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<title>New Hampshire PUC Approves Two Restructuring Settlement Agreements</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="69%" valign="top"><img src="../images/statelin.gif" alt="STATELINE by Robert Olson" border="0" WIDTH="375" HEIGHT="75"><p><b><u>
<br>
<br>
November 1998</u><br>
</b><font size="6"><b>New Hampshire PUC Approves Two Restructuring
Settlement Agreements<br>
</b></font><strong>by Robert Olson -- Brown, Olson and Wilson, P.C.<br>
</strong><font face="Arial" size="2">(<em>originally published by PMA OnLine Magazine:
11/98</em>)</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">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.</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">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.</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">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.</font></p>
<p ALIGN="JUSTIFY"><font face="Arial">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 NEP’s 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
Chairman’s remarks expressed a preference for a minimum of three transmission service
suppliers for Unitil. </font></p>
<p ALIGN="JUSTIFY"><font face="Arial">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. </font></p>
<p ALIGN="JUSTIFY"><font face="Arial">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. </font></p>
<p><font face="Arial">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.</font></p>
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<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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