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<title>New Hampshire: Public Utilities Commission Clarifies Restructuring Plan</title>
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<p align="left"><strong><small><font face="Arial">About The Author:</font></small></strong></p>
<p align="left"><font face="Arial" style="font-size: 9pt">Robert A. Olson is a partner in the law firm of
Brown, Olson & Gould, P.C. which maintains a nationwide practice in energy law,
public utility law and related commercial transactions.</font></p>
<p><small><font face="Arial"><font style="font-size: 9pt">He can be reached at:</font><br>
<br>
<b><font color="#0000FF">Brown, Olson & Gould, PC</font></b><br>
2 Delta Drive<br>
Suite 301<br>
Concord, NH 03301<br>
<a href="mailto:[email protected]">[email protected]</a><br>
(603) 225-9716<br>
<a href="mailto:[email protected]"></a></font></small></p>
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<td width="70%" valign="top"><img src="../images/statelin.gif" alt="STATELINE by Robert Olson" border="0" WIDTH="375" HEIGHT="75"><p><b><u>
<br>
<br>
April 1998</u><br>
<big><big><font face="Arial"><big>New Hampshire: Public Utilities Commission
Clarifies Restructuring Plan<br>
</big></font></big></big></b><strong>by Robert Olson -- Brown, Olson and Wilson, P.C.<br>
</strong><font face="Arial" size="2">(<em>originally published by PMA OnLine Magazine:
05/98</em>)</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">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.</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">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.</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">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 company’s 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
supplier’s ability to advertise.</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">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. </font></p>
<p ALIGN="JUSTIFY"><font face="Arial">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. </font></p>
<p ALIGN="JUSTIFY"><font face="Arial">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 QF’s
legal rights or obligations but that utilities have a statutory duty to mitigate all
stranded costs, including those associated with QF obligations. </font></p>
<p><font face="Arial">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
PUC’s approval by May 1, 1998.</font></p>
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<blockquote>
<p align="left"><font face="Arial">
<small>Robert A. Olson is a partner in the law firm of Brown, Olson &
Gould P.C.
which maintains a nationwide practice in energy law, public utility law and related
commercial transactions. He can be reached at:</small></font><p align="center">
<font face="Arial"><small><font color="#0000FF"><b>Brown, Olson & Gould, PC</b></font><br>
2 Delta Drive, Suite 301<br>
Concord, NH 03301 <br>
<br>
<a href="mailto:[email protected]">[email protected]</a> | (603) 225-9716<a href="mailto:[email protected]"></a></small></font>
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