03may01...0835h

2001 SESSION

01-0036

03/01

HOUSE BILL 423

COMMITTEE: Science, Technology and Energy

AMENDED ANALYSIS

I. Entitles an electric utility to retain 20 percent of the savings from an approved renegotiation of a public utilities commission order.

II. Modifies the terms of transition service for customers of Public Service Company of New Hampshire.

III. Modifies the system benefits charge authority.

IV. Requires the public utilities commission to make certain determinations prior to approving the sale of Public Service Company of New Hampshire fossil generation assets.

V. Authorizes the public utilities commission to impose an energy surcharge on transition service customers of Public Service Company of New Hampshire.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

03may01...0835h

01-0036

03/01

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand One

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

1 Findings. The general court finds that:

I. Commodity prices for oil and natural gas have substantially increased in the past year, resulting in higher wholesale electricity prices in New Hampshire and throughout the New England region. The higher wholesale electricity prices have prevented competitive electricity suppliers from being able to compete with standard transition service causing them to exit the market or not even enter it in the first place.

II. Given the increase in wholesale electricity prices and the potential lack of a significant number of viable competitive suppliers, it is important that measures be taken to protect customers from the potential of a noncompetitive and volatile electricity market. A critically important measure that should be undertaken to protect customers from price volatility and a noncompetitive market is for the public utilities commission to delay the divestiture of Public Service Company of New Hampshire's ("PSNH") fossil generation assets until the commission determines such sale is in the public interest. Delay in the divestiture of PSNH's fossil generation assets would allow for the use of those assets to serve transition service. While this delay in divestiture dates is in the public interest today, the general court finds that competitive electricity markets should provide benefits for customers over the long term. When the sale of PSNH's fossil assets is in the public interest, the public utilities commission should proceed with the sale of those assets in order to establish competitive electricity markets.

III. The planned sale of PSNH's generation assets will be done in a manner consistent with RSA 374:30.

IV. Changes to RSA 369-B and RSA 374-F which are designed to protect PSNH customers from current price volatility must be accomplished in a manner that shall not affect the validity, effectiveness, or finality of Order No. 23,550 issued by the public utilities commission, and does not diminish the value of the settlement agreement to either PSNH or PSNH's customers.

2 Limited Electrical Energy Producers; Retention of Savings by Electric Utility. Amend RSA 362-A:4-d to read as follows:

362-A:4-d Retention of Savings by Electric Utility. An electric utility that is party to an approved renegotiation of a commission order under RSA 362-A:4-c shall be entitled to retain [up to] 20 percent of the savings resulting from such renegotiation[, subject to order of the commission].

3 Authority to Issue Finance Orders; Transition Service. Amend RSA 369-B:3, IV(b)(1)(A)-(D) to read as follows:

(A) For purposes of implementing RSA 369-B:3, IV(b), transition service shall be available for the periods of time set forth in subparagraphs (b)(1)(B) and (b)(1)(C), subject to the commission's authority to lengthen the transition service period under RSA 374-F. From competition day until [initial transition service end day] the completion of the sale of PSNH's ownership interests in fossil and entitlement interests in nuclear generation assets located in New Hampshire, PSNH shall supply such transition service and default service in its retail electric service territory from its generation assets and, if necessary, through supplemental power purchases in a manner approved by the commission. [After initial transition service end day] Once PSNH is no longer supplying transition service, to the extent applicable, any provider or providers of transition service shall have been chosen through a competitive bid process, administered by the commission, to provide such service. The commission may, if it finds it to be in the public interest, divide the competitive bid process into multiple categories or multiple competitive bids;

(B)(i) Transition service for residential customers, street lighting customers, and general delivery service rate G customers shall be available until 24 months after initial transition service end day. From competition day until initial transition service end day, the price of transition service for these customers shall be $0.044 per kilowatt-hour. From initial transition service end day to 12 months after initial transition service end day, the price of transition service for these customers shall be $0.044 per kilowatt-hour, or the competitively bid price for transition service, whichever is less. From 12 months after initial transition service end day to 24 months after initial transition service end day, the price of transition service for these customers shall be $0.046 per kilowatt-hour, or the competitively bid price for transition service for these customers, whichever is less. If the competitively bid price exceeds these fixed prices, the differences shall be reconciled for these customers in the manner prescribed in the original proposed settlement;

(ii) If the commission extends transition service beyond 33 months while PSNH retains its fossil generation assets, the price of transition service during such period may be PSNH's actual, prudent, and reasonable costs of providing such power, as approved by the commission. The commission, in approving such transition service pricing, shall also consider setting a transition price which will facilitate a smooth transition to market prices, provided the commission determines such transition effectively, fully, and contemporaneously mitigates stranded costs and is in the public interest.

(iii) At the end of the transition service period, up to 25 percent of the residential customers, street lighting customers, and general delivery service rate G customers who have not chosen a competitive supplier may be assigned randomly to registered competitive suppliers other than the transition service supplier or suppliers, if the commission finds such random assignment to be in the public interest. The commission shall develop procedures and regulations for this assignment process. Any random assignment must be affirmatively approved by an individual customer;

(C) Transition service for all other customers shall be available until 12 months after initial transition service end day. From competition day to initial transition service end day, the price of transition service for these customers shall be $0.044 per kilowatt-hour. From initial transition service end day to [12 months after initial transition service end day] the day that PSNH ceases to provide transition service, the price of transition service for these customers [shall] may be PSNH's actual, prudent, and reasonable costs of providing such power as approved by the commission. The commission may extend transition service for these customers if it determines an extension to be in the public interest. The commission, in approving such transition service pricing, shall also consider setting a transition price which will facilitate a smooth transition to market prices, provided the commission determines such transition effectively, fully, and contemporaneously mitigates stranded costs and is in the public interest. Thereafter, the price of transition service shall be the competitively bid price for transition service;

(D) Any difference between the price of transition service from competition day to [initial transition service end day] the day that PSNH ceases to provide transition service and PSNH's actual, prudent, and reasonable costs of providing such power as determined by the commission shall first be separated between the 2 groups of customers described in subparagraphs (b)(1)(B) and (b)(1)(C), used first to offset any differences described in subparagraph (b)(1)(B), and the net then reconciled for each group of customers either by changing the recovery end date, or by decreasing the stranded cost recovery charge, as the commission finds to be in the public interest;

4 Authority to Issue Finance Orders; System Benefits Charge. Amend RSA 369-B:3, IV(b)(6) to read as follows:

(6) The total system benefits charge shall be [fixed at $0.002] no greater than $0.003 per kilowatt-hour for 33 months from competition day divided between low-income assistance and energy efficiency/conservation programs. In the event that the commission finds that a significant amount of unencumbered dollars have accumulated in either program, and are not needed for program purposes, the commission shall refund such unencumbered dollars to ratepayers in a timely manner;

5 Electric Utility Restructuring Policy Principles; Universal Service; Default Service. Amend RSA 374-F:3, V(c) to read as follows:

(c) Default service should be designed to provide a [temporary] safety net and to assure universal access and system integrity. Default service should be procured through the competitive market [and based on short-term market prices,] and may be administered by independent third parties. The [cost] allocation of the costs of administering default service should be borne by the customers of default service in a manner approved by the commission. If the commission determines it to be in the public interest, the commission may implement measures to discourage misuse, or long-term use, of default service. Revenues, if any, generated from such measures should be used to defray stranded costs.

6 Electric Utility Restructuring; Implementation; System Benefits Charge; Energy Efficiency Programs. Amend RSA 374-F:4, VIII(b) to read as follows:

(b) [The system benefits charge referred to in RSA 374-F:3, VI shall be limited as follows:

(1) During the first year after competition is certified to exist pursuant to RSA 38:36, the portion of the system benefits charge due to energy efficiency programs, new renewable programs, and programs for low-income customers shall not exceed 2.5 mills per kilowatt hour for any utility whose rates are at or above regional average as determined by the commission.

(2)] During the first and second year after competition is certified to exist pursuant to RSA 38:36, the portion of the system benefits charge referred to in RSA 374-F:3, VI due to energy efficiency programs, new renewable programs, and programs for low-income customers shall not exceed 3 mills per kilowatt hour for any utility [whose rates are at or above regional average as determined by the commission].

7 Sale of PSNH Fossil Generation Assets; Date. Amend 2000, 249, 7, II to read as follows:

II. The sale of PSNH fossil generation assets shall take place no [later] sooner than July 1, [2001] 2003, unless the commission finds [due to circumstances beyond its control] that [further delay] an earlier sale is in the public interest.

8 Energy Efficiency Program. The public utilities commission shall phase-in, as quickly as can be effectively administered by Public Service Company of New Hampshire, an energy efficiency program for Public Service Company of New Hampshire that is funded at a rate of $0.0018 per kilowatt-hour to be allocated from the system benefits charge. The public utilities commission shall not decrease the amount of the system benefits charge allocated to low-income customers due to passage of this act.

9 Liquidation of Generation Assets. As part of the public utilities commission's administration of the liquidation of Public Service Company of New Hampshire's generation assets, the commission shall:

I. Allow and consider bids for the generation assets that may include proposals for providing transition service at a ceiling price for any customer class. Should such a bid be accepted by the commission, the commission shall consider such transition service commitment as part of the competitive bid process under RSA 369-B:3, IV(b)(1)(A). If such transition service is used, then it shall be considered the "competitively bid price" for purposes of RSA 369-B:3, IV(b)(1)(B) and (C), as applicable.

II. Expeditiously initiate and complete, in a manner consistent with RSA 374:30, the sale of nuclear generation assets located in New Hampshire required by the settlement in a manner that benefits all New Hampshire customers with stranded cost recovery obligations associated with such assets.

10 Temporary Energy Surcharge. In order to avoid excessive deferrals that may accrue under the provisions of RSA 369-B:3, IV(b)(1)(B)(i), the public utilities commission may impose an energy surcharge on electricity purchased by residential, street lighting, and general delivery service rate G customers of Public Service Company of New Hampshire that take transition service between initial transition service end day and 24 months after initial transition service end day as defined in RSA 369-B:2, VII. Money collected from such a surcharge shall be applied to reducing any amounts that would otherwise be deferred under RSA 369-B:3, IV(b)(1)(B)(i) after taking into account the provisions of RSA 369-B:3, IV(b)(3)(D).

11 Effect on Finance Order. The provisions of this act shall amend the specific provisions of public utilities commission Order No. 23, 550, approving the issuance of rate reduction bonds, issued by the public utilities commission in Docket No. DE 99-099. All provisions of RSA 369-B, including the amendments made by this act, and all provisions of commission Order No. 23,550, as amended by this act, shall remain in full force and effect and are hereby ratified and confirmed in all respects. The provisions of this act shall not affect the validity, effectiveness, or finality of commission Order No. 23,550, or the validity of any rate reduction bonds issued thereto. The general court finds that commission Order No. 23,550, as amended by this act, satisfies all of the conditions and requirements of RSA 369-B, as amended, including without limitation, RSA 369-B:3, IV, and is deemed to be authorized and issued pursuant to RSA 369-B, as amended, and that the implementation of such order, as amended, is in the public interest.

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