On October 7, 1998, the New Hampshire Public Utilities Commission (NHPUC) approved the Amended Offer of Settlement for Retail Choice of Granite State Electric Company (GSEC), and its affiliated power supplier, New England Power Company (NEP). On November 2, 1998, the NHPUC Chairman recommended approval of a second restructuring settlement involving the Unitil companies, including the distribution companies Concord Electric Company and Exeter & Hampton Electric Company and Unitil Power Corp. With approval of these restructuring settlements, Unitil and GSEC withdrew from a federal court lawsuit initiated by Public Service of New Hampshire. In that lawsuit, the court enjoined restructuring efforts by the Commission, but exempted negotiated settlements from the injunction.
Both settlements provide for a transition service period in which service is provided by the utility to all customers. During the transition service period, customers are encouraged to choose a competitive supplier of electricity. The GSEC transition service period began on July 1, 1998, and is scheduled to terminate on June 30, 2002; however, the PUC can decide to terminate or extend the transition service period on December 31, 2000. The transition service period under the Unitil settlement extends to April 30, 2002, and competition will be implemented on March 1, 1999.
Price escalations in the cost of transition service and consumer education are designed to encourage customers to leave transition service and select a competitive supplier. Under the GSEC settlement, transition prices are subject to a fuel price index adjustment. The savings estimates for customers under the GSEC settlement is estimated to be at least 10% and possibly in excess of 17%. Under the Unitil settlement, prices will escalate by 2.5% per year, but the distribution rates would be frozen for a year after implementation of competition. Both GSEC and Unitil will provide funds for consumer education, and the identity of the competitive supplier will appear on customers bills.
Suppliers of transition service power must meet certain requirements. Under the GSEC settlement, transition service suppliers are to provide service at a flat, capped rate, subject to the fuel price index adjustment. In addition, as part of the sale of NEPs non-nuclear generating assets to US Generating Company (US Gen), which allows GSEC to divest itself of its generating assets, US Gen is obligated to provide transition service to GSEC ratepayers if GSEC is unable to obtain an appropriate supplier through its request for proposals. The transition service suppliers under the Unitil settlement will be chosen by a competitive bidding process, and Unitil Power Corp. will provide the interim transition service. Unitil Power agreed to divest itself of all its power supply obligations over a 12 year period. The NHPUC Chairmans remarks expressed a preference for a minimum of three transmission service suppliers for Unitil.
In the GSEC settlement order, the NHPUC established temporary rules pertaining to registration of competitive suppliers. The rules establish consumer protection requirements to better enable customers to make informed decisions on choosing their competitive supplier. Specifically, the NHPUC temporary rules require that competitive suppliers must provide customers with disclosure statements which at a minimum contain all fixed and variable prices of service offered; the terms and conditions of supply agreements; and, a description of the dispute resolution process available for dissatisfied customers. Additionally, the interim rules contain requirements regarding notice of termination and telephone solicitation. The temporary rules do not provide for any portfolio requirements, such as requiring a certain percentage of renewable power sources. The NHPUC is actively reviewing permanent competitive supplier registration rules.
Both GSEC and the Unitil operating companies will be able to recover 100% of their non-mitigated, stranded costs. GSEC has agreed with NEP to terminate their power supply contract in exchange for paying a termination charge. However, the NHPUC reviewed the termination of the NEP contract and reduced the amount of funds which would flow to NEP under the termination. The NHPUC recommended approval of a Unitil stranded cost recovery plan which would cap the time limit for stranded cost recovery at twelve years from the date of divestiture.
Energy efficiency and environmental concerns are likewise addressed by the settlements. The GSEC settlement provides for reduced emissions from power plants purchased by US Gen from NEP located in Massachusetts. However, the settlements do not impose any environmental restrictions on other competitive power suppliers. The Unitil settlement would provide a low income residential efficiency program. Unitil will also work with the various interested agencies to develop additional programs pertaining to energy efficiency.