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Tennessee Reviews Gas Promotion Costs

Fortnightly Magazine - April 15 1997

(see Table 1). La Capra also developed two alternative average rate targets based on lower or higher average rate targets. Using these three average rate targets, La Capra determined base, high and low interim stranded cost charges (see Table 2). (em ES

Table 1. Comparison of 1995

New Hampshire Electricity Rates to

1995 Adjusted Regional Electricity Rates (in cents per kWh)

VECCECE&HGSECNHEC PSNHTOTAL

Total average rate10.549.399.489.1513.3012.3011.78

Adj. regional average rate 10.50 10.98 10.78 10.54 11.17

10.28 10.43

Utility rate as a %

of regional average 100.38% 85.49% 87.92% 86.83% 119.06%

119.73% 112.97%

Table 2. Interim Stranded Cost Charges for New Hampshire Utilities (in cents per kWh)

YearPSNHNHECE&HCECGSECCVEC

Base Case (max. of 104.5%

of the adj. regional average)19983.795.742.832.761.803.32

19993.665.822.832.761.673.19

Low Case (max. of 100%

of the adj. regional average)19983.33N/A N/AN/AN/A3.28

19993.19N/AN/AN/AN/A3.15

High Case (max. of 107.76%

of the adj. regional average)19984.12N/AN/AN/AN/AN/A

19993.99N/AN/A N/AN/AN/A

Source: "Estimates of Electric Utility Stranded Costs Associated with the Introduction of Retail Competition in the New Hampshire

Generation Service Market," Jan. 2, 1997, La Capra Associates, 333 Washington St., Boston, Mass. Connecticut Valley Electric Co. (CVEC); Granite State Electric Co. (GSEC); The New Hampshire Electric Cooperative (NHEC); Public Service of New Hampshire (PSNH);

Concord Electric Co. (CEC); Exeter and Hampton Co. (E&H)

1Re Restructuring New Hampshire's Electric Utility Industry, DR 96-150, Order No. 22,514, Feb. 28, 1997 (N.H.P.S.C.).

2Re Restructuring New Hampshire's Electric Utility Industry, DR 96-150, Sept 10, 1996, 171 PUR4th 564 (N.H.P.U.C. 1996).

3"An Act Restructuring the Electric Utility Industry in New Hampshire and Establishing a Legislative Oversight Committee," enacted May 16, 1996, Rev.Stats.Ann., secs. 129 et seq. In the act, the New Hampshire General Court found the state exhibited the highest average electricity rates of any state in the U.S.

4See, Re Northeast Utilities/Public Service Co. of New Hampshire, 114 PUR4th 385 (N.H.P.U.C. 1990).

5A NEPOOL proposal recently was filed with the Federal Energy Regulatory Commission in compliance with FERC Order 888, and included the planned transfer of operational authority to an independent system operator. See, "Power Pool Politics: How New England Agreed to an ISO," by Gordon L. Weil, PUBLIC UTILITIES FORTNIGHTLY, Feb. 15, 1997, p. 43.

6Quoting state law, PSNH argued that once the PUC had approved the bankruptcy plan, the law required that, "[T]he commission shall not thereafter issue any order or process which would alter, amend, suspend, annul, set aside or otherwise modify such approval or result in the fixing of rates other than in the manner prescribed in the agreement."

7The commission explained: "Seven years of annual 5.5-percent rate increases have produced real rate increase to customers more than 20 percent above those projected by NU for the region during the hearings in DR 89-244. The restructuring plan's limitations of rates to the regional average will produce rates consistent with those which PSNH originally projected for the end of the fixed rate period."

8The commission went on to say that: "Rate regulation is not a mere promise to pay, it is an exercise of the police power. The defect in PSNH's claim thus begins and ends with PSNH's premise: that the