HB 1470

HB 1470 - AS AMENDED BY THE HOUSE

AN ACT relative to divestiture of electric utility assets.

SPONSORS: Rep. Gilmore, Straf 11; Rep. Howard, Carr 10; Rep. Guay, Coos 6; Rep. D. White, Hills 25; Rep. Bradley, Carr 8; Sen. Cohen, Dist 24; Sen. Hollingworth, Dist 23

I. Requires that the public utilities commission administer the divestiture of electricity generation assets required by a settlement agreement between the state and a public utility.

II. Requires that the public utilities commission hire an independent, qualified asset sale specialist to conduct the asset sale process.

III. Permits the public utilities commission to require that any settlement agreement provide for the divestiture of additional assets or to change the method of divestiture.

IV. Advises the public utilities commission to require that any settlement agreement amortize the proceeds of any asset sale at the most rapid rate that is beneficial to ratepayers.

V. Authorizes the public utilities commission to delay the sale of hydroelectric utilities being divested by a public utility for up to one year later than non-hydroelectric generation assets being divested.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

AN ACT relative to divestiture of electric utility assets.

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

I. In accordance with "Agreement to Settle PSNH Restructuring" filed with the public utilities commission on August 2, 1999 (the Agreement), Public Service Company of New Hampshire (PSNH) has agreed to divest itself of its power generation assets and power purchase agreements. The Agreement contemplates divestiture through several processes, including the sale of PSNH's existing power generation facilities through an asset sale process. The Agreement states that the goal of the asset sale process is to maximize the net proceeds realized from the sale in order to mitigate stranded costs. However, the agreement also contemplates that PSNH will conduct the asset sale process, and that PSNH affiliates will be allowed to bid in the asset sale process should they seek to retain generating facilities.

II. The general court finds that the asset sale process outlined in the Agreement is seriously flawed. A sale of PSNH's assets, conducted by PSNH, with PSNH affiliates bidding on the assets, establishes a multi-layered conflict of interest that is antithetical to the public interest.

III. Because the sale of assets will significantly affect stranded costs, the general court is obligated to ensure both the fairness and the appearance of fairness of the asset sale process in order to maximize the proceeds of the sale.

IV. The general court finds that an asset sale conducted by the public utilities commission is more likely to maximize proceeds and thereby reduce stranded costs than an asset sale conducted by PSNH.

V. The general court finds that the proceeds of the asset sale will likely generate greater savings for ratepayers if such proceeds are more rapidly amortized than what is proposed in the Agreement. The public utilities commission should require a more rapid amortization if such potential savings do exist and it is in the public interest.

VI. As a condition of approving the Agreement, the public utilities commission may find that an additional divestiture of assets is in the public interest.

VII. The general court finds that it is in the public interest to allow municipalities to bid a fair market price on hydroelectric facilities. The public utilities commission may find it appropriate to delay the sale of any such facilities for up to one year to facilitate such participation by municipalities.

VIII. The general court finds that an asset sale conducted pursuant to this act should not be inconsistent with the laws or rules of the state of New Hampshire.

2 New Paragraph; Public Utilities; Electric Utility Restructuring; Implementation; Divestiture of Assets. Amend RSA 374-F:4 by inserting after paragraph XI the following new paragraph:

XII.(a) If a settlement agreement between the state and an electric utility, entered into for the purpose of implementing retail choice of electric suppliers, requires divestiture of electricity generation assets, and if the electric utility, an affiliate, or a company that would become an affiliate if an announced merger were consummated has retained the right to bid on those assets, the commission shall administer the liquidation of such assets. Any asset sale administered by the commission pursuant to this paragraph shall be conducted in this state. The commission shall hire an independent, qualified asset sale specialist to conduct the asset sale process. The electric utility shall be allowed to comment prior to the selection of any such specialist. The commission may require that any such settlement agreement provide for the divestiture of additional generation assets or change the method of divestiture. The commission should require that any such settlement agreement amortize the proceeds of any asset sale at the most rapid rate that is beneficial to ratepayers.

(b) In order to facilitate the participation of municipalities in the acquisition of any hydroelectric facilities being divested by an electric utility under this paragraph, the commission is authorized, if it finds it to be in the public interest, to delay the sale of any such hydroelectric facilities for up to one year later than that of the sale of non-hydroelectric generation assets being divested by the electric utility. Notwithstanding RSA 31:5 and RSA 33:8, no approval of the superior court shall be required for a municipality to hold one special town meeting or one special meeting to raise or appropriate money or to issue bonds or notes for the purchase of a hydroelectric facility under this paragraph or for expenditures related to such activity.