-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Je3rk0E2/gTBacuujURMxqEErw7QCgWCTi6nNIGtNCB4K+1UHzvZjI0vUOT9TBKA vpTAVpzAAVEtH/xalAHVnA== 0000072741-96-000106.txt : 19960703 0000072741-96-000106.hdr.sgml : 19960703 ACCESSION NUMBER: 0000072741-96-000106 CONFORMED SUBMISSION TYPE: U-1/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19960702 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTHEAST UTILITIES CENTRAL INDEX KEY: 0000072741 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 042147929 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-1/A SEC ACT: 1935 Act SEC FILE NUMBER: 070-08825 FILM NUMBER: 96590300 BUSINESS ADDRESS: STREET 1: 174 BRUSH HILL AVE CITY: WEST SPRINGFIELD STATE: MA ZIP: 01090-0010 BUSINESS PHONE: 2036655000 MAIL ADDRESS: STREET 1: 107 SELDON ST CITY: BERLIN STATE: CT ZIP: 06037-1616 U-1/A 1 PRE-EFFECTIVE AMEND. NO. 2 TO FORM U-1 File No. 70-8825 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 AMENDMENT NO. 2 TO FORM U-1 APPLICATION/DECLARATION WITH RESPECT TO DIVERSIFICATION ACTIVITIES UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 NORTHEAST UTILITIES PUBLIC SERVICE COMPANY OF WESTERN MASSACHUSETTS ELECTRIC COMPANY NEW HAMPSHIRE THE QUINNEHTUK COMPANY NORTH ATLANTIC ENERGY 174 Brush Hill Avenue CORPORATION West Springfield, MA 01090 1000 Elm Street Manchester, NH 03105 NORTHEAST UTILITIES SERVICE COMPANY NORTH ATLANTIC ENERGY THE CONNECTICUT LIGHT AND POWER COMPANY SERVICE CORPORATION NORTHEAST NUCLEAR ENERGY COMPANY Route 1, Lafayette Road THE ROCKY RIVER REALTY COMPANY Seabrook, NH 03874 107 Selden Street Berlin, CT 06037 (Name of company or companies filing this statement and addresses of principal executive offices) NORTHEAST UTILITIES (Name of top registered holding company parent of each applicant or declarant) Robert P. Wax, Esq. Vice President, Secretary and General Counsel Northeast Utilities P. O. Box 270 Hartford, CT 06141-0270 (Name and address of agent for service) The Commission is requested to mail signed copies of all orders, notices and communications to: Jeffrey C. Miller, Esq. John T. Muro Assistant General Counsel Vice President - Retail Marketing Northeast Utilities Service Company Northeast Utilities Service Company 107 Selden Street 107 Selden Street Berlin, CT 06037 Berlin, CT 06037 The Application/Declaration in File No. 70-8825 is hereby amended as follows: Subparagraph (M) of the first paragraph of Item 1. Description of Proposed Transactions is hereby amended, and footnote 12 is added, to read as follows: "(M) engage in the brokering, marketing, generation, production, transportation, transmission, distribution, storage and sale of energy at wholesale and retail (including but not limited to electricity or natural or manufactured gas) and "paper products" such as futures, hedges, load aggregations, fuel tolling, fuel conversions and other instruments expected to be required in a competitive energy marketplace (such activities, to the extent relating to the wholesale marketing of electricity in the geographical areas covered by the New England Power Pool, the New York Power Pool, and the Pennsylvania - New Jersey - Maryland Interconnection Association , referred to hereinafter as 'Wholesale Marketing Activities'); and " See, e.g., HCAR No. 35-26359, File No. 70-8641 (August 18, 1995)." The following is added to the end of the sixth paragraph of Section 1 of Item 1. Description of Proposed Transaction: "Applicants may employ various risk-reduction measures to limit potential losses from Diversification Activities and risks to the NU System, its customers and shareholders. These measures may include hedging techniques, in accordance with system policy, and contractual arrangements with suppliers and customers. Applicants will not engage in speculative hedging in connection with Diversification Activities and will limit any hedging activity to no more than the total amount of commodities that are subject to market price fluctuations." The following paragraphs, and footnotes 13 and 14 thereto, are added at the end of Section 1 of Item 1. Description of Proposed Transaction: "Certain of the Diversification Activities, referred to hereinafter as the 'Pilot Program Activities', are necessary in order for the Applicants to satisfy the orders of the New Hampshire Public Utilities Commission relating to participation by Public Service Company of New Hampshire in the New Hampshire Retail Competition Pilot Program (the 'New Hampshire Pilot') . These include the creation of one or more new subsidiaries to engage in the brokering, transmission and sale of electrical energy to customers taking part in the New Hampshire Pilot and the performance by Public Service Company of New Hampshire of various Diversification Activities services on behalf of affiliated and non-affiliated New Hampshire Pilot electricity suppliers, such as billing, credit and collections, metering, telemarketing, and similar services. The NHPUC has stated in its pilot program guidelines that local utility companies providing such services to affiliated companies may do so at cost plus a return on investment, except that where such services are available in the competitive market, the local utility shall charge fair market value. The NHPUC guidelines also provide that services such as the Diversification Activities services will be provided to non-affiliates at rates comparable to those offered to affiliated companies. Therefore, it is possible that PSNH will be providing such services to affiliates at a price either above or below "cost" as defined in Rules 90 and 91 under the Act. PSNH specifically requests approval to comply with the NHPUC guidelines in performing such services, to the extent they are not performed at "cost". "Additionally, one or more of the Newcos may find it necessary or desirable to engage in Pilot Program Activities, on similar terms to those set forth above, in order to participate in other states' retail wheeling experiments such as the Massachusetts retail access pilot programs. Such Newcos will limit their Pilot Program Activities to New Hampshire and Massachusetts absent further order of the Commission. " The New Hampshire Public Utilities Commission (the 'NHPUC') has adopted final guidelines for a pilot retail wheeling program which commenced on May 28, 1996 and is scheduled to last for a period of two years. The program encompasses three percent of the electric load in New Hampshire (approximately 60 Megawatts). Customers of all rate classes, who have been selected randomly among interested customers of each utility, are permitted to negotiate power supplies with New Hampshire utilities, power marketers, power brokers, generators and other suppliers of electric service. Pilot customers bear the risks associated with procuring alternative energy. The orders of the NHPUC, copies of which are filed as Exhibit D hereto, require, inter alia, that Public Service Company of New Hampshire (PSNH) may participate in the New Hampshire Pilot only through an affiliate company which will market the power to pilot participants. PSNH is the largest electric utility company in New Hampshire with more than 400,000 retail and 20 wholesale electric customers. PSNH already engages in associated customary marketing and customer service activities with respect to the services it offers. The New Hampshire Pilot currently affects approximately 11,000 of PSNH's customers and permits them to choose their energy supplier for the term of the pilot program. " Massachusetts Electric Company ('MECo') has submitted two retail access pilot programs to the Massachusetts Department of Public Utilities ("MDPU") for review. In the first pilot program, MECo proposes to implement retail choice to residential and small commercial and industrial customers in the communities of Lawrence, Lynn, Northampton and Worcester (the 'MA R&C Pilot'). Total participation in the MA R&C Pilot Program will be limited to 100 million KWh per year with 50 million KWh specifically set aside for residential customers. The second pilot program extends retail choice to certain members of the Massachusetts High Technology Council ('MHTC') (the 'MHTC Pilot'; the MA R&C Pilot and the MHTC Pilot are referred together hereinafter as the 'MA Pilot Programs'). MECo proposes to commence the MA R&C Pilot effective September 1, 1996, and the MHTC Pilot effective July 1, 1996." The following paragraphs are added at the end of section 2 of Item 1. Description of Proposed Transactions: "The Pilot Program Activities and Wholesale Marketing Activities shall be financed as provided above using not more than $50 million of the requested funding, provided that (a) each such NEWCO shall have an initial common equity of 1000 shares of no par value common stock, (b) the initial common equity capital of the NEWCO formed by NU to participate in the New Hampshire Pilot, to be known as "PSNH Energy, Inc.", shall not exceed $1 million, and (c) any loans used to finance Pilot Program Activities and Wholesale Marketing Activities of NEWCOs shall have maturities no later than December 31, 2035 and shall bear an interest rate that is commensurate with the credit ratings of the borrowing company and/or any affiliated guarantor of such borrowings, as evidenced by a market-based spread above an appropriate interest rate index such as LIBOR or U.S. Treasury notes having maturities comparable to such borrowings and any such loans and capital contribution shall not exceed $10 million for each such subsidiary in the aggregate. "To date, PSNH has conducted its Pilot Program Activities through its PSNH Energy Division. Upon authorization, PSNH Energy, Inc. will reimburse PSNH for all expenditures to date, and acquire all the assets and rights of PSNH Energy Division in accordance with Rule 90." The first paragraph of Item 5. Procedure is hereby amended to read as follows: "The Applicants respectfully request (a) that the Commission reserve jurisdiction over all aspects of this Application/Declaration, except for the Pilot Program Activities and the Wholesale Marketing Activities, pending such further showings as the Commission may deem appropriate, and (b) that the Commission enter not later than July 15, 1996 an appropriate order granting and permitting this Application/Declaration to become effective with respect to the Pilot Program Activities and the Wholesale Marketing Activities." Item 6. Exhibits and Financial Statements is hereby amended to add the following exhibits to Item 6(a), which are filed herewith: D.3 Order No. 22,118 dated April 24, 1996 of the NHPUC in DR 95-250. D.4 Order No. 22,142 dated May 13, 1996 of the NHPUC in DR 95-250. F.1 Opinion of Counsel SIGNATURES Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned companies have duly caused this amendment to be signed on their behalf by the undersigned thereunto duly authorized. NORTHEAST UTILITIES NORTHEAST UTILITIES SERVICE COMPANY NORTHEAST NUCLEAR ENERGY COMPANY THE ROCKY RIVER REALTY COMPANY THE QUINNEHTUK COMPANY NORTH ATLANTIC ENERGY SERVICE CORPORATION NORTH ATLANTIC ENERGY CORPORATION THE CONNECTICUT LIGHT AND POWER COMPANY PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE WESTERN MASSACHUSETTS ELECTRIC COMPANY By:/s/ Jeffrey C. Miller Their Attorney Dated: July 2, 1996 EX-99 2 NHPUC ORDER NO. 22,118 Exhibit D.3 DR 95-250 RETAIL COMPETITION PILOT PROGRAM Public Service Company of New Hampshire Order Partially Approving Compliance Filings ORDER NO. 22,118 April 24, 1996 I. INTRODUCTION On March 15, 1996, Public Service Company of New Hampshire (PSNH) filed tariffs and other submissions in compliance with Order No. 22,033 (Final Guidelines, February 28, 1996) relative to PSNH's participation in the retail electric competition pilot program (Pilot). The filing contains proposed unbundled rates, describes the unbundling process (including the development of unbundled retail transmission rates) and sets out a detailed Pilot implementation plan. On March 29, 1996, the Commission issued Order No. 22,081 which partially approved a Joint Recommendation between PSNH and Staff. That order directed all New Hampshire electric utilities, including PSNH, to use certain class-specific retail market prices when developing unbundled rates for the Pilot. The assumed market prices adopted by the Commission have the effect of reducing the level of PSNH's unbundled stranded cost charges which were set forth in its Joint Recommendation with Staff. After technical sessions on March 22 and 25, hearings were conducted April 3-4, 1996. PSNH presented oral testimony during such hearings and a number of participants cross-examined witnesses. During those hearings the Public Utility Policy Institute (PUPI) made an oral motion for the Commission to reconsider its decision allowing PSNH to compete in the Pilot through a division rather than through an affiliate. The New Hampshire Electric Cooperative (NHEC) orally requested that the Commission order PSNH to file unconditional retail transmission tariffs with the FERC and the Commission. II. COMMISSION ANALYSIS A. General Observations We must begin by expressing our concern over the complexity of the delivery tariff submitted by PSNH. Although the Pilot will include large sophisticated customers who have the capability and resources to review and understand complex legal and technical transmission issues, most Pilot customers will have little experience or knowledge of such issues. We believe it is unrealistic to expect that residential and small commercial customers will be able to comprehend a forty-page document addressing issues about which even large customers know little. One obvious way to simplify the tariff would be to include only those provisions which differ from those contained within existing bundled tariffs. It is possible to simply reference the provisions which are common to both types of service (bundled and unbundled). These include, but are not limited to: (a) line extensions, (b) harmful physical effects, (c) liability and indemnification, (d) underground service, and (e) company property. An even better approach would be for PSNH to structure the tariff such that the company functions as a transmission billing agent for its Pilot customers. This is the approach submitted by Granite State and which we approved in Order No. 22,098. The advantage of this approach is that the retail transmission tariff can incorporate all of the complexity of existing wholesale transmission tariffs, but that retail customers will not be required to comprehend complex technical matters to which they have had little exposure. Although we reiterate our strong preference for the approach adopted by Granite State, in light of the time constraints in the Pilot, we will allow PSNH to re-file a simplified delivery tariff consistent with this Order. We believe that it is unnecessary to include in the tariff terms and conditions which are common to those currently in existing bundled tariffs. The delivery tariff should simply reference those provisions. Another issue which warrants general discussion is the methodology for estimating hourly load for NEPOOL billing purposes. In Order No. 22,098 we decided that it would be inappropriate for utilities to employ more than one estimation methodology. We therefore directed Staff to arrange a technical session to explore ways for each of the other utilities to employ a single load estimation methodology. We expect that PSNH and the state's other franchised electric utilities will participate in those technical sessions and attempt to develop a common methodology. We favorably acknowledge PSNH's willingness to utilize an electronic system for the transfer of data and monies. As we stated in Order No. 22,098, value added network systems appear to have a significant advantage over more labor-intensive approaches, both with respect to cost and time saved. Consequently, such systems will help reduce transaction costs for competitive suppliers, and ultimately customers, who participate in the Pilot. We direct PSNH to participate in the technical sessions convened by Staff to address this and related issues. We turn now to several aspects of PSNH's filing which do not appear to comport with the requirements established in the Final Guidelines and related Commission orders. Before doing so, we return to an issue which was addressed extensively in Order No. 22,081 and which was the subject of extensive discussion and debate during the compliance hearings relative to PSNH. B. PSNH Marketing Affiliate In Order 22,081, we considered whether PSNH should be permitted to supply power at retail through its current corporate entity or through an affiliate. While expressing a strong preference for an affiliate, we permitted PSNH to participate in the Pilot through a division based upon its testimony that the Pilot could be delayed while PSNH sought all of the necessary regulatory approvals. PUPI bases its reconsideration request primarily upon a March 27, 1996 filing by PSNH's parent, Northeast Utilities (NU), at the Securities and Exchange Commission (SEC). The filing seeks SEC approval for NU and its operating subsidiaries, including PSNH, to engage in a number of business activities which are outside of traditional electric utility practice. Among these proposed diversifications, NU requested authorization to: engage in the brokering, marketing, generation, production, transportation, transmission, distribution, storage and sale of energy (including but not limited to electricity or natural or manufactured gas) and "paper products" such as futures, hedges, load aggregations, fuel tolling, fuel conversions and other instruments expected to be required in a competitive energy marketplace...Exhibit PSNH-29. NU and its affiliates requested SEC approval of its U-1 no later than June 1, 1996. During the hearing, we granted Freedom's request to compel the production of all drafts of the U-1 filings as well as inter-office memorandum relative to the filing. PSNH thereafter produced several earlier drafts of the filings which suggested that NU was in the process of seeking regulatory approval to form an energy marketing affiliate prior to PSNH's testimony at the hearing. PSNH also submitted an inter-office memorandum which reflected the Company's anticipation that the Commission would require PSNH to form a separate marketing affiliate in order to participate in the Pilot. In the memorandum, it was suggested that "it would be time well spent if someone at NU began identifying and answering the issues in forming such an affiliate," and that "[NU should] consider drafting the needed papers and maybe even filing the SEC application, to get the clock started." Exhibit PSNH-33. According to PSNH, NU amended its U-1 application on April 5, 1996 to request approval to form a retail marketing affiliate solely for purposes of the Pilot. On April 17, 1996, this Commission sent a letter to the SEC and FERC urging prompt consideration of NU's filings and those of other New Hampshire utilities undertaking similar actions. Based upon the foregoing events and upon further consideration, we believe that it possible for PSNH and NU to obtain timely regulatory approvals to form a retail marketing affiliate to participate in the Pilot. Accordingly, we will condition PSNH's participation in the Pilot on the formation of such an affiliate. We anticipate that PSNH will diligently pursue such approvals. As stated in the Final Guidelines, pursuant to RSA 366:3, PSNH must file with the Commission any affiliate agreements which it enters into for services provided during the Pilot. Any such agreement must specify the goods and services to be provided and the related pricing provisions. We direct PSNH to file such affiliate agreements as soon as they are finalized. We acknowledge that PSNH or NU will need to seek regulatory approvals to establish a retail marketing affiliate, and that such approvals may not be received before the list of selected customers is made available to competitive suppliers. It is not our intention to disadvantage utility affiliates by allowing other competitive suppliers to market their services to Pilot customers while utility affiliates await regulatory approvals. If PSNH's necessary regulatory approvals appear not to be forthcoming in a timely manner, then the company can so inform the Commission and propose an alternative interim approach. As a result of this decision, there is no need to address various implementation issues relating to PSNH's proposal to form a retail division within its current corporate structure. C. GAC Selection Process Since the compliance filing hearings, the City of Manchester filed comments relating to PSNH's proposed method of selecting Geographic Areas of Choice (GACs). We have directed Staff to work with PSNH and other interested parties to attempt to reach consensus relative to GAC selection procedures. Staff is directed to file a letter with the Commission's Executive Director no later than April 26, 1996 to report the status of those efforts. D. Delivery Tariff Issues 1. Reciprocity Section 5.2 of the revised filing states that delivery service will only be available to competitive power suppliers that own or operate transmission and distribution facilities if they agree to provide comparable delivery service to PSNH. Although we understand the objective of such a provision, it is not required by the Final Guidelines and it raises difficult legal questions which we believe are outside the scope of the Pilot. This issue should be raised within restructuring proceedings, and accordingly, we direct PSNH to eliminate Section 5.2 from its delivery tariff. 2. Charges for Billing and Customer Services Pursuant to the Final Guidelines, competitive suppliers have the option to bill separately for power supply services, and franchised utilities may voluntarily offer such services. In its compliance filing, PSNH indicated its willingness to offer billing services and it included preliminary estimates of the associated incremental costs. Attachment G to the PSNH compliance filing sets forth two classes of billing cost estimates, developmental and transactional (i.e., variable). Included in the former category are the software and computer programming costs to perform the billing calculations and to transfer funds to a competitive supplier's bank account. The transactional costs include daily electronic fund transfer charges and related labor and accounting costs. Although we recognize that more work needs to be done to convert cost estimates into proposed charges, we are nonetheless concerned about the magnitude of difference between PSNH's costs and Granite State's proposed rates. In its compliance filing, Granite State offered its "Complete" billing service for about $1.30 per month for residential customers and about $1.55 per month for large business customers. In contrast, PSNH anticipates developmental costs of about $600 per month per rate class per supplier and transaction costs of about $900 per month per supplier. Assuming three rate classes and one thousand customers per supplier, the above estimates indicate an average monthly charge of $2.70 per customer. Clearly, this charge would increase if the number of customers per supplier decreases. While large customers may find this charge tolerable, it is unlikely to be acceptable to small residential or commercial customers. A charge of $2.70 per month would be greater than the monthly transaction cost built into our assumed retail market prices. As a result, such a charge would reduce the likelihood that residential customers would receive the anticipated 10% bill savings. Part of the reason for PSNH's apparent high billing costs is that it includes developmental costs whereas Granite State recovers those costs, consistent with the Final Guidelines, through an implementation cost surcharge applied to all customers. Absent developmental costs, PSNH's billing service charges appear to be more competitive than those of Granite State. Given the requirement that all customers contribute to the recovery of developmental costs, we direct PSNH to construct charges for billing services that reflect only the variable transaction costs. 3. 30-Day Notice Provision The proposed tariff requires that Pilot customers give PSNH 30 days notice before switching suppliers. According to PSNH, such notice is necessary in order to inform NEPOOL about a shift in load responsibility. We believe that 5 working days is an adequate amount of time for PSNH to verify the information contained in the application and to inform NEPOOL of any changes. In order to minimize administrative burdens, Pilot customers will be permitted to switch suppliers no more than once per month. 4. NEPOOL Membership PSNH's proposed tariff and application for delivery service requires customers to arrange for their load to be included in the load of a NEPOOL member. We direct PSNH to remove this requirement from its proposed tariff and application. The Final Guidelines require suppliers to have a NEPOOL affiliation and to submit evidence of that affiliation in our registration process. It is the responsibility of the utility to estimate the customer's load and assign it to the chosen NEPOOL member. 5. Customer Application Form In our view, the proposed application for delivery service is unnecessarily burdensome and should be simplified in a manner similar to the Granite State application. Suppliers or marketers should be responsible for providing the technical information such as receipt and delivery point locations. Customers should be required to provide only the basic information necessary to obtain delivery service. We also believe that the proposed certification in Section 10.0 is unnecessary. We are concerned that such a requirement would discourage participation in the Pilot. Customers currently take bundled retail service according to the terms and conditions of approved tariffs which are made available to customers upon request. Even without written certification, PSNH and its customers are bound by those terms and conditions. We believe that Pilot participants should receive delivery service in the same manner. 6. Ancillary Services Section 7.0 states that PSNH shall be permitted to amend its delivery tariff to include charges for ancillary services if it determines that such services are necessary to reliably serve a customer's load. We direct PSNH to remove this provision because it addresses issues unrelated to delivery service which have been adequately covered by the requirement that suppliers have a NEPOOL affiliation. 7. Miscellaneous Charges Several parties inquired as to the status of PSNH's charges to recover, among other things, the cost of estimating hourly loads and the cost of assembling and transferring customer-specific load data. We will simply note that all charges levied by PSNH in the Pilot, or by any other franchised utility, must be approved by this Commission. 8. Franchise Tax As noted in Order No. 22,098, it is our opinion that franchise taxes should continue to be recovered in the Pilot based upon gross revenues associated with the sale of power. To the extent that different entities, namely competitive suppliers, brokers and aggregators, will collect a portion of those revenues in the Pilot, it is our view that those entities should bear the responsibility for collecting and remitting the associated franchise taxes. We recognize, however, that franchise tax liability issues may have to be resolved by the Department of Revenue Administration and perhaps ultimately by the courts or the Legislature. In the meantime, PSNH's unbundled delivery service rates should reflect adjustments for franchise tax. 9. Indemnification Requirement In Order No. 22,098 we expressed our strong belief that Pilot customers should not be required to indemnify utilities for claims which arise out of participation in the Pilot. We believe that such a requirement will adversely affect customer participation in the Pilot. As we stated in Order 22,098, there are other avenues which should be explored to address these concerns. As with Granite State, PSNH should explore alternative mechanisms with Staff's assistance. E. Retail Transmission Tariff Filings In Order No. 22,098, we expressed our concern about the delay in the filing of retail transmission tariffs and the effect this delay may have on implementation of the Pilot. On April 15, 1996, PSNH filed with the Commission a letter detailing the status of those filings. In it, PSNH stated its intent to file on April 19, 1996 an amendment to its network wholesale transmission tariff with Unitil to implement retail access for Concord Electric and Exeter and Hampton pilot customers. We were also notified that NUSCO will file on the same day an amendment to its point-to-point wholesale transmission tariff to implement retail access for Pilot customers of PSNH and those of other New Hampshire utilities. PSNH stated that it intends to file its retail delivery tariff with the FERC following the receipt of a written order from us either approving or requiring changes to the tariff. Finally, with respect to retail access for New Hampshire Electric Cooperative (NHEC) Pilot customers, PSNH proposes to make the necessary filing following the completion of negotiations with NHEC. We reiterate our expectation that PSNH and the NHEC will seek a negotiated resolution of their differences in order to allow NHEC's customers to participate in the Pilot. As part of any such agreement, we would expect PSNH to submit an amendment to the wholesale FPPAC that leaves wholesale customers financially neutral during the Pilot. F. New Load and Supplier Notification In Order No. 22,098 we stated our intention to provide more detail on the definition of new load and to establish guidelines relative to accessing information. New load for purposes of Pilot eligibility shall be defined generally as new large commercial and industrial accounts established on or after March 1, 1996 that otherwise would be billed under the rate classes specified in Appendix D of the Guidelines. Customers who relocate from a different service territory within the state are ineligible. Although the Guidelines indicate that new load includes large commercial and industrial customers who "locate" in a franchise utility's service territory on or after March 1, 1996, loads associated with facilities which were under construction but not completed prior to that date are eligible to participate in the Pilot. It is not necessary for the actual facilities to be newly constructed. Out-of-state businesses that relocate to New Hampshire and occupy existing facilities shall qualify for participation in the Pilot as new load. We wish to clarify the eligibility of customers with existing accounts as it relates to load growth. Load growth at existing customer locations shall not qualify as new load under the Pilot unless such load growth is attributable to the "backing-down" of customer-owned generation. New load associated with the extension or expansion of an existing facility shall qualify only if the extension or expansion is served through a separate meter. In the event that such new facilities are served through a separate meter, the customer is responsible for demonstrating that the load was not shifted from an existing account. We shall require each franchised utility to inform prospective "new load" customers of their eligibility to participate in the Pilot. In addition, marketing affiliates of franchised utilities shall be prohibited from soliciting new load customers until the customers have been informed of the Pilot and provided the opportunity to post their names and addresses on the Commission's Home Page. G. Availability of Customer Information One issue raised during the hearings on Granite State's compliance filing which we did not address in Order No. 22,098 is the procedure for suppliers to access the list of Pilot customers who are selected to participate in the Pilot. Granite State believes that in order for the competition to be fair, customer information should be made available by the Commission to each registered supplier, including utility affiliates, simultaneously in a common electronic format. We agree. Each utility is hereby directed to file with the Commission an electronic list of selected customer names, addresses and other information including customer-specific load and usage data. That information shall be submitted, no later than noon May 1, 1996, on 3.5 inch diskettes using the ASCII text file format with ";" as field delimiters. In addition, in order to ensure that all competitive suppliers have equal access to the information, utilities shall deliver to the Commission at least as many copies of the diskettes as there are registered suppliers listed on our Internet Home Page by the close of business April 30, 1996. Franchised utilities are responsible for notifying customers that they have been selected and for distributing approved application forms. Selected customers are responsible for completing those forms and for returning them to the franchised utilities. H. Retail Market Price Assumptions In Order No. 22,098, we expressed the concern that unforeseen developments in the wholesale power market could cause actual wholesale prices to significantly exceed those upon which our retail price assumptions were based. We specifically mentioned the impact on wholesale prices in the event that there are extended outages at NU's Millstone nuclear power plants. If wholesale prices increase substantially above the levels used in developing the assumed retail market prices, the ability of competitors to offer attractive prices will be jeopardized. In Order No. 22,081, we accepted the wholesale price estimates of PSNH witness, Frank Sabatino, as the basis for calculating the assumed retail market prices. In order to monitor market conditions, we will require PSNH to keep the Commission apprised of actual and projected developments in the wholesale power market as they occur. We direct PSNH to work with Staff to develop an appropriate reporting mechanism, including one which will address confidentiality concerns. Based upon the foregoing, it is hereby ORDERED, that PSNH shall modify its compliance filing as directed herein; and it is FURTHER ORDERED, that PSNH shall file a revised compliance filing on or before May 1, 1996. By order of the Public Utilities Commission of New Hampshire this twenty-fourth day of April, 1996. /s/Douglas L. Patch /s/Bruce B. Ellsworth /s/Susan S. Geiger Chairman Commissioner Commissioner Attested by: /s/Dr. Sarah P. Voll Executive Director and Secretary EX-99 3 NHPUC ORDER NO. 22,142 Exhibit D.4 DR 95-250 RETAIL ELECTRIC COMPETITION PILOT PROGRAM Public Service Company of New Hampshire Order Addressing Request for Interim Relief ORDER NO. 22,142 May 13, 1996 I. INTRODUCTION This order addresses a request by Public Service Company of New Hampshire (PSNH) relative to the terms and conditions under which it will be permitted to market and sell power to Pilot customers. Briefly, the procedural history of this matter is as follows. In the Final Guidelines for the Pilot, the Commission expressed a strong preference for requiring franchise utilities to form legally separate retail affiliates in order to participate in the Pilot as competitive suppliers. Order No. 22,081 (February 28, 1996). Subsequent to that order, hearings were held before the Commission relative to a joint recommendation entered into by Staff and PSNH. During those hearings PSNH presented extensive testimony regarding the difficulties associated with the formation of such an affiliate. Specifically, PSNH alleged that it would have to obtain the consent of its lenders before seeking regulatory approvals from the U.S. Securities and Exchange Commission (SEC) and the Federal Energy Regulatory Commission (FERC). According to PSNH, there was significant potential for extensive delays in obtaining such consents and approvals. Based upon that testimony the Commission allowed PSNH to operate as a supplier in the Pilot through a functionally distinct division within the PSNH operation. After receiving new information, the Commission reconsidered its previous decision and prohibited PSNH from conducting retail marketing activities and making sales to Pilot customers through the PSNH organization. Order No. 22,118 (April 24, 1996). The Commission ruled that only a legally and functionally separate affiliate or subsidiary of PSNH could participate as a competitive supplier. The Commission recognized that it would be necessary for PSNH and/or its parent company, Northeast Utilities (NU), to seek regulatory approvals before it could form and operate such an affiliate. Based upon this recognition, the Commission indicated that it would entertain proposals to allow PSNH to participate in the Pilot pending such approvals. In an April 23, 1996 letter to the Commission, PSNH indicated that SEC and FERC approvals would probably not be received before mid-June. PSNH presented a proposal under which it sought authority to "act as if the affiliate existed, on an interim basis," until such regulatory approvals were received. Specifically, PSNH proposed using a separate team to work on the Pilot whose members "would operate under a strict code of conduct that would ensure that competitively sensitive data is not shared." PSNH also proposed that power would be "transferred" to the separate team under the same terms and conditions as the wholesale contract that it would file with the FERC for approval of sales to its retail affiliate. After receiving all necessary regulatory approvals, PSNH indicated that it would assign all retail contracts to the newly formed affiliate. After receiving written comments, the Commission deliberated this matter at its May 6, 1996 public meeting. II. COMMISSION ANALYSIS We will allow PSNH to proceed according to the commitments set forth in its April 23, 1996 letter, which include the following terms and conditions: (a) the establishment of a separate team to work on the Pilot, the members of which are separated from PSNH's regulated retail activities; (b) the establishment of a code of conduct in order to ensure that competitively sensitive data is not shared with Pilot team members; (c) recorded transfers of wholesale power to the Pilot team at the same rates and under the same terms and conditions as the wholesale contract which PSNH has filed at the FERC; and (d) the establishment and implementation of accounting mechanisms to keep track of all costs associated with the work of the Pilot team. After PSNH or NU receives the necessary regulatory approvals from the SEC and FERC, which we expect it will seek diligently and as expeditiously as possible, PSNH must cease all Pilot-related marketing activities and all contracts with Pilot customers must be assigned to the retail affiliate. In light of our decision, we direct PSNH to file with the Commission a list of the names, company affiliation(s) and titles of all employees who have been designated to participate in the Pilot team. During the time that the Pilot team operates, we expect that all such employees will work exclusively on the activities which will be assumed by the retail marketing affiliate for which regulatory approvals are pending. Under no circumstances should employees other than those designated as members of the Pilot team participate in the marketing and sales activities associated with the Pilot. We also direct PSNH to file with the Commission a written copy of the code of conduct which it has established for its employees relative to the separation of Pilot employees from other employees of PSNH's regulated activities. We direct PSNH to file such information by noon on May 15, 1996. Finally, as with other Commission orders, we reserve the right to reverse or modify this decision based upon new information or developing circumstances. Based upon the foregoing, it is hereby ORDERED, that PSNH is authorized to market and sell power to Pilot customers, on an interim basis, under strict adherence to the terms and conditions set forth herein. By order of the Public Utilities Commission of New Hampshire this thirteenth day of May, 1996. /s/Douglas L. Patch /s/Bruce B. Ellsworth /s/Susan S. Geiger Chairman Commissioner Commissioner Attested by: /s/Dr. Sarah P. Voll Executive Director and Secretary EX-5 4 OPINION OF COUNSEL Exhibit F.1 July 2, 1996 Securities and Exchange Commission Judiciary Plaza 450 Fifth Street, N.W. Washington, D.C. 20549 Ladies and Gentlemen: I am Assistant General Counsel of Northeast Utilities Service Company ("NUSCO"), the service company affiliate of Northeast Utilities. I am furnishing this opinion as an exhibit the Application/Declaration on Form U-1 in File No. 70-8825, as amended (the "Application"), filed by Northeast Utilities, The Connecticut Light and Power Company, Northeast Utilities Service Company, Western Massachusetts Electric Company, Public Service Company of New Hampshire, North Atlantic Energy Corporation, Northeast Nuclear Energy Company, North Atlantic Energy Service Corporation, The Rocky River Realty Company and The Quinnehtuk Company (collectively, the "Companies") with respect to certain diversification activities as further described in the Application. In connection with this opinion, I have reviewed or caused to be reviewed the Application and the exhibits thereto, the Companies' charter documents, as amended to the date of this opinion, the proceedings of their shareholders and boards of directors to date and such other papers, documents and records, and have made or caused to be made such examination of law, as I deemed relevant and necessary in order to give this opinion. I have assumed that in respect of the Application an appropriate order of the Securities and Exchange Commission under the Public Utility Holding Company Act of 1935 will be issued and all actions of the Companies will be in conformity therewith. I have also assumed that the Companies and any "Newcos" (as defined in the Application) will act in conformity with any and all state laws, including licensing, franchise and consumer protection laws, as may be applicable to the diversification activities described in the Application. Based upon the foregoing, I am of the opinion that: (a) All State laws applicable to the proposed transaction have been and will be complied with; (b) The Companies are validly organized and duly existing in their respective states of incorporation; and (c) The consummation of the proposed transactions will not violate the legal rights of the holders of any securities issued by any of the Companies or any associate company thereof. I hereby consent to the use of this opinion in connection with the filing of the Declaration. I am a member of the Bar of the State of New York. As to matters involving the laws of other jurisdictions, I have made a study of such laws and consulted with lawyers employed by NUSCO who are admitted to the Bars of such other jurisdictions. Very truly yours, /s/Jeffrey C. Miller Assistant General Counsel Northeast Utilities Service Company -----END PRIVACY-ENHANCED MESSAGE-----