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OCA Activity - ElectricCase Update: Modified: 8/7/09 This update contains information about selected dockets with activity since the last Board meeting.
1. ISO/Regional Electric Issues We have been working with our counterparts in the region to increase ratepayer representation and participation at ISO-New England, the operator of the region’s electric grid. This could result in ratepayer representation on the ISO Board, or other mechanisms to ensure that ratepayers’ interests are better represented at the ISO, and possibly a change to the ISO’s mission to include lowest reasonable cost language. We are also tracking activities by others in the region to strengthen the monitoring of the regional market. On July 29, 2009 the ISO held the first “Consumer Liaison Group” meeting in Westborough, MA. to facilitate additional participation of organizations representing consumers in ISO activities. Participants included consumer advocate agencies from the region, large customers, business and industry associations, utilities, transmission owners, and other interested parties. The OCA participated telephonically. 2. Energy Efficiency and Sustainable Energy Board The “EESE” Board was created to advise the Commission in several areas, including the expenditure of the RPS funds for renewable energy projects, and RGGI funds for energy efficiency projects. It is also charged with developing a plan to achieve the state’s energy efficiency potential, as well as for the economic and environmental sustainability of the state’s energy system. The OCA has a seat on this Board (and we served on several subcommittees), which includes state agencies, non-profit organizations, and businesses. The utilities are non-voting parties. The Board has been meeting monthly to work on its broad charge. All materials are posted at www.puc.nh.gov/EESE.htm. The Board will meet on the second Friday of each month in 2009. The next two meetings are scheduled for August 14th and September 18th. 3. Electric Assistance Program (EAP) – Advisory Board The EAP Advisory Board quarterly meeting was held on July 24. As of July 27, 2009 there were 7,615 households on the wait list. A total of 28,177 low income households are enrolled in the program and receiving discounts on their electric bills. More information on EAP is available at http://www.puc.nh.gov/Consumer/electricassistanceprogram.htm. [Note: there is a comparable natural gas bill assistance program that currently provides about a 17% discount on bills for approximately 5,600 customers of National Grid and Northern Utilities.] 4. DE 07-045 Briar Hydro Associates Briar owns and operates the Penacook Lower Falls Project, a 4.1 MW hydroelectric generating facility on the Contoocook River. Briar claims it has succeeded to rights in a Contract for the Purchase and Sale of Electric Energy dated April 28, 1982 with Public Service of New Hampshire (PSNH). The 1982 Power Purchase Contract has a term of 30 years and requires PSNH to purchase the project’s entire generation output. The current price for that output is 3.53¢/kWh. Briar requested that the Commission determine who is entitled to receive payments for capacity. The Commission issued Order No. 24,804 on November 21, 2007 denying the Petition, which was consistent with the OCA’s position. The Commission’s decision is worth approximately $50,000 annually to ratepayers. Briar then filed a motion for rehearing. The Commission held a hearing to hear oral arguments on May 20, 2008. On April 22, 2009 the Commission issued Order No. 24,960 denying Briar Hydro’s Motion for Rehearing. On May 12, 2009 Briar Hydro appealed the case to the NH Supreme Court. On June 25, 2009 the Supreme Court accepted the appeal and docketed it as 2009-0359. Oral argument has not yet been scheduled. 5. DE 07-064 Rate Mechanism for Energy Efficiency On May 14, 2007 the Commission opened a docket to “investigate the merits of instituting, for electric utilities, appropriate rate mechanisms, such as revenue decoupling, which would have the effect of removing obstacles to, and encouraging investment in, energy efficiency.” On November 7, 2007, the Commission held a technical session with presentations from experts representing differing views on decoupling. The OCA, as well as other agencies in the case, questioned many aspects of decoupling. The Commission issued Order No. 24,934 on January 16, 2008. In its Order, the Commission states that it “ allows the electric and natural gas utilities to propose rate mechanism to promote energy efficiency in future rate case filings.” The Commission also concluded that there may be different rate mechanisms that could shift risks from investors versus ratepayers, and that the Commission should take that into account in ruling on decoupling proposals. On February 18, 2009 the Way Home filed a motion for rehearing seeking specific guidance from the Commission regarding issues related to decoupling proposals. On March 23, 2009 the Commission denied the motion for rehearing. PSNH filed a distribution rate case on June 30, 2009, which presented the first opportunity for a utility to seek decoupling or other energy efficiency rate mechanism. PSNH is not seeking full decoupling but in the alternative is requesting a larger increase in the residential customer charge than the average increase requested. Which shifts revenues from a usage dependent charge to a fixed charge so the company faces less risk. 6. DE 08-077_PSNH Power Purchase Agreement and Renewable Energy Certificate Agreement with Lempster Wind On May 29, 2008 PSNH filed a petition for approval of a Power Purchase Agreement (PPA) and Renewable Energy Certificate (REC) Option Agreement between PSNH and Lempster Wind, LLC (Lempster Wind). PSNH seeks to enter into a 15-year contract with Lempster under a provision in the Renewable Portfolio Standard (RPS) Act (RSA 362-F) to purchase the energy, capacity and RECs from Lempster. PSNH would use the energy to offset market purchases, and the RECs to meet its obligations under the RPS Act. The RPS Act authorizes multi-year purchase agreements, and requires the Commission to consider issues related to cost-effectiveness, economic development, environmental benefits, and the impact on competitive markets in its review. On January 23, 2009 Constellation withdrew from the case, citing “a number of internal personnel changes to adjust to events in the energy and financial markets and [to] realign its organizational structure.” The final hearing was held on February 5. On May 1 the Commission issued Order No 24,965 approving PSNH’s request to enter into a PPA and REC agreement with Lempster Wind, which was consistent with the OCA’s position. On May 19, 2009 Freedom Partners LLC filed a motion for rehearing, arguing that the approval of PSNH’s contract with Lempster was contrary to the RPS law, was improperly entered into by PSNH prior to having Commission approval, and raising other objections to the decision. On June 25, 2009 the Commission issued Order No. 24,982 denying the motion for rehearing. On July 23, 2009 Freedom Partners filed an appeal at the NH Supreme Court. 7. DE 08-103 Investigation of PSNH Installation of Scrubber Technology at Merrimack Station On August 22, 2008 the Commission initiated an investigation of PSNH’s installation of “scrubber” technology at its coal-fired plant in Bow, as well as an inquiry into the PUC’s authority over PSNH’s scrubber project. The Commission’s factual investigation and legal inquiry were prompted by PSNH’s disclosure in August that the estimated cost of the scrubber has risen from $250 million to $457 million since 2006. In addition to the information and a memorandum of law received from PSNH, the PUC received a memorandum of law from the OCA that argued that the PUC does have jurisdiction to review PSNH’s modification of the Bow plant, as well as the significant cost increase, which will be borne by ratepayers. On September 19, 2008 the Commission issued Order No. 24,898, finding that it does not have jurisdiction to review the project. Thereafter, several parties filed motions for rehearing, including an individual ratepayer, TransCanada (an owner of hydro plants), and three commercial ratepayers including Stonyfield Farm and the Common Man Restaurants. TransCanada and the commercial ratepayers also filed motions to stay to stop PSNH from proceeding with the project, after PSNH issued a press release stating that they intended to begin site work on November 3, 2008. On November 12, 2008 the Commission issued Order No. 24,914 denying the motions for rehearing. On December 15, 2008 Stonyfield Farm and two other businesses filed a notice of appeal with the NH Supreme Court. The Supreme Court heard oral argument on June 16. They have not yet rendered a decision. All filings in the case are posted on the OCA’s website at http://www.oca.nh.gov/08-103.htm. 8.DE 08-113 and 08-114 PSNH 2009 Energy Service and Stranded Costs Rates On September 12, 2008 PSNH filed proposed energy service and stranded costs rates for effect on January 1, 2009. On December 19, 2008 the Commission issued Order No. 24,923 approving the 2009 stranded cost rate of 0.98 cents, up from 0.65 cents in 2008. On December 30, 2008 the PUC issued Order No. 24,924 approving the new energy service rate of 9.92 cents/kWh, up from 9.57 cents in 2008. On May 20 th the company filed its mid-year update, estimating that the energy service rate will be reduced to 8.94 cents/kWh on August 1, 2009 (this was later updated to 9.03 cents). PSNH also requested an increase in the Stranded Cost charge to 1.14 cents/kWh on August 1. The OCA did make some recommendations, but did not oppose the rate changes. A hearing on the request was held on July 2, 2009. On July 24, 2009 the Commission issued Order No. 24,991 approving the updated 2009 energy service rate of 9.03 cents/kWh. The Commission also issued Order No. 24,987 approving the Stranded Cost rate of to 1.14 cents/kWh. 9. DE 08-120 2009 Core Electric Energy Efficiency Programs On October 6, 2008 the four electric utilities (PSNH, Unitil, National Grid and NH Electric Cooperative) filed their joint proposal for both statewide and utility-specific ratepayer funded energy efficiency programs beginning on January 1, 2009, including a proposal for PSNH and Unitil to offer a “fuel blind” residential program that provides weatherization services to those who heat with fuels other than electricity for the first time. Each year electric ratepayers contribute approximately $20 million to the System Benefits Charge (SBC) that the utilities manage and spend on efficiency programs, which includes a “shareholder incentive” for the utilities of between 8-12% of the total budget. On January 5 th the Commission issued Order No.24,930 approving the 2009 programs and allowing the utilities to propose fuel-blind programs. PSNH and Unitil filed more detailed fuel blind proposals on April 9, 2009. Commission Staff filed a memorandum opposed to the proposals. On June 4, 2009 the Commission issued an Order Nisi (No. 24,974) approving the pilot program with modifications, including limiting the program to 200 PSNH customers and 100 Unitil customers for 2009, for effect on June 15, 2009. On June 30, 2009 PSNH and Unitil filed revised budgets and evaluation plans for the fuel blind pilot program pursuant to the Commission’s Order Nisi. The Parties also meet at least quarterly to track the progress of the programs as well as to proactively attempt to address improvements for the future. 10. DE 08-135 PSNH New Line Extension Policy On November 3, 2008 PSNH filed proposed tariff pages to establish a new line extension policy applicable to developers, small business and residential customers requesting extension of the Company’s facilities to receive service. The filing is consistent with the Settlement Agreement in PSNH’s last delivery service rate case (DE 06-028), in which PSNH, the OCA and Staff agreed to review the cost of initiating service to new customers as compared with the revenues received from those customers. The purpose of the new policy is to better align the costs and revenues related to new customers in order to reduce subsidization of new customers by existing customers. The prehearing conference was held on February 5, 2009, and two technical sessions have been held. The NH Homebuilders and Remodelers Association has raised concerns about the impact on builders (including affordable housing developers) if the existing subsidies of costs of line extensions are eliminated. The parties have met several times to discuss a settlement agreement. 11. DE 08-145 Investigation into Modifications of PSNH’s Merrimack Station On November 13, 2008 Freedom Logistics and Halifax-American Energy Company filed a petition seeking a determination of whether PSNH should have sought Commission approval prior to installing a new turbine at PSNH’s coal-fired station in Bow. The Petitioners argue that the new turbine constitutes a modification under RSA 369-B:3-a, which requires that prior to a modification of any of PSNH’s plants, the Commission must find that “it is in the public interest of retail customers of PSNH to do so and provides for the cost recovery of such modification.” The new turbine was installed in April 2008, and the Commission has not made such a finding, which PSNH argues is not required. A prehearing conference was held on January 16, 2009, and a technical session was held on February 3, 2009. PSNH, CLF and Freedom filed stipulated facts on April 8, 2009, and briefs on the legal issues on May 22, 2009. We now await Commission action. 12. DE 09-033 PSNH Request for Approval of Financing On February 20, 2009 PSNH filed a petition seeking authority to issue up to $150 million in principal amount of long-term debt securities through December 3 1, 2009, to mortgage its property in connection with the issuance of long-term debt, to enter into an interest rate transaction to manage interest rate risk, and to increase its short-term debt limit to ten percent of net fixed plant plus a fixed amount of $60 million. PSNH requested approval by April 15 th. According to PSNH, the proposed long term debt issuance will be used in part to refinance its short term debt, as well as to finance anticipated capital expenditures and to pay for issuance costs. Although the Company filed under RSA 369 for approval, which requires the Commission to find that the proposed uses of funds are in the public interest, the Company did not provide any more information about the proposed uses of the funds other than those listed above. The parties provided briefs to the Commission on April 10, 2009 on the issue of scope. The OCA argued that the Commission must consider in addition to the terms of the debt whether the use, as well as the impact on rates, of the debt is consistent with the public good. On May 13, 2009 the Commission issued a Secretarial letter suspending the schedule until a decision on the scope. On June 19, 2009 the Commission issued Order No. 24,979 in which they ruled that “whether or not PSNH should construct the scrubber technology at Merrimack station, or whether there are available alternatives to installing that technology” is beyond the scope of this docket (Page 16). A proposed procedural schedule was submitted to the Commission on June 24 which called for a hearing on August 11. However, in the interim, a discovery dispute has arisen between PSNH and CLF which may delay the schedule. 13. DE 09-054 Residential Renewable Energy Generation Incentive Program On April 17, 2009 the PUC opened this docket to seek public comments on how it will implement a provision of the Renewable Portfolio Standard (RPS) Law (RSA 362-F:10,V) that requires the Commission to develop a rebate program for small residential renewable energy systems that generate electricity (such as solar and wind). Under the RPS law, electric utilities are required to have increasing percentages of the energy they provide to customers come from renewable energy sources. Utilities can meet these requirements by purchasing Renewable Energy Credits (RECs) created by renewable generation facilities, or they can make Alternative Compliance Payments (ACPs) into the newly created Renewable Energy Fund administered by the PUC. The residential rebate program, which sets aside up to 10% of the overall RPS fund, provides a one-time payment of $3 per watt, up to a maximum payment of $6,000 or 50% of system costs, whichever is less, per facility for projects up to 5kW in size. Systems installed after July 1, 2008 are eligible for the rebate. In order to process rebate requests, the Commission’s Sustainable Energy Division developed a draft application for public review for projects installed between July 1, 2008 and August 31, 2009. A technical session was held on May 15, 2009, and a public comment hearing was held on May 26, 2009. Order No. 24,985 approved the application process for incentive payments for small residential renewable electricity systems that begin operation from July 1, 2008 through September 30, 2009 pursuant to RSA 362-F: 10,V. The application process for projects to be completed after August 31, 2009 should begin soon. In addition, a process access for larger and for non-residential projects that wish to seek the remaining funds will be developed by the Commission in the near future.
14. DE 09-035 PSNH Distribution Rate Case On April 17, 2009 PSNH filed a request for a temporary 3% increase in distribution rates for effect on July 1, 2009, which was later changed to August 1, 2009. The Company filed its Notice of Intent to request a permanent increase in rates on May 29, 2009 notifying the Commission that it will file its rate case on or before July 1, 2009. A prehearing conference and technical session was held on June 10, 2009, and the final hearing on temporary rates was held on July 13, 2009. On June 29, 2009 PSNH submitted its permanent rate filing. On July 6, 2009, PSNH and the PUC Staff filed a settlement agreement on temporary rates. The settlement recommended that PSNH be allowed to increase its distribution revenues on a temporary basis by $25,611,000 annually during the course of the permanent rate proceeding. A portion of this amount ($19,000,000) is attributable to the incorporation of the Company’s last allowed return on equity of 9.67%. Also, a portion of the increase ($6,000,000) is intended to allow PSNH to begin to recover some of the amount expended during the December 2008 ice storm. The increased revenue is applied across all of the Company’s current distribution rates uniformly. According to the settlement agreement, the increase to distribution service rates, taken together with proposed simultaneous changes to PSNH’s stranded cost recovery charge and energy service rate (see DE 09-091, below), as well as the transmission cost adjustment mechanism rate (see DE 09-114, below), will result in a net decrease of approximately 1% in the overall rates of energy service customers. The PUC held a hearing on July 13, 2009. At the hearing, the OCA did not oppose the settlement agreement. On July 30, the PUC issued an order of notice on the permanent rate phase of the proceeding, scheduling a prehearing conference and technical session for August 12. On July 31, 2009, the PUC, in Order 24,997, approved the settlement agreement on temporary rates. 15. DE 09-067 Complaint of Clean Power Development, LLC against PSNH Clean Power Development, LLC (CPD) wants to construct a wood-fueled biomass-energy facility in Berlin, NH. On April 7, 2009 CPD filed a complaint with the PUC against PSNH, alleging that PSNH has violated its Least Cost Integrated Resource Plan and the State’s Energy Policy by failing to negotiate a power purchase agreement (“PPA”) with PSNH whereby PSNH would purchase the energy, capacity and renewable energy certificates associated with output of CPD’s proposed facility. According to CPD, a PPA is a prerequisite to moving forward with the financing, construction and eventual operation of their facility. CPD also alleges that PSNH breached its duty of candor to the PUC in a recent PUC proceeding. CPD asked for the PUC to open an adjudicative proceeding to investigate PSNH’s conduct and to order PSNH to make reparation. On April 14, 2009 the PUC requested a response to the complaint from PSNH. On May 26, 2009, CPD notified the PUC that it was not satisfied with PSNH’s response, and requested that the PUC commence a formal investigation, to which PSNH objected on June 1. On July 23, 2009, Concord Steam filed a petition to intervene. At this time, the OCA is monitoring this docket. 16. DE 09-091 PSNH Reconciliation of 2008 Energy Service and Stranded Cost Rates On May 1, 2009, PSNH filed testimony and schedules with the PUC in support of its proposed reconciliation of revenues and costs associated with its energy service charge and stranded cost recovery charge (SCRC) for calendar year 2008. The filing covers 1) the reconciliation between the revenues and expenses included in the SCRC and energy service charges, 2) the performance of PSNH’s fossil and hydro generation facilities, and 3) how PSNH met its energy and capacity requirements during this reporting period. According to the petition, as a result of lower than expected costs in 2008, energy service costs were lower than energy service revenues, resulting in a $20.7 million energy service over recovery for calendar year 2008. PSNH explained that the over-recovery was primarily due to two unanticipated adjustments: 1) a physical coal inventory adjustment of $12.7 million which was calculated and booked in December 2008; and 2) $6 million in insurance proceeds that were booked in December 2008 associated with the Merrimack Unit 2 turbine damage. With respect to the reconciliation of the SCRC revenues and costs, PSNH reported $53.9 million in SCRC revenues during 2008. According to the Company, the revenues did not fully recover its SCRC expenses, resulting in an under-recovery of $6.4 million. The PUC held a prehearing conference on July 23, and, afterwards, the parties agreed to a procedural schedule, which Staff filed with the PUC for approval. Discovery is ongoing at this time. 17. DE 09-114 PSNH Transmission Cost Adjustment Mechanism (TCAM) On June 12, 2009, PSNH filed a petition with supporting testimony and schedules requesting a change in the transmission cost adjustment mechanism (TCAM) rate. The TCAM is used for the reconciliation and recovery of transmission expenses and revenues. Through the TCAM rate, PSNH recovers regional network service (RNS) costs, local network service (LNS) costs, reliability costs, and scheduling and dispatch costs, all of which are approved by the Federal Energy Regulatory Commission (FERC) and administered by the Independent System Operator-New England (ISO-NE). In this filing, PSNH seeks reconciliation for: (1) the actual calendar year 2008; (2) January through May 2009 transmission costs and expenses; and (3) estimated costs for June and July 2009. In addition, the petition seeks approval of a forecasted retail TCAM rate for the eleven-month period beginning August 1, 2009. PSNH typically requests a July 1 effective date for its annual forecasted TCAM rate, but requested an effective date of August 1, 2009 in this docket to coincide with its requested effective date for temporary distribution rates in Docket No. DE 09-035. In its petition, PSNH estimated that the average TCAM rate would increase by $0.0026 per kilowatt hour (kwh) from the current $0.00935 per kWh to $0.01 195 per kWh. PSNH stated that the actual TCAM charges for each rate class would be filed prior to the hearing. The PUC held a hearing on PSNH’s filing on July 2. On July 24, 2009, the Commission issued Order No. 24,992, approving PSNH's requested overall average TCAM rate of $0.01195 per kWh effective with service rendered on and after August 1, 2009, which the OCA did not oppose.
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