EXHIBIT D 3.3.1
September 22, 2000
Hand Delivered
Dennis L. Keschl, Administrative Director
Maine Public Utilities Commission
242 State Street
State House Station 18
Augusta, ME 04333-0018
Dear Mr. Keschl:
I write on behalf of Public Service Company of New Hampshire
("PSNH") to request approval, pursuant to 35-A M.R.S.A. Section 708,
of a reorganization that will occur upon the creation by PSNH of a
wholly-owned subsidiary limited liability company (referred to
hereinafter as "SPE"). The creation of SPE is an integral part of the
restructuring of the electric utility industry in New Hampshire, and
is required in connection with the securitization of stranded costs
and the issuance of rate reduction bonds.
The proposed industry restructuring is the product of legislation
and a Settlement Agreement designed to reduce PSNH's rates, negotiated
by PSNH and its parent, Northeast Utilities, the Governor of New
Hampshire, the Governor's Office of Energy and Community Services, New
Hampshire's Office of Attorney General, and the Staff of the New
Hampshire Public Utilities Commission. Implementation of the
Settlement Agreement will provide sizable near-term rate reductions
for PSNH customers. The rate decrease results from an agreed-upon
write-off by PSNH of approximately $367 million, a sharing of the risk
of recovery of stranded costs by PSNH, the sale at auction of PSNH's
generating assets, and the issuance of rate reduction bonds in an
amount not exceeding $670 million. PSNH's customers will have the
opportunity to lower their electric energy costs even further, by
choosing a competitive energy supplier.
The New Hampshire Public Utilities Commission approved the
issuance of the rate reduction bonds and related transactions by
"Order Addressing Financing Issues dated September 8, 2000" ("Finance
Order") (copy printed from the internet is attached). A simplified
description of the proposed securitization follows:
Upon creation of SPE, PSNH will transfer into SPE "Rate Reduction
Bond Property," an irrevocable vested property right created by the
Commission in the Finance Order, which includes the right to all
revenues, collections, claims, payments, money or proceeds arising
from the Rate Reduction Bond Charge authorized by the Finance Order.
SPE will then issue not more than $670 million of rate reduction bonds
("RRBs") secured by Rate Reduction Bond Property. The RRBs will be
repaid through the collection of an RRB charge from all retail
customers of PSNH. PSNH will use the proceeds from the transfer of
the Rate Reduction Property to SPE to retire existing debt, and the
Company will be recapitalized. PSNH ratepayers will benefit from the
retirement of existing, higher cost, debt. Accordingly, PSNH rates
will be significantly lower than they would be if the transaction did
not occur.
This Commission has historically granted exemptions or approvals
to PSNH for various reorganizations and the issuance of securities.
Recent examples include Docket No. 90-093, the proceeding involving
PSNH's bankruptcy Plan of Reorganization, and Docket No. 98-182,
wherein the Commission by Order dated March 31, 1998 exempted PSNH
from the approval requirements of Sections 708, 901 and 1101 for any
"issuance of securities, including the granting of any mortgage on or
security interest in PSNH's properties in Maine or elsewhere...so long
as PSNH is incorporated under the laws of a state other than the State
of Maine and the issuance is approved by the agency regulating public
utilities in that state." Most recently, in Docket No. 2000-46, the
Commission granted Section 708 approval to the merger of Northeast
Utilities and Consolidated Edison, Inc. In its March 17, 2000 Order,
the Commission noted that:
PSNH's contacts with the state of Maine are extremely
limited. While it owns and operates certain transmission and
distribution plant in Maine, it does not provide retail service
to any customers in Maine nor does it receive any compensation in
Maine as a result of the properties it owns in Maine. Our
primary interest is in assuring that PSNH maintains its T&D plant
in Maine in a safe and reasonable manner.
Because PSNH's contacts are so limited, we believe we can
adequately discharge our responsibilities under Section 708 by
approving the merger upon the condition that the merger be
approved by the New Hampshire Public Utilities Commission and the
Federal Energy Regulatory Commission.
PSNH's contacts with the state of Maine have not changed since
the Commission's Order in 2000-46. The principles supporting the
Commission's decision in that case apply with equal force here.
Indeed, since the purpose of the transaction is to benefit New
Hampshire ratepayers, this Commission can adequately discharge its
responsibilities under Section 708 by approving the reorganization
caused by the creation of wholly-owned SPE in light of the New
Hampshire Commission's Finance Order of approval.
For the reasons set forth above, PSNH requests that the
Commission issue an order, as soon as possible, approving the
transaction under Section 708.
I appreciate the Commission's attention to this request. If you
need further information, please do not hesitate to contact me.
Sincerely,
Jerrol A. Crouter
cc: Joanne B. Steneck, Esq.
Public Advocate
Catherine E. Shively, Esq.
