power supply
services.

2. Franchised utilities may provide billing services to competitive
suppliers if they so desire. If a franchised utility provides billing
services to an affiliate power marketer, it must also offer the same or
comparable services to non-affiliated competitive suppliers.

3. If a franchised utility provides billing services, the charge for such
services shall not exceed the incremental costs incurred.

4. Any bill submitted to a Pilot participant shall include the supplier's
name, phone number, and business address.

H. Ancillary Services

Ancillary services are services which may or may not be necessary for the
reliable and safe delivery of power from competing suppliers, including but
not limited to, voltage control, operating reserves, and power factor
adjustment.

1. Because of the requirement that competitive suppliers must be members of
or contract with members of NEPOOL, generation-related ancillary services
such as voltage and frequency control and operating reserves will be
supplied at the bulk power level and the costs recovered through power
supply prices. Consequently, we will not require franchised utilities to
offer unbundled generation-related ancillary services.

2. To the extent that there are ancillary services related to the
transmission and distribution functions, these services will continue to
be provided in a bundled form by the operators of the transmission and
distribution systems.

3. Unbundled charges for generation, transmission or distribution related
ancillary charges will not be permitted during the term of the Pilot
unless already provided under generally available tariffs.

I. Responsibilities of Pilot Customers and Franchised Utilities

1. It shall be the responsibility of Pilot customers to negotiate with
competing suppliers and other service providers. A franchised utility
shall not interfere with the negotiations between Pilot customers and
competing suppliers, but it shall be permitted to compete in the Pilot on
the condition that it establish an affiliate company for that purpose.
Although this requirement will ensure that appropriate inter-affiliate
pricing arrangements are instituted for the sale of goods and services by
jurisdictional utilities, we recognize that it does nothing to curb
possible anti-competitive abuses by non-jurisdictional utilities. We
anticipate that other regulators, both state and federal, will exercise
their authority to prevent market abuses. That limitation
notwithstanding, the requirement is consistent with our position that
franchised utilities must aggressively mitigate their stranded costs
since revenues received from the sale of utility goods and services can
be applied against such costs. The guidelines governing the pricing of
inter-affiliate transactions are detailed in Section VIII(L) of these
Guidelines.

J. Rates and Charges

1. A utility shall not impose an exit fee on Pilot customers and shall not
impose a re-entry fee when those customers return either during or at the
termination of the Pilot. Reasonable incremental costs, approved by the
NHPUC, which are directly related to serving Pilot customers may be
recovered from participants.

2. Rates for unbundled services, calculated in accordance with Section VI of
these Guidelines, shall be submitted for NHPUC approval. Workpapers shall
be presented identifying by account number the embedded costs allocated
to each service for each customer class and the corresponding billing
determinants used in the development of rates.

3. While transmission and distribution charges shall be based on individual
rather than aggregated customer loads, such charges may be collectively
billed to an agent authorized to act on behalf of an aggregated group of
customers.

4. A utility shall be entitled to levy a surcharge on all customers to
recover reasonable administrative costs, approved by the NHPUC,
associated with the establishment and implementation of the Pilot.

5. To the extent that a utility believes that it will incur stranded costs
as a result of the Pilot, it may seek recovery of those costs consistent
with Section V of these Guidelines. That is, prior to the implementation
of the Pilot, the utility shall estimate for each rate class its
projected stranded costs and, based on those estimates, develop usage-
based, stranded cost charges that recover from participating customers
50% of those costs. The assumed market prices to be used in the
calculation of stranded costs will be issued following our consideration
of the recently filed Joint Recommendation and Staff.

6. Franchised utilities offering billing services in accordance with Section
VIII(G) of these Guidelines shall submit for approval applicable rates
and terms and conditions.

K. Customer Protection

1. Existing rules designed to protect customers who receive bundled electric
services shall continue to apply, where appropriate, to unbundled
transmission and distribution services offered by franchised utilities.

2. Existing rules relating to the winter termination of certain residential
customers shall be applied to all competitive suppliers in the Pilot.

3. The resources of the NHPUC will be available to resolve disputes between
customers, utilities and competitive suppliers.

L. Pricing of Inter-affiliate Transactions

We are indifferent as to the effect affiliated agreements have on utility
affiliates. Our interest and concern extends only to the effect these
agreements have on franchised utilities and their customers. The most common
approaches to pricing affiliate transactions are: (a) transfer at cost where
cost is defined to include an allowance for a return on capital; (b)
transfer at the market rate; and (c) a multiple of cost. All these
approaches recognize that affiliates, whether regulated or non-regulated,
must conduct their affairs in a businesslike manner and should have an
opportunity to earn a fair profit for services provided. This basic
business principle must be reflected in the pricing of any inter-affiliate
transaction. Transactions which take place at out of pocket cost violate
this principle. Transactions at out-of-pocket cost may be adequate for
transactions between divisions or cost centers of the same company but not
between independent companies supposedly engaged in arms length
negotiations.

We will require that the pricing of inter-affiliate transactions be free of
all subsidies. Goods and services traded in competitive markets, such as
power supply, will be priced at fair market value. For goods and services
purchased from the franchised utility or an affiliated service company, such
as internal accounting, preparation of records, financial services , data
processing, legal advice, and wages and salaries of employees assigned to
Pilot activities, prices shall be set on a cost plus basis including
administrative and general overhead. In order to verify compliance with
this guideline, franchised utilities shall file pursuant to RSA 366:3
affiliate agreements which specify in detail the goods and services to be
provided and the related pricing provisions. Such agreements shall
be submitted no later than March 15, 1996.

IX. MONITORING AND EVALUATION

1. The NHPUC will monitor the progress of the Pilot and evaluate the
development of competitive retail electric markets.

2. In connection with this monitoring process, franchised utilities,
competing suppliers and Pilot customers shall make certain information
available to the NHPUC. Such information, which we detail below, shall be
accorded confidential treatment as appropriate under RSA 91-A, New
Hampshire's Right to Know Law.

3. Franchised utilities shall report by class the number of customers and
customer groups that request to participate in the Pilot. The names and
addresses of customers actually selected, including those within
participating GACs, shall be provided to the NHPUC no later than May 1,
1996.

4. Franchised utilities shall record all expenses which relate to the Pilot
in separate accounts and shall submit monthly reports to the NHPUC which
itemize these expenses. These reports shall also include by class the
number of participating customers, monthly kWh and kW sales and
associated unbundled revenue based on approved tariffs. Additional
revenue related to the provision of metering, billing or data processing
services, to recover approved administrative costs, or for goods and
services sold to power marketing affiliates shall be separately
identified.

5. Franchised utilities subject to the NHPUC's fifty-fifty stranded cost
sharing mechanism shall calculate actual net lost revenues by class and
submit monthly reports summarizing that information.

6. Competitive power suppliers, including power marketing affiliates, shall
file quarterly reports detailing by customer account number the prices
and quantities associated with each transaction. To the extent that a
customer makes more than one power purchase during a reporting period,
the price and quantity data for that customer shall be provided on an
average or aggregate basis. In addition, in order to verify the
reasonableness of inter-affiliate power supply transactions, franchised
utilities shall file each month a quantity-weighted average wholesale
price for short-term sales and purchases. Short-term transactions are
defined as a month or less in duration.

7. We will also require franchised utilities to analyze the customer load
data from the sample of participants fitted with hourly recording meters
and report their findings in semi-annual reports.

8. Information about competitive power suppliers will be publicly available
through the Pilot registration process.

X. COMPLIANCE FILINGS

1. Pursuant to these Guidelines, franchised utilities
shall file compliance tariffs incorporating unbundled rates and general
terms and conditions for customer, distribution and transmission services.
The compliance filings must also specify or
contain the following:

(a) workpapers supporting 3% retail load requirement;
(b) breakdown of 3% retail load requirement by rate class and by
individual/GAC participation;
(c) adjustments to fuel and purchase power adjustment mechanisms to ensure
non-participating customers are not burdened with un-recovered power
costs;
(d) workpapers supporting unbundled rates;
(e) method of estimating hourly loads for NEPOOL billing purposes;
(f) time period to transfer metering data to competitive suppliers;
(g) miscellaneous charges and associated workpapers relating to billing,
data processing and transfer, and administrative services;
(h) pricing arrangements for power and non-power related goods and services
transacted between franchised utilities and affiliated companies;
(i) plans to install hourly load meters for state-wide sample.

Based upon the foregoing, it is hereby

ORDERED, that the foregoing Final Guidelines are APPROVED;

FURTHER ORDERED, that all New Hampshire electric utilities shall implement a
retail electric pilot program consistent with these Final Guidelines unless
alternative proposals are approved by this Commission; and it is

FURTHER ORDERED, that all New Hampshire electric utilities shall file
compliance tariffs and all other information described in Section X on or
before March 15, 1996; and it is

FURTHER ORDERED, that for the purposes of making the above-described
compliance filings, Granite State, CVEC and PSNH shall file tariffs
consistent with their recommended unbundled rates pending our consideration
of the Joint Recommendation filed by PSNH.

By order of the Public Utilities Commission of New Hampshire this twenty-
eighth day of February, 1996.

Douglas L. Patch
Chairman

Bruce B. Ellsworth
Commissioner

Susan S. Geiger
Commissioner

Attested by:

Claire D. DiCicco
Assistant Secretary

APPENDIX A

New Hampshire Revised Statutes Annotated (RSA) 374:26-a, mandating creation
of a pilot program, provides as follows:

374:26-a Retail Competition Pilot Program. The commission shall establish a
pilot program, under such terms and conditions as the commission shall deem
appropriate, for the purpose of determining the implications of retail
competition in the electric industry, provided that the commission
determines that such program is fair, lawful, constitutional, consistent
with RSA 378:37 and in the public good. This pilot program shall be open to
all franchised areas and to all classes of customers.

APPENDIX B

Procedural Schedule for Implementing Final Guidelines

Final Guidelines February 28, 1996
Compliance Filings March 15, 1996
Technical Sessions March 18-29, 1996
Hearings on Pilot Implementation April 1-5, 1996
Final Commission Report April 15, 1996
Pilot Commencement May 28, 1996

APPENDIX C

The following organizations submitted written comments on the Preliminary
and Revised Guidelines:

Associated Power Services Inc., Business and Industry Association of New
Hampshire, Cabletron Systems Inc., Central Illinois Light Company,
Connecticut Valley Electric Company, Conservation Law Foundation, Office
of Consumer Advocate, City of Dover, EnerDev, Inc., The Flatley Company,
Freedom Energy Company, Funspot, Granite State Electric Company, Granite
State Hydropower Association, Great Bay Power Corporation, KCS Power
Marketing, Inc., Rep. Jeffrey C. MacGillivray, City of Manchester, New
England Cogeneration Association, New Hampshire Charitable Foundation, New
Hampshire Community Action Program, New Hampshire Department of
Environmental Services, New Hampshire Electric Cooperative, Inc., New
Hampshire Energy Management, Public Service Company of New Hampshire, George
E. Sansoucy, Save Our Homes Organization, Suncook Energy Corporation,
Sweetheart Cup Company Inc., UNITIL System Companies, UtiliCorp United Inc.,
Wheeled Electric Power Company, and Certain Wood-Fired Qfs. In addition,
several residential customers filed comments.

APPENDIX D

New Load Criteria

Large commercial and industrial customers who locate in a franchised
utility's service territory on or after March 1, 1996 and who would
otherwise be served under the following rate schedules may participate in
the Pilot.

* Concord Electric Company - G1, G2, G4, QRWH and Off-Peak WH
* Connecticut Valley Electric - GV, and G-T
* Exeter & Hampton Electric - G1, G2, G4, QRWH and Off-Peak WH
* Granite State Electric - G1, T and V
* New Hampshire Electric Coop - G, PG, PGI
* Public Service of New Hampshire - GV, LG

APPENDIX E

Determination Of Hourly Loads For

NEPOOL Billing

In the event that hourly recording meters are uneconomic or cannot be
installed prior to the initiation of the Pilot, existing meters may be
utilized and the hourly loads calculated in the following manner: Supplier
shall be required to include the load at each account it serves, including
losses, in its own-load dispatch at NEPOOL. The reporting of loads for own-
load dispatch purposes will be accomplished by the following:

1) Each account will be assigned to a customer class. A customer class would
consist of a group of customers with similar load shape characteristics.
2) Each customer class will have an assigned load profile which is based on
historical load profile data for customers in the class. For the Pilot,
this load profile will be approved for its accuracy by the NHPUC.

The load profile for each class shall consist of 24 separate profiles which
represent average hourly load profiles for typical day types of the week for
each month of the year (e.g, average weekdays in March).

3) Each account will be assigned a Usage Factor which represents the
relative usage of the account versus the customer class. The Usage Factor
would equal the quotient of (i) the actual total energy consumption of
the account for the previous twelve months, expressed in kilowatt-hours
divided by (ii) the total energy from the load profile for the customer
class for a twelve month period, expressed in kilowatt-hours. For
example, if a Non-Electric Heat Residential account had actual usage of
5,986 kWh for the past twelve months and the load profile for the class
shows an average twelve month usage of 6,000 kWh, then the Usage Factor
for this account would equal 0.998.

4) Each day the distribution utility (Disco) shall read the meter at the
Transmission Delivery Point to obtain the hourly loads (TDPL). These
loads will then be divided between each supplier based on the customers
they serve to determine own-load responsibilities at NEPOOL.

5) For customers with direct access metering equipment, Disco shall remotely
access the meter for each account once per day and read the hourly load
data for the previous day (Monday's load will be accessed on Tuesday,
Tuesday's load will be accessed on Wednesday, Wednesday's load will be
accessed on Thursday, Thursday's load will be accessed on Friday, and
loads for Friday, Saturday and Sunday will be accessed on Monday);

The adjusted load value at the Transmission Delivery Point shall equal the
product of: (i) the demand at the meter as measured in kilowatts; and (ii)
the Metering Voltage Adjustment Factor expressed as a decimal; and (iii) the
Distribution Loss Factor expressed as a decimal.

The Metering Voltage Adjustment Factor shall equal 1.00 if meter is located
on the secondary side of customer's transformer and shall equal 0.99 if
meter is located on the primary side of the Customer's transformer.

6) Disco shall determine the total load allocated to each supplier at the
Transmission Delivery Point from direct access meters.

DAMLs = _mc=1 DAMRs,c * (1 + Distr. Loss Factor)*
(1 + Meter Adj. Factor)

Where DAML means Direct Access Meter Load and DAMR means Direct Access Meter
Reading.

7) Disco shall determine the total load at the Transmission Delivery Point
from all suppliers from direct access meters.

DAML = _ns=1 DAMLs

8) Disco shall determine the total load at the Transmission Deliver Point
which is to be allocated to non-direct metered loads (NDAML).

NDAML = TDPL - DAML

9) Disco shall determine the initial total load at the Transmission Delivery
Point which is allocated to each supplier from non-direct access meter
loads.

INDAMLs = _pk=1 Ns,k * LPk * (1 + Distr. Loss Factor)

where INDAML means initial non-direct access meter load, N number of
customers per supplier per customer class and LP the load profile for the
customer class.

10) Disco shall determine the initial total load which is allocated to all
suppliers.

INDAML = _ns=1 INDAML

11) Disco shall adjust the total initial total loads to get the final loads
allocated to each supplier at the Transmission Delivery Point from non-
direct access metered loads.

NDAMLs = INDAMLs * (NDAML/INDAML)

12) Disco shall determine the total allocated to each supplier at the
Transmission Delivery Point.

LOADs = DAMLs + NDAMLs
13) As a check:
TDPL = _ns=1 LOADs

The loads assigned to each supplier shall be adjusted for actual sales as
determined by the meter readings. Forty five (45) days after the end of each
month, Disco shall calculate a total adjustment for each calendar month.
This will be done by scaling the estimated hourly loads to the metered usage
and allocating any difference from the NDAML prorata and multiplying by the
Metering Adjustment Factor and Distribution Loss Factor. The total adjusted
load will be determined for each supplier and compared to the total load
assigned to each supplier for the month. Any differences will be reconciled
amongst suppliers at the average NEPOOL cost of supply for the month. A
supplier who had more sales than was assessed would pay the difference at
the average lambda rate whereas a supplier that was assessed more than the
recorded sales would be credited the difference at the average lambda rate.