HB1406 — Version 100

23march00.....3678h

2000 SESSION

00-2415

03/09

HOUSE BILL 1406

COMMITTEE: Science, Technology and Energy

ANALYSIS

This bill permits the public utilities commission to use a utility's required purchases to meet a portion of the transition service recommended upon implementation of retail choice of electricity suppliers.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

23march00.....3678h

00-2415

03/09

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 Findings. The general court finds that:

I. Transition service procured through competitive means continues to be necessary in order to establish customer choice and a restructured electricity industry.

II. Transition service as proposed in the filed settlement with Public Service Company of New Hampshire (PSNH) is likely to be priced significantly below current market prices based upon other recent competitive bids in the northeast. Underpricing of transition service would create significant deferrals of costs. These deferrals could come as a result of current market prices for electricity that are significantly higher than the proposed transition service pricing of 3.7, 3.8, and 3.9 cents per kilowatt hour for the 3-year duration of transition service. Under the settlement these costs are to be paid back with a return to PSNH in the future.

III. Deferrals of costs attributed to transition service underpricing could exceed $100 million for PSNH customers to be repaid with a return. Deferral repayment could occur at a time when the New Hampshire economy may not be robust, at a time when declining costs in other states could create a future rate gap for New Hampshire, and at a time when technological innovation may allow self generation to be more viable than it is today.

IV. Transition service underpricing would undermine the ability of competitive electricity markets to be established over time in New Hampshire.

V. Therefore the general court finds that deferrals of costs attributed to transition service underpricing are not acceptable and that transition service shall be established at prices that are realistic market prices given current market conditions.

VI. These provisions are not intended to apply to any utility which is implementing its transition service through a settlement approved by the public utilities commission prior to March 1, 2000.

2 Electric Utility Restructuring; Restructuring Policy Principles; Universal Service; Transition Service; Required Purchases. Amend RSA 374-F:3, V(b) to read as follows:

(b) As competitive markets emerge, customers should have the option of stable and predictable ceiling electricity prices through a reasonable transition period, consistent with the near term rate relief principle of RSA 374-F:3, XI. Upon the implementation of retail choice, transition service should be available for at least 2 but not more than 4 years after the start of competition, for customers who have not yet chosen a competitive electricity supplier. Transition service should be procured through competitive means and may be administered by independent third parties. The commission may utilize a utility's required purchases from qualifying facilities to meet a portion of transition service if it finds such utilization is in the public interest. The price of transition service should increase over time to encourage customers to choose a competitive electricity supplier during the transition period. Such transition service should be separate and distinct from default service.

3 Effective Date. This act shall take effect upon its passage.

Vetoed May 23, 2000