File No. 70-8825
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
AMENDMENT NO. 2
TO
FORM U-1
APPLICATION/DECLARATION WITH RESPECT TO DIVERSIFICATION ACTIVITIES
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
NORTHEAST UTILITIES PUBLIC SERVICE COMPANY OF
WESTERN MASSACHUSETTS ELECTRIC COMPANY NEW HAMPSHIRE
THE QUINNEHTUK COMPANY NORTH ATLANTIC ENERGY
174 Brush Hill Avenue CORPORATION
West Springfield, MA 01090 1000 Elm Street
Manchester, NH 03105
NORTHEAST UTILITIES SERVICE COMPANY NORTH ATLANTIC ENERGY
THE CONNECTICUT LIGHT AND POWER COMPANY SERVICE CORPORATION
NORTHEAST NUCLEAR ENERGY COMPANY Route 1, Lafayette Road
THE ROCKY RIVER REALTY COMPANY Seabrook, NH 03874
107 Selden Street
Berlin, CT 06037
(Name of company or companies filing this statement
and addresses of principal executive offices)
NORTHEAST UTILITIES
(Name of top registered holding company parent of each applicant or
declarant)
Robert P. Wax, Esq.
Vice President, Secretary and General Counsel
Northeast Utilities
P. O. Box 270
Hartford, CT 06141-0270
(Name and address of agent for service)
The Commission is requested to mail signed copies of all orders, notices and
communications to:
Jeffrey C. Miller, Esq. John T. Muro
Assistant General Counsel Vice President - Retail Marketing
Northeast Utilities Service Company Northeast Utilities Service Company
107 Selden Street 107 Selden Street
Berlin, CT 06037 Berlin, CT 06037
The Application/Declaration in File No. 70-8825 is hereby amended as
follows:
Subparagraph (M) of the first paragraph of Item 1. Description of
Proposed Transactions is hereby amended, and footnote 12 is added, to read as
follows:
"(M) engage in the brokering, marketing, generation, production,
transportation, transmission, distribution, storage and sale of energy at
wholesale and retail (including but not limited to electricity or natural or
manufactured gas) and "paper products" such as futures, hedges, load
aggregations, fuel tolling, fuel conversions and other instruments expected
to be required in a competitive energy marketplace (such activities, to the
extent relating to the wholesale marketing of electricity in the geographical
areas covered by the New England Power Pool, the New York Power Pool, and the
Pennsylvania - New Jersey - Maryland Interconnection Association <F12>,
referred to hereinafter as 'Wholesale Marketing Activities'); and
"<F12> See, e.g., HCAR No. 35-26359, File No. 70-8641 (August 18,
1995)."
The following is added to the end of the sixth paragraph of Section 1 of
Item 1. Description of Proposed Transaction:
"Applicants may employ various risk-reduction measures to limit
potential losses from Diversification Activities and risks to the NU System,
its customers and shareholders. These measures may include hedging
techniques, in accordance with system policy, and contractual arrangements
with suppliers and customers. Applicants will not engage in speculative
hedging in connection with Diversification Activities and will limit any
hedging activity to no more than the total amount of commodities that are
subject to market price fluctuations."
The following paragraphs, and footnotes 13 and 14 thereto, are added at
the end of Section 1 of Item 1. Description of Proposed Transaction:
"Certain of the Diversification Activities, referred to hereinafter
as the 'Pilot Program Activities', are necessary in order for the Applicants
to satisfy the orders of the New Hampshire Public Utilities Commission
relating to participation by Public Service Company of New Hampshire in the
New Hampshire Retail Competition Pilot Program (the 'New Hampshire Pilot')
<F13>. These include the creation of one or more new subsidiaries to engage
in the brokering, transmission and sale of electrical energy to customers
taking part in the New Hampshire Pilot and the performance by Public Service
Company of New Hampshire of various Diversification Activities services on
behalf of affiliated and non-affiliated New Hampshire Pilot electricity
suppliers, such as billing, credit and collections, metering, telemarketing,
and similar services. The NHPUC has stated in its pilot program guidelines
that local utility companies providing such services to affiliated companies
may do so at cost plus a return on investment, except that where such
services are available in the competitive market, the local utility shall
charge fair market value. The NHPUC guidelines also provide that services
such as the Diversification Activities services will be provided to
non-affiliates at rates comparable to those offered to affiliated companies.
Therefore, it is possible that PSNH will be providing such services to
affiliates at a price either above or below "cost" as defined in Rules 90 and
91 under the Act. PSNH specifically requests approval to comply with the
NHPUC guidelines in performing such services, to the extent they are not
performed at "cost".
"Additionally, one or more of the Newcos may find it necessary or
desirable to engage in Pilot Program Activities, on similar terms to those
set forth above, in order to participate in other states' retail wheeling
experiments such as the Massachusetts retail access pilot programs. <F14>
Such Newcos will limit their Pilot Program Activities to New Hampshire and
Massachusetts absent further order of the Commission.
"<F13> The New Hampshire Public Utilities Commission (the 'NHPUC')
has adopted final guidelines for a pilot retail wheeling program
which commenced on May 28, 1996 and is scheduled to last for a
period of two years. The program encompasses three percent of the
electric load in New Hampshire (approximately 60 Megawatts).
Customers of all rate classes, who have been selected randomly
among interested customers of each utility, are permitted to
negotiate power supplies with New Hampshire utilities, power
marketers, power brokers, generators and other suppliers of
electric service. Pilot customers bear the risks associated with
procuring alternative energy. The orders of the NHPUC, copies of
which are filed as Exhibit D hereto, require, inter alia, that
Public Service Company of New Hampshire (PSNH) may participate in
the New Hampshire Pilot only through an affiliate company which
will market the power to pilot participants. PSNH is the largest
electric utility company in New Hampshire with more than 400,000
retail and 20 wholesale electric customers. PSNH already engages
in associated customary marketing and customer service activities
with respect to the services it offers. The New Hampshire Pilot
currently affects approximately 11,000 of PSNH's customers and
permits them to choose their energy supplier for the term of the
pilot program.
"<F14> Massachusetts Electric Company ('MECo') has submitted two
retail access pilot programs to the Massachusetts Department of
Public Utilities ("MDPU") for review. In the first pilot program,
MECo proposes to implement retail choice to residential and small
commercial and industrial customers in the communities of Lawrence,
Lynn, Northampton and Worcester (the 'MA R&C Pilot'). Total
participation in the MA R&C Pilot Program will be limited to 100
million KWh per year with 50 million KWh specifically set aside for
residential customers. The second pilot program extends retail
choice to certain members of the Massachusetts High Technology
Council ('MHTC') (the 'MHTC Pilot'; the MA R&C Pilot and the MHTC
Pilot are referred together hereinafter as the 'MA Pilot
Programs'). MECo proposes to commence the MA R&C Pilot effective
September 1, 1996, and the MHTC Pilot effective July 1, 1996."
The following paragraphs are added at the end of section 2 of Item 1.
Description of Proposed Transactions:
"The Pilot Program Activities and Wholesale Marketing Activities
shall be financed as provided above using not more than $50 million of the
requested funding, provided that (a) each such NEWCO shall have an initial
common equity of 1000 shares of no par value common stock, (b) the initial
common equity capital of the NEWCO formed by NU to participate in the New
Hampshire Pilot, to be known as "PSNH Energy, Inc.", shall not exceed $1
million, and (c) any loans used to finance Pilot Program Activities and
Wholesale Marketing Activities of NEWCOs shall have maturities no later than
December 31, 2035 and shall bear an interest rate that is commensurate with
the credit ratings of the borrowing company and/or any affiliated guarantor
of such borrowings, as evidenced by a market-based spread above an
appropriate interest rate index such as LIBOR or U.S. Treasury notes having
maturities comparable to such borrowings and any such loans and capital
contribution shall not exceed $10 million for each such subsidiary in the
aggregate.
"To date, PSNH has conducted its Pilot Program Activities through
its PSNH Energy Division. Upon authorization, PSNH Energy, Inc. will
reimburse PSNH for all expenditures to date, and acquire all the assets and
rights of PSNH Energy Division in accordance with Rule 90."
The first paragraph of Item 5. Procedure is hereby amended to read as
follows:
"The Applicants respectfully request (a) that the Commission
reserve jurisdiction over all aspects of this Application/Declaration, except
for the Pilot Program Activities and the Wholesale Marketing Activities,
pending such further showings as the Commission may deem appropriate, and (b)
that the Commission enter not later than July 15, 1996 an appropriate order
granting and permitting this Application/Declaration to become effective with
respect to the Pilot Program Activities and the Wholesale Marketing
Activities."
Item 6. Exhibits and Financial Statements is hereby amended to add the
following exhibits to Item 6(a), which are filed herewith:
D.3 Order No. 22,118 dated April 24, 1996 of the NHPUC in DR
95-250.
D.4 Order No. 22,142 dated May 13, 1996 of the NHPUC in DR 95-250.
F.1 Opinion of Counsel
SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the undersigned companies have duly caused this amendment to be
signed on their behalf by the undersigned thereunto duly authorized.
NORTHEAST UTILITIES
NORTHEAST UTILITIES SERVICE COMPANY
NORTHEAST NUCLEAR ENERGY COMPANY
THE ROCKY RIVER REALTY COMPANY
THE QUINNEHTUK COMPANY
NORTH ATLANTIC ENERGY SERVICE CORPORATION
NORTH ATLANTIC ENERGY CORPORATION
THE CONNECTICUT LIGHT AND POWER COMPANY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
WESTERN MASSACHUSETTS ELECTRIC COMPANY
By:/s/ Jeffrey C. Miller
Their Attorney
Dated: July 2, 1996
Exhibit D.3
DR 95-250
RETAIL COMPETITION PILOT PROGRAM
Public Service Company of New Hampshire
Order Partially Approving Compliance Filings
ORDER NO. 22,118
April 24, 1996
I. INTRODUCTION
On March 15, 1996, Public Service Company of New Hampshire (PSNH) filed
tariffs and other submissions in compliance with Order No. 22,033 (Final
Guidelines, February 28, 1996) relative to PSNH's participation in the retail
electric competition pilot program (Pilot). The filing contains proposed
unbundled rates, describes the unbundling process (including the development
of unbundled retail transmission rates) and sets out a detailed Pilot
implementation plan.
On March 29, 1996, the Commission issued Order No. 22,081 which
partially approved a Joint Recommendation between PSNH and Staff. That order
directed all New Hampshire electric utilities, including PSNH, to use certain
class-specific retail market prices when developing unbundled rates for the
Pilot. The assumed market prices adopted by the Commission have the effect
of reducing the level of PSNH's unbundled stranded cost charges which were
set forth in its Joint Recommendation with Staff. After technical sessions on
March 22 and 25, hearings were conducted April 3-4, 1996. PSNH presented
oral testimony during such hearings and a number of participants
cross-examined witnesses. During those hearings the Public Utility Policy
Institute (PUPI) made an oral motion for the Commission to reconsider its
decision allowing PSNH to compete in the Pilot through a division rather than
through an affiliate. The New Hampshire Electric Cooperative (NHEC) orally
requested that the Commission order PSNH to file unconditional retail
transmission tariffs with the FERC and the Commission.
II. COMMISSION ANALYSIS
A. General Observations
We must begin by expressing our concern over the complexity of the
delivery tariff submitted by PSNH. Although the Pilot will include large
sophisticated customers who have the capability and resources to review and
understand complex legal and technical transmission issues, most Pilot
customers will have little experience or knowledge of such issues. We
believe it is unrealistic to expect that residential and small commercial
customers will be able to comprehend a forty-page document addressing issues
about which even large customers know little.
One obvious way to simplify the tariff would be to include only those
provisions which differ from those contained within existing bundled tariffs.
It is possible to simply reference the provisions which are common to both
types of service (bundled and unbundled). These include, but are not limited
to: (a) line extensions, (b) harmful physical effects, (c) liability and
indemnification, (d) underground service, and (e) company property.
An even better approach would be for PSNH to structure the tariff such
that the company functions as a transmission billing agent for its Pilot
customers. This is the approach submitted by Granite State and which we
approved in Order No. 22,098. The advantage of this approach is that the
retail transmission tariff can incorporate all of the complexity of existing
wholesale transmission tariffs, but that retail customers will not be
required to comprehend complex technical matters to which they have had
little exposure.
Although we reiterate our strong preference for the approach adopted by
Granite State, in light of the time constraints in the Pilot, we will allow
PSNH to re-file a simplified delivery tariff consistent with this Order. We
believe that it is unnecessary to include in the tariff terms and conditions
which are common to those currently in existing bundled tariffs. The
delivery tariff should simply reference those provisions.
Another issue which warrants general discussion is the methodology for
estimating hourly load for NEPOOL billing purposes. In Order No. 22,098 we
decided that it would be inappropriate for utilities to employ more than one
estimation methodology. We therefore directed Staff to arrange a technical
session to explore ways for each of the other utilities to employ a single
load estimation methodology. We expect that PSNH and the state's other
franchised electric utilities will participate in those technical sessions
and attempt to develop a common methodology.
We favorably acknowledge PSNH's willingness to utilize an electronic
system for the transfer of data and monies. As we stated in Order No.
22,098, value added network systems appear to have a significant advantage
over more labor-intensive approaches, both with respect to cost and time
saved. Consequently, such systems will help reduce transaction costs for
competitive suppliers, and ultimately customers, who participate in the
Pilot. We direct PSNH to participate in the technical sessions convened by
Staff to address this and related issues.
We turn now to several aspects of PSNH's filing which do not appear to
comport with the requirements established in the Final Guidelines and related
Commission orders. Before doing so, we return to an issue which was
addressed extensively in Order No. 22,081 and which was the subject of
extensive discussion and debate during the compliance hearings relative to
PSNH.
B. PSNH Marketing Affiliate
In Order 22,081, we considered whether PSNH should be permitted to
supply power at retail through its current corporate entity or through an
affiliate. While expressing a strong preference for an affiliate, we
permitted PSNH to participate in the Pilot through a division based upon its
testimony that the Pilot could be delayed while PSNH sought all of the
necessary regulatory approvals.
PUPI bases its reconsideration request primarily upon a March 27, 1996
filing by PSNH's parent, Northeast Utilities (NU), at the Securities and
Exchange Commission (SEC). The filing seeks SEC approval for NU and its
operating subsidiaries, including PSNH, to engage in a number of business
activities which are outside of traditional electric utility practice. Among
these proposed diversifications, NU requested authorization to:
engage in the brokering, marketing, generation, production,
transportation, transmission, distribution, storage and sale of energy
(including but not limited to electricity or natural or manufactured
gas) and "paper products" such as futures, hedges, load aggregations,
fuel tolling, fuel conversions and other instruments expected to be
required in a competitive energy marketplace...Exhibit PSNH-29.
NU and its affiliates requested SEC approval of its U-1 no later than
June 1, 1996.
During the hearing, we granted Freedom's request to compel the
production of all drafts of the U-1 filings as well as inter-office
memorandum relative to the filing. PSNH thereafter produced several earlier
drafts of the filings which suggested that NU was in the process of seeking
regulatory approval to form an energy marketing affiliate prior to PSNH's
testimony at the hearing. PSNH also submitted an inter-office memorandum
which reflected the Company's anticipation that the Commission would
require PSNH to form a separate marketing affiliate in order to participate
in the Pilot. In the memorandum, it was suggested that "it would be time
well spent if someone at NU began identifying and answering the issues in
forming such an affiliate," and that "[NU should] consider drafting the
needed papers and maybe even filing the SEC application, to get the clock
started." Exhibit PSNH-33.
According to PSNH, NU amended its U-1 application on April 5, 1996 to
request approval to form a retail marketing affiliate solely for purposes of
the Pilot. On April 17, 1996, this Commission sent a letter to the SEC and
FERC urging prompt consideration of NU's filings and those of other New
Hampshire utilities undertaking similar actions.
Based upon the foregoing events and upon further consideration, we
believe that it possible for PSNH and NU to obtain timely regulatory
approvals to form a retail marketing affiliate to participate in the Pilot.
Accordingly, we will condition PSNH's participation in the Pilot on the
formation of such an affiliate. We anticipate that PSNH will diligently
pursue such approvals.
As stated in the Final Guidelines, pursuant to RSA 366:3, PSNH must file
with the Commission any affiliate agreements which it enters into for
services provided during the Pilot. Any such agreement must specify the
goods and services to be provided and the related pricing provisions. We
direct PSNH to file such affiliate agreements as soon as they are finalized.
We acknowledge that PSNH or NU will need to seek regulatory approvals to
establish a retail marketing affiliate, and that such approvals may not be
received before the list of selected customers is made available to
competitive suppliers. It is not our intention to disadvantage utility
affiliates by allowing other competitive suppliers to market their services
to Pilot customers while utility affiliates await regulatory approvals. If
PSNH's necessary regulatory approvals appear not to be forthcoming in a
timely manner, then the company can so inform the Commission and propose an
alternative interim approach.
As a result of this decision, there is no need to address various
implementation issues relating to PSNH's proposal to form a retail division
within its current corporate structure.
C. GAC Selection Process
Since the compliance filing hearings, the City of Manchester filed
comments relating to PSNH's proposed method of selecting Geographic Areas of
Choice (GACs). We have directed Staff to work with PSNH and other interested
parties to attempt to reach consensus relative to GAC selection procedures.
Staff is directed to file a letter with the Commission's Executive Director
no later than April 26, 1996 to report the status of those efforts.
D. Delivery Tariff Issues
1. Reciprocity
Section 5.2 of the revised filing states that delivery service will only
be available to competitive power suppliers that own or operate transmission
and distribution facilities if they agree to provide comparable delivery
service to PSNH. Although we understand the objective of such a provision,
it is not required by the Final Guidelines and it raises difficult legal
questions which we believe are outside the scope of the Pilot. This issue
should be raised within restructuring proceedings, and accordingly, we direct
PSNH to eliminate Section 5.2 from its delivery tariff.
2. Charges for Billing and Customer Services
Pursuant to the Final Guidelines, competitive suppliers have the option
to bill separately for power supply services, and franchised utilities may
voluntarily offer such services. In its compliance filing, PSNH indicated
its willingness to offer billing services and it included preliminary
estimates of the associated incremental costs.
Attachment G to the PSNH compliance filing sets forth two classes of
billing cost estimates, developmental and transactional (i.e., variable).
Included in the former category are the software and computer programming
costs to perform the billing calculations and to transfer funds to a
competitive supplier's bank account. The transactional costs include daily
electronic fund transfer charges and related labor and accounting costs.
Although we recognize that more work needs to be done to convert cost
estimates into proposed charges, we are nonetheless concerned about the
magnitude of difference between PSNH's costs and Granite State's proposed
rates. In its compliance filing, Granite State offered its "Complete"
billing service for about $1.30 per month for residential customers and about
$1.55 per month for large business customers. In contrast, PSNH anticipates
developmental costs of about $600 per month per rate class per supplier and
transaction costs of about $900 per month per supplier. Assuming three rate
classes and one thousand customers per supplier, the above estimates indicate
an average monthly charge of $2.70 per customer. Clearly, this charge would
increase if the number of customers per supplier decreases. While large
customers may find this charge tolerable, it is unlikely to be acceptable to
small residential or commercial customers. A charge of $2.70 per month would
be greater than the monthly transaction cost built into our assumed retail
market prices. As a result, such a charge would reduce the likelihood that
residential customers would receive the anticipated 10% bill savings.
Part of the reason for PSNH's apparent high billing costs is that it
includes developmental costs whereas Granite State recovers those costs,
consistent with the Final Guidelines, through an implementation cost
surcharge applied to all customers. Absent developmental costs, PSNH's
billing service charges appear to be more competitive than those of Granite
State. Given the requirement that all customers contribute to the recovery
of developmental costs, we direct PSNH to construct charges for billing
services that reflect only the variable transaction costs.
3. 30-Day Notice Provision
The proposed tariff requires that Pilot customers give PSNH 30 days
notice before switching suppliers. According to PSNH, such notice is
necessary in order to inform NEPOOL about a shift in load responsibility. We
believe that 5 working days is an adequate amount of time for PSNH to verify
the information contained in the application and to inform NEPOOL of any
changes. In order to minimize administrative burdens, Pilot customers will
be permitted to switch suppliers no more than once per month.
4. NEPOOL Membership
PSNH's proposed tariff and application for delivery service requires
customers to arrange for their load to be included in the load of a NEPOOL
member. We direct PSNH to remove this requirement from its proposed tariff
and application. The Final Guidelines require suppliers to have a NEPOOL
affiliation and to submit evidence of that affiliation in our registration
process. It is the responsibility of the utility to estimate the customer's
load and assign it to the chosen NEPOOL member.
5. Customer Application Form
In our view, the proposed application for delivery service is
unnecessarily burdensome and should be simplified in a manner similar to the
Granite State application. Suppliers or marketers should be responsible for
providing the technical information such as receipt and delivery point
locations. Customers should be required to provide only the basic
information necessary to obtain delivery service.
We also believe that the proposed certification in Section 10.0 is
unnecessary. We are concerned that such a requirement would discourage
participation in the Pilot. Customers currently take bundled retail service
according to the terms and conditions of approved tariffs which are made
available to customers upon request. Even without written certification,
PSNH and its customers are bound by those terms and conditions. We believe
that Pilot participants should receive delivery service in the same manner.
6. Ancillary Services
Section 7.0 states that PSNH shall be permitted to amend its delivery
tariff to include charges for ancillary services if it determines that such
services are necessary to reliably serve a customer's load. We direct PSNH
to remove this provision because it addresses issues unrelated to delivery
service which have been adequately covered by the requirement that suppliers
have a NEPOOL affiliation.
7. Miscellaneous Charges
Several parties inquired as to the status of PSNH's charges to recover,
among other things, the cost of estimating hourly loads and the cost of
assembling and transferring customer-specific load data. We will simply note
that all charges levied by PSNH in the Pilot, or by any other franchised
utility, must be approved by this Commission.
8. Franchise Tax
As noted in Order No. 22,098, it is our opinion that franchise taxes
should continue to be recovered in the Pilot based upon gross revenues
associated with the sale of power. To the extent that different entities,
namely competitive suppliers, brokers and aggregators, will collect a portion
of those revenues in the Pilot, it is our view that those entities should
bear the responsibility for collecting and remitting the associated franchise
taxes. We recognize, however, that franchise tax liability issues may have
to be resolved by the Department of Revenue Administration and perhaps
ultimately by the courts or the Legislature. In the meantime, PSNH's
unbundled delivery service rates should reflect adjustments for franchise
tax.
9. Indemnification Requirement
In Order No. 22,098 we expressed our strong belief that Pilot customers
should not be required to indemnify utilities for claims which arise out of
participation in the Pilot. We believe that such a requirement will
adversely affect customer participation in the Pilot. As we stated in Order
22,098, there are other avenues which should be explored to address these
concerns. As with Granite State, PSNH should explore alternative mechanisms
with Staff's assistance.
E. Retail Transmission Tariff Filings
In Order No. 22,098, we expressed our concern about the delay in the
filing of retail transmission tariffs and the effect this delay may have on
implementation of the Pilot. On April 15, 1996, PSNH filed with the
Commission a letter detailing the status of those filings. In it, PSNH
stated its intent to file on April 19, 1996 an amendment to its network
wholesale transmission tariff with Unitil to implement retail access for
Concord Electric and Exeter and Hampton pilot customers. We were also
notified that NUSCO will file on the same day an amendment to its
point-to-point wholesale transmission tariff to implement retail access for
Pilot customers of PSNH and those of other New Hampshire utilities. PSNH
stated that it intends to file its retail delivery tariff with the FERC
following the receipt of a written order from us either approving or
requiring changes to the tariff. Finally, with respect to retail access for
New Hampshire Electric Cooperative (NHEC) Pilot customers, PSNH proposes to
make the necessary filing following the completion of negotiations with NHEC.
We reiterate our expectation that PSNH and the NHEC will seek a
negotiated resolution of their differences in order to allow NHEC's customers
to participate in the Pilot. As part of any such agreement, we would expect
PSNH to submit an amendment to the wholesale FPPAC that leaves wholesale
customers financially neutral during the Pilot.
F. New Load and Supplier Notification
In Order No. 22,098 we stated our intention to provide more detail on
the definition of new load and to establish guidelines relative to accessing
information. New load for purposes of Pilot eligibility shall be defined
generally as new large commercial and industrial accounts established on or
after March 1, 1996 that otherwise would be billed under the rate classes
specified in Appendix D of the Guidelines. Customers who relocate from a
different service territory within the state are ineligible. Although the
Guidelines indicate that new load includes large commercial and industrial
customers who "locate" in a franchise utility's service territory on or after
March 1, 1996, loads associated with facilities which were under construction
but not completed prior to that date are eligible to participate in the
Pilot. It is not necessary for the actual facilities to be newly
constructed. Out-of-state businesses that relocate to New Hampshire and
occupy existing facilities shall qualify for participation in the Pilot as
new load.
We wish to clarify the eligibility of customers with existing accounts
as it relates to load growth. Load growth at existing customer locations
shall not qualify as new load under the Pilot unless such load growth is
attributable to the "backing-down" of customer-owned generation. New load
associated with the extension or expansion of an existing facility shall
qualify only if the extension or expansion is served through a separate
meter. In the event that such new facilities are served through a separate
meter, the customer is responsible for demonstrating that the load was not
shifted from an existing account.
We shall require each franchised utility to inform prospective "new
load" customers of their eligibility to participate in the Pilot. In
addition, marketing affiliates of franchised utilities shall be prohibited
from soliciting new load customers until the customers have been informed of
the Pilot and provided the opportunity to post their names and addresses on
the Commission's Home Page.
G. Availability of Customer Information
One issue raised during the hearings on Granite State's compliance
filing which we did not address in Order No. 22,098 is the procedure for
suppliers to access the list of Pilot customers who are selected to
participate in the Pilot. Granite State believes that in order for the
competition to be fair, customer information should be made available by the
Commission to each registered supplier, including utility affiliates,
simultaneously in a common electronic format. We agree. Each utility is
hereby directed to file with the Commission an electronic list of selected
customer names, addresses and other information including customer-specific
load and usage data. That information shall be submitted, no later than noon
May 1, 1996, on 3.5 inch diskettes using the ASCII text file format with ";"
as field delimiters. In addition, in order to ensure that all competitive
suppliers have equal access to the information, utilities shall deliver to
the Commission at least as many copies of the diskettes as there are
registered suppliers listed on our Internet Home Page by the close of
business April 30, 1996.
Franchised utilities are responsible for notifying customers that they
have been selected and for distributing approved application forms. Selected
customers are responsible for completing those forms and for returning them
to the franchised utilities.
H. Retail Market Price Assumptions
In Order No. 22,098, we expressed the concern that unforeseen
developments in the wholesale power market could cause actual wholesale
prices to significantly exceed those upon which our retail price assumptions
were based. We specifically mentioned the impact on wholesale prices in the
event that there are extended outages at NU's Millstone nuclear power plants.
If wholesale prices increase substantially above the levels used in
developing the assumed retail market prices, the ability of competitors to
offer attractive prices will be jeopardized. In Order No. 22,081, we
accepted the wholesale price estimates of PSNH witness, Frank Sabatino, as
the basis for calculating the assumed retail market prices. In order to
monitor market conditions, we will require PSNH to keep the Commission
apprised of actual and projected developments in the wholesale power market
as they occur. We direct PSNH to work with Staff to develop an appropriate
reporting mechanism, including one which will address confidentiality
concerns.
Based upon the foregoing, it is hereby ORDERED, that PSNH shall modify
its compliance filing as directed herein; and it is FURTHER ORDERED, that
PSNH shall file a revised compliance filing on or before May 1, 1996.
By order of the Public Utilities Commission of New Hampshire this
twenty-fourth day of April, 1996.
/s/Douglas L. Patch /s/Bruce B. Ellsworth /s/Susan S. Geiger
Chairman Commissioner Commissioner
Attested by:
/s/Dr. Sarah P. Voll
Executive Director and Secretary
Exhibit D.4
DR 95-250
RETAIL ELECTRIC COMPETITION PILOT PROGRAM
Public Service Company of New Hampshire
Order Addressing Request for Interim Relief
ORDER NO. 22,142
May 13, 1996
I. INTRODUCTION
This order addresses a request by Public Service Company of New
Hampshire (PSNH) relative to the terms and conditions under which it will be
permitted to market and sell power to Pilot customers. Briefly, the
procedural history of this matter is as follows.
In the Final Guidelines for the Pilot, the Commission expressed a
strong preference for requiring franchise utilities to form legally separate
retail affiliates in order to participate in the Pilot as competitive
suppliers. Order No. 22,081 (February 28, 1996). Subsequent to that order,
hearings were held before the Commission relative to a joint recommendation
entered into by Staff and PSNH. During those hearings PSNH presented
extensive testimony regarding the difficulties associated with the formation
of such an affiliate. Specifically, PSNH alleged that it would have to
obtain the consent of its lenders before seeking regulatory approvals from
the U.S. Securities and Exchange Commission (SEC) and the Federal Energy
Regulatory Commission (FERC). According to PSNH, there was significant
potential for extensive delays in obtaining such consents and approvals.
Based upon that testimony the Commission allowed PSNH to operate as a
supplier in the Pilot through a functionally distinct division within the
PSNH operation.
After receiving new information, the Commission reconsidered its
previous decision and prohibited PSNH from conducting retail marketing
activities and making sales to Pilot customers through the PSNH organization.
Order No. 22,118 (April 24, 1996). The Commission ruled that only a legally
and functionally separate affiliate or subsidiary of PSNH could participate
as a competitive supplier. The Commission recognized that it would be
necessary for PSNH and/or its parent company, Northeast Utilities (NU), to
seek regulatory approvals before it could form and operate such an affiliate.
Based upon this recognition, the Commission indicated that it would entertain
proposals to allow PSNH to participate in the Pilot pending such approvals.
In an April 23, 1996 letter to the Commission, PSNH indicated that
SEC and FERC approvals would probably not be received before mid-June. PSNH
presented a proposal under which it sought authority to "act as if the
affiliate existed, on an interim basis," until such regulatory approvals were
received. Specifically, PSNH proposed using a separate team to work on the
Pilot whose members "would operate under a strict code of conduct that would
ensure that competitively sensitive data is not shared." PSNH also proposed
that power would be "transferred" to the separate team under the same terms
and conditions as the wholesale contract that it would file with the FERC for
approval of sales to its retail affiliate. After receiving all necessary
regulatory approvals, PSNH indicated that it would assign all retail
contracts to the newly formed affiliate.
After receiving written comments, the Commission deliberated this
matter at its May 6, 1996 public meeting.
II. COMMISSION ANALYSIS
We will allow PSNH to proceed according to the commitments set
forth in its April 23, 1996 letter, which include the following terms and
conditions: (a) the establishment of a separate team to work on the Pilot,
the members of which are separated from PSNH's regulated retail activities;
(b) the establishment of a code of conduct in order to ensure that
competitively sensitive data is not shared with Pilot team members; (c)
recorded transfers of wholesale power to the Pilot team at the same rates and
under the same terms and conditions as the wholesale contract which PSNH has
filed at the FERC; and (d) the establishment and implementation of accounting
mechanisms to keep track of all costs associated with the work of the Pilot
team. After PSNH or NU receives the necessary regulatory approvals from the
SEC and FERC, which we expect it will seek diligently and as expeditiously as
possible, PSNH must cease all Pilot-related marketing activities and all
contracts with Pilot customers must be assigned to the retail affiliate.
In light of our decision, we direct PSNH to file with the
Commission a list of the names, company affiliation(s) and titles of all
employees who have been designated to participate in the Pilot team. During
the time that the Pilot team operates, we expect that all such employees will
work exclusively on the activities which will be assumed by the retail
marketing affiliate for which regulatory approvals are pending. Under no
circumstances should employees other than those designated as members of the
Pilot team participate in the marketing and sales activities associated with
the Pilot. We also direct PSNH to file with the Commission a written copy of
the code of conduct which it has established for its employees relative to
the separation of Pilot employees from other employees of PSNH's regulated
activities. We direct PSNH to file such information by noon on May 15, 1996.
Finally, as with other Commission orders, we reserve the right to reverse or
modify this decision based upon new information or developing circumstances.
Based upon the foregoing, it is hereby ORDERED, that PSNH is
authorized to market and sell power to Pilot customers, on an interim basis,
under strict adherence to the terms and conditions set forth herein.
By order of the Public Utilities Commission of New Hampshire this
thirteenth day of May, 1996.
/s/Douglas L. Patch /s/Bruce B. Ellsworth /s/Susan S. Geiger
Chairman Commissioner Commissioner
Attested by:
/s/Dr. Sarah P. Voll
Executive Director and Secretary
Exhibit F.1
July 2, 1996
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
I am Assistant General Counsel of Northeast Utilities Service Company
("NUSCO"), the service company affiliate of Northeast Utilities. I am
furnishing this opinion as an exhibit the Application/Declaration on Form U-1
in File No. 70-8825, as amended (the "Application"), filed by Northeast
Utilities, The Connecticut Light and Power Company, Northeast Utilities
Service Company, Western Massachusetts Electric Company, Public Service
Company of New Hampshire, North Atlantic Energy Corporation, Northeast
Nuclear Energy Company, North Atlantic Energy Service Corporation, The
Rocky River Realty Company and The Quinnehtuk Company (collectively, the
"Companies") with respect to certain diversification activities as further
described in the Application.
In connection with this opinion, I have reviewed or caused to be
reviewed the Application and the exhibits thereto, the Companies' charter
documents, as amended to the date of this opinion, the proceedings of their
shareholders and boards of directors to date and such other papers, documents
and records, and have made or caused to be made such examination of law, as I
deemed relevant and necessary in order to give this opinion. I have assumed
that in respect of the Application an appropriate order of the Securities and
Exchange Commission under the Public Utility Holding Company Act of 1935 will
be issued and all actions of the Companies will be in conformity therewith.
I have also assumed that the Companies and any "Newcos" (as defined in the
Application) will act in conformity with any and all state laws, including
licensing, franchise and consumer protection laws, as may be applicable to
the diversification activities described in the Application.
Based upon the foregoing, I am of the opinion that:
(a) All State laws applicable to the proposed transaction have been and
will be complied with;
(b) The Companies are validly organized and duly existing in their
respective states of incorporation; and
(c) The consummation of the proposed transactions will not violate the
legal rights of the holders of any securities issued by any of the
Companies or any associate company thereof.
I hereby consent to the use of this opinion in connection with the
filing of the Declaration.
I am a member of the Bar of the State of New York. As to matters
involving the laws of other jurisdictions, I have made a study of such laws
and consulted with lawyers employed by NUSCO who are admitted to the Bars of
such other jurisdictions.
Very truly yours,
/s/Jeffrey C. Miller
Assistant General Counsel
Northeast Utilities Service Company
