On March 20, 1998, the New Hampshire Public Utilities Commission ("PUC") issued an order clarifying certain aspects of its previously issued plan to restructure the New Hampshire electric utility industry (the "Plan"). The order requires all public utilities, except Public Service Company of New Hampshire ("PSNH"), to submit filings that comply with the March order by May 1, 1998. The order also states that the PUC will do everything possible to insure that retail competition begins by July 1, 1998; however on April 17, the PUC chairman testified before the New Hampshire House of Representatives Science, Technology and Energy Committee in support of extending that date to January 31, 1999.
In its March order, the PUC ruled that competitive suppliers will be able to offer energy billing services to all customers once retail competition commences. In addition, the order states that competitive suppliers may also provide meters and metering services to customers whose maximum demand exceeds 100 KW. Customers whose maximum demand is below this level will be provided meters and metering services by the distribution company. The order states, however, that the PUC would consider pilot programs permitting small customers to purchase meters and metering services through the competitive market.
In the March order, the PUC also ruled that affiliates of the distribution company will be permitted to compete for retail customers in the affiliate distribution companys franchise territory after the PUC approves an appropriate code of conduct to protect against anti-competitive behavior. The order states that distribution companies would not be permitted to offer generation related services to their customers and that generation must be separated from distribution and transmission functions. The PUC reasoned that while it remained concerned that absent divestiture, affiliates of distribution companies may gain an unfair advantage over other suppliers, the PUC decided to defer this issue until it has been able to review the adequacy of the protection devices proposed by various parties. In the March order, the PUC also reversed its prior decision prohibiting affiliates from using the trade name of the affiliate distribution company. In vacating this prohibition, the PUC reasoned that it should not at the outset of competition restrict the use of affiliate trade names until it gains more experience with the general marketing practices of competitive power suppliers. The PUC cautioned, however, that competitive power suppliers will be required to comply with certain registration and disclosure requirements and that these may have an impact on a suppliers ability to advertise.
In the March order, the PUC reaffirmed the use of the regional average price of energy as a benchmark in establishing the interim stranded cost recovery for each utility. Under New Hampshire law, the PUC is required to establish an interim stranded cost charge for two years following implementation of retail competition and that after this two year period a final stranded cost charge will be determined. The PUC stated that comparing the bundled rates of each New Hampshire utility to the average bundled rates for all the New England utilities was consistent with the legislative requirement that retail competition provide ratepayers with short term rate relief and constituted an appropriate balance between the competing interests of utilities and ratepayers. In the March order, the PUC also rejected utilities claims that permitting less than 100% recovery of stranded costs was unconstitutional, stating that neither the United States nor the New Hampshire Constitution protects regulated utilities from the effects of competition.
In the March order, the PUC also revised its method for providing default service. In the Plan, the PUC required distribution companies to provide default service. In providing this service, the distribution companies would use the power purchased from qualifying facilities ("QFs") under existing arrangements with the utility as well as power purchased from the wholesale market. In the March order, the PUC stating that it was concerned that such an approach may provide the distribution company with an opportunity to seek recovery of stranded costs from the Federal Energy Regulatory Commission in addition to the recovery of stranded costs permitted by the PUC. Therefore, the PUC ruled that it will no longer require the distribution company to purchase power on behalf of any retail customers, including default customers. In addition, the PUC requested interested persons provide specific proposals whereby third party suppliers would provide energy to serve default customers.
The PUC also ruled that utilities must resell their QF energy and capacity into the wholesale power market as part of their overall obligation to mitigate above market costs. Regarding utilities ongoing obligations to honor QF arrangements, the PUC stated that it was not its intent to impair any of the QFs legal rights or obligations but that utilities have a statutory duty to mitigate all stranded costs, including those associated with QF obligations.
The March order requires that all New Hampshire utilities, except PSNH to submit filings that comply with the requirements of the March order for the PUCs approval by May 1, 1998.