DRUMMOND
                          WOODSUM &
                          MACMAHON

                      ATTORNEYS AT LAW
                    245 COMMERCIAL STREET
                    POST OFFICE BOX 9781
                 PORTLAND, MAINE 04104-5081
              (207) 772-1941 FAX (207) 772-3627
                     TTY (207) 828-8260

September 22, 2001

Dennis L. Keschl
Administrative Director
Maine Public Utilities Commission
242 State Street
State House Station 186565
Augusta, ME 04333-0018

RE:  Public Service Company of New Hampshire:  Request for Approval
     of a Reorganization in Connection with the Issuance
     of Rate Reduction Bonds

Dear Dennis:

     I write on behalf of Public Service Company of New
Hampshire ("PSNH") to request approval, pursuant to 35-A
M.R.S.A. Section  708, of a reorganization that may occur in
connection with the issuance of $96 million in Rate
Reduction Bonds for the benefit of PSNH.  The
reorganization, if it occurs, will be in furtherance of
electric utility restructuring in New Hampshire, and should
be approved by this Commission, upon the condition that the
transaction be approved by the New Hampshire Public
Utilities Commission.

     On October 3, 2000, the Commission in Docket No. 2000-
803 approved a reorganization of PSNH through the creation
of a wholly-owned limited liability company known as "SPE,"
the purpose of which was to issue up to $670 million of Rate
Reduction Bonds as an integral part of electric industry
restructuring in New Hampshire.  That series of Rate
Reduction Bonds was issued under authority granted by the
New Hampshire Legislature in RSA Chapter 369-B, which
authorized the use of securitization by PSNH to recover
certain of its stranded costs associated with restructuring
of the electric utility industry.  In addition to the $670
million in Rate Reduction Bonds involved in the
reorganization addressed by Docket No. 2000-803, the New
Hampshire Legislature authorized, in RSA 369-B:3, IV, the
issuance of not more than $130 million in Rate Reduction
Bonds to finance renegotiated agreements of certain of
PSNH's power purchase obligations.  The proceeds from the
$96 million in bonds involved here will be used by PSNH in
connection with agreements the company has entered into with
the Hemphill Power and Light Company and the Whitefield
Power and Light Company for the buy-down of power purchase
obligations for two wood-fired generating plants.  The
details of the transaction are set forth in the Direct
Testimony of David R. McHale, filed August 3, 2001 in New
Hampshire, and attached hereto.

     As indicated in the McHale Testimony (and the proposed
New Hampshire PUC Order included therein), SPE may be used
to issue the $96 million in Revenue Reduction Bonds involved
here.  In that event, no reorganization occurs under Maine
law.  On the other hand, PSNH may determine that it is
prudent to create a new subsidiary to issue these $96
million in bonds.  If that option is pursued, then PSNH will
create a new affiliated interest, and approval of the
reorganization is required under Section 708.

     The Commission has previously determined that PSNH is a
Maine public utility because the company owns certain,
limited transmission and distribution plant in this state,
consisting primarily of transmission lines.  PSNH does not
serve any retail customers in Maine.  As the Commission
noted in approving the reorganization in Docket No. 2000-
803:

     PSNH's contacts with the State of Maine are
     extremely limited.  While it owns and operates
     certain transmission and distribution plant in
     Maine, it does not provide retail service to any
     customers in Maine nor does it receive any
     compensation in Maine as a result of the
     properties it owns in Maine.  Our primary interest
     is in assuring that PSNH maintains its T&D plant
     in Maine in a safe and reasonable manner.

     Because PSNH's contacts are so limited, we believe
     we can adequately discharge our responsibilities
     under section 708 by approving the reorganization
     based upon the New Hampshire Public Utilities
     Commission's approval.  We expect that the
     reorganization will not affect PSNH's ability to
     maintain its T&D plant in Maine in a safe and
     reasonable manner and in accordance with the
     National Electric Safety Code, as required by 35-A
     M.R.S.A.  2305-A(2).


     PSNH's contacts with the State of Maine have not
changed since the Commission's Order in 2000-803.  The
principles supporting the Commission's decision in that case
apply with equal force here.  Indeed, since the purpose of
the transaction is to benefit New Hampshire ratepayers, this
Commission can adequately discharge its responsibilities
under  708 by approving the reorganization on condition
that the transaction is approved by the New Hampshire Public
Utilities Commission.  See Public Service Co. of New
Hampshire, Request for Exemption of 35-A M.R.S.A. Section
708(2)(A), Docket No. 2000-46 (Mar. 17, 2000)(listing PSNH's
T&D properties in Maine and approving reorganization on
condition that NH Commission approval is obtained).

     For the reasons set forth above, PSNH requests that the
Commission issue an order, as soon as possible, approving
the creation of an affiliated interest for the issuance of
up to $96 million in Rate Reduction Bonds in connection with
the buy-down of power purchase obligations with the Hemphill
and Whitefield wood-fired generating units.

     I appreciate the Commission's attention to this
request.  If you need further information, please do not
hesitate to contact me.

                              Sincerely,

                              /s/ Jerrol A. Crouter
                              Jerrol A. Crouter


cc:  Catherine E. Shively, Esq. (w/o enc.)
     Joanne Steneck, Esq.
     Public Advocate