New Hampshire Issues Final Plan for Electric Restructuring
serve retail customers beginning on Jan. 1, 1998."
Similarly, the commission found no merit in the utility's claim of a contractual right to recover all of their stranded costs. It explained that Northeast Utilities did pay a purchase price, including the acquisition premium when it agreed to acquire PSNH. But it made that payment to creditors of PSNH, rather than the state; what Northeast Utilities received in return was control of PSNH, rather than any promise from the state, the PUC explained. %n8%n
As to whether limited recovery of stranded costs would constitute a taking under the U.S. Constitution as alleged by PSNH, the commission said that, "A taking only occurs when the balance has been struck in the regulatory process so as unreasonably to favor ratepayer interests at the substantial expense of investor interests." %n9%n
That standard, the PUC advised, is one that the "utilities reasonably should have expected: that when their discretionary spending exceeds the regional average, they are responsible for the difference." The commission also found historic support for its approach in a well known U.S. Supreme Court case upholding "area rates" for natural gas producers. %n10%n The New Hampshire commission said that the similarities between the area rate dispute and its regional cost cap mechanism were "striking."
Finally, the commission found no conflict between federal bankruptcy laws and its application of the stranded cost rule to PSNH. It emphasized that the law is clear that the Bankruptcy Code preserves the authority of state regulators to approve rates contained in a reorganization plan. As a case in point, the commission noted the Bankruptcy Court in the PSNH case had ruled that the confirmed reorganization plan could not take effect until the commission approved the rate agreement. The commission emphasized that in so ruling the court added that nothing in the Bankruptcy Code has the effect of exempting the reorganized utility from "ongoing applicable regulatory requirements by NHPUC." In the commission's view, "The setting of rates years later by this commission is an example of what the Court had in mind when it referred to applicable regulatory requirements" imposed by PSNH's state regulators. t
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