DR 97-241
CONNECTICUT VALLEY ELECTRIC COMPANY
Fuel Adjustment Clause and Purchased Power Cost
Adjustment
Order Addressing Motion for Rehearing
O R D E R N O. 22,838
January 20, 1998
On December 31, 1997, the New Hampshire Public
Utilities Commission (Commission) issued Order No. 22,815
relative to the proposed Fuel Adjustment Clause (FAC), Purchased
Power Cost Adjustment (PPCA) and Short-Term Energy Purchase Rate
of Connecticut Valley Electric Company (CVEC). In Order No.
22,815, the Commission rejected CVEC's proposed rate on the
ground that CVEC's management had acted imprudently by failing to
terminate its wholesale purchase power contract with Central
Vermont Public Service Company (CVPS). In the same order, the
Commission froze CVEC's rates until it completed an evidentiary
hearing on January 28, 1998 to consider three issues: 1) the
appropriate proxy for a market price that CVEC could have
obtained if it had terminated its RS-2 wholesale contract with
CVPS; 2) the implications of only allowing CVEC to pass on to
customers that market price; and 3) whether the Commission's
final determination on the FAC and PPCA rates should be
reconciled back to January 1, 1998 or some other date.
On January 12, 1998, CVEC filed a motion for rehearing
in which it alleges, inter alia, that the Commission failed to
adequately notify CVEC of the Commission's intent to consider the
issues that were addressed during the December 17, 1997 hearing
and that were ultimately ruled on in Order No. 22,815. According
to CVEC, the Commission provided "insufficient notice of an
evidentiary hearing on prudence." CVEC's motion also argues that
(a) the Commission exceeded its jurisdiction by using the
FAC/PPCA proceeding to advance its restructuring agenda, (b) the
Commission's prudence determination is preempted by federal law,
and (c) the Commission made an imprudence finding without basic
findings of fact or sufficient record evidence. Finally, CVEC's
motion advises the Commission that CVEC will seek relief from the
United States District Court if the Commission is unable or
unwilling to vacate Order No. 22,815 and replace it with an order
"establishing cost-based rates."
On January 14, 1998, the City of Claremont, a CVEC
customer, filed an objection to CVEC's rehearing request.
Claremont argues that CVEC was afforded sufficient notice and
that the Commission properly exercised its traditional rate
making powers in Order No. 22,815.
We have considered all of the arguments raised by CVEC
in its motion for rehearing and those asserted in Claremont's
objection. We will grant the following relief. We will afford
CVEC the opportunity to address the prudence question at the
hearing which is scheduled for January 28, 1998. Although we
believe that CVEC was given sufficient notice prior to the
December 17, 1997 hearing, we will nonetheless allow it one final
opportunity to present testimony or other evidence which supports
its position regarding this issue. Following the completion of
the January 28, 1998 hearing, we will issue an order that
addresses CVEC's request for modification of Order No. 22,815.
Accordingly, CVEC is directed to submit pre-filed
testimony on those matters that it wishes to address at the
January 28, 1998 hearing, consistent with our delineation of the
scope of the proceeding outlined in Order No. 22,815, as expanded
by this order. This testimony must be filed at the Commission
and served on all parties by the close of business on January 23,
1998.
All other requests for relief in CVEC's motion for
rehearing are denied. With respect to CVEC's request that we
increase its FAC and PPCA rates retroactively to January 1, 1998,
we decline to do so at this juncture.
Finally, we take this opportunity to clarify the
Commission's action in Order No. 22,815. Our action does not
represent a departure from traditional rate making policies.
Rather, we applied traditional prudence analysis to current
circumstances and found that CVEC management has acted
imprudently by not seeking to avail itself of opportunities that
exist in the wholesale market. Our decisions in this docket were
intended to advance only one objective: to set just and
reasonable rates for CVEC based on the evidence and testimony
presented during the hearing in this matter. We reject the claim
that our traditional rate making authority is constrained due to
the fact that we have suspended, pending rehearing, the final
orders which we issued in the restructuring docket, DR 96-150.
See, Order No. 22,548 (April 7, 1997). The fact that we have
suspended our orders in that docket has absolutely no bearing on
the matters addressed in this case. In this case, we were called
upon to make a traditional rate determination based on whether
CVEC's management acted prudently with respect to its fuel and
power purchases. This necessarily requires that we examine
CVEC's relationship with CVPS.
If we were to conclude that the Commission lacks the
authority to examine the prudence of CVEC's actions, as CVEC's
motion alleges, then we would be unable to set rates for electric
utilities at just and reasonable levels and we would be
abdicating the responsibility of approving only those rates which
we find to be just and reasonable as our Supreme Court has so
clearly indicated we must. Appeal of Sinclair Machine Products,
Inc., 126 N.H. 822, 835 (1985).
While we reject CVEC's argument that we lack authority
to determine whether CVEC's management acted prudently in not
canceling the company's wholesale contract with CVPS, we will
nonetheless grant CVEC's request for rehearing on the issue of
prudence. This subject will be addressed at the January 28, 1998
hearing in addition to the issues previously noticed. We remind
CVEC that it bears the burden of proof of convincing the
Commission that the proposed rates are just and reasonable. Id.
Based upon the foregoing, it is hereby
ORDERED, that CVEC's Motion for Rehearing in this
matter is GRANTED IN PART and DENIED IN PART.
By order of the Public Utilities Commission of New
Hampshire this twentieth day of January, 1998.
Douglas L. Patch Bruce B. Ellsworth Susan S. Geiger
Chairman Commissioner Commissioner
Attested by:
Thomas B. Getz
Executive Director and Secretary