DF 98-002
NEW HAMPSHIRE ELECTRIC COOPERATIVE, INC.
Petition for Financing
Order NISI Providing Approval for Financing
O R D E R N O. 22,896
April 7, 1998
The New Hampshire Electric Cooperative, Inc. (NHEC), on
January 22, 1998, filed with the New Hampshire Public Utilities
Commission (Commission), a petition pursuant to RSA 369 for
authority to issue debt instruments in the amount of $26,561,300.
The requested financing is intended to finance its ongoing
construction program. The funds would be borrowed from the
National Rural Utilities Cooperative Finance Corp. (CFC),
pursuant to the terms of NHEC's Restated Mortgage and Security
Agreement. The requested authorization further implements the
existing lending relationship between NHEC and CFC. NHEC also
requests the Commission to find that the capitalization which
would result from the proposed borrowing would produce a
projection of future rates which are within a just and reasonable
range.
CFC is a cooperative finance authority which provides
capital to member cooperatives. The Commission has previously
approved the lending relationship of CFC and NHEC in DR 92-009,
the docket approving NHEC's Plan of Reorganization. See Order
No. 20,618 (October 5, 1992). The Commission has also approved
borrowing from CFC in DF 95-186, in which approval was granted
for NHEC to complete the refinancing of its Rural Utilities
Service (RUS) debt which was no longer available to NHEC. See
Order No. 20,671 (November 19, 1992) and Order No. 21,801 (August
29, 1995).
The borrowing arrangement is structured as twelve
$2,000,000 notes and one $2,561,300 note. NHEC will request
funding in these amounts as its cash flow requires. NHEC
anticipates that, initially, construction projects will be funded
through its $10,000,000 Line of Credit with CFC and then
borrowings under the requested long term notes will be used to
pay down the Line of Credit. Each note will carry a term of 35
years, with interest rates determined at the date of funding. As
of January 5, 1998, NHEC indicates that the fixed interest rate
was 7.25%. NHEC also has access to other rate options including
variable rate options that may assist the Company in reducing its
overall cost of debt. As a condition of each loan, NHEC is
required to purchase Loan Capital Term Certificates (LCTCs) in
amounts ranging from 0% to 3% of the loan amount. As NHEC repays
principal each year, the required LCTC balance is recalculated as
of December 31 of each year, and the excess is returned to the
Company.
NHEC has stated in its petition and supporting
testimony that it does not anticipate borrowing the full amount
requested. Instead, the Company anticipates that it may need as
little as $6,500,000 in new financing to meet its needs as
identified in its 1997-99 Construction Work Plan. If any balance
of the remaining funds are not needed for unforeseen operating
and capital expenses, funds could be used to prepay higher
interest rate debt which would reduce NHEC's total interest
costs.
As stated, we have previously reviewed the relationship
between NHEC and CFC in other dockets. We find the continuation
of this relationship to be beneficial to NHEC as a source of low-cost financing. We recognize that, as a cooperative, NHEC must
obtain capital for the replacement of existing facilities and for
the construction of new facilities wholly through debt financing.
In this petition, NHEC requests financing authority for issuance
of debt instruments of up to $26,561,300 for its 1997-99
Construction Work Plan, and for the other limited purposes as
discussed herein. We believe that the terms and conditions of
the loan, as offered by CFC and accepted by NHEC, are reasonable.
We also believe the proposed uses for the funds as anticipated in
NHEC's petition are in the public good and we will approve the
request.
Based upon the foregoing, it is hereby
ORDERED NISI, that NHEC's issuance of debt instruments
to CFC, pursuant to RSA 369, in an amount up to $26,561,300 is
approved; and it is
FURTHER ORDERED, that on January 1 and July 1 of each
year, NHEC shall file with this Commission a detailed statement,
duly sworn by its Treasurer, showing the disposition of the
proceeds of each note that may have been issued in the prior six
month period, until the entire proceeds shall have been fully
accounted for; and it is
FURTHER ORDERED, that pursuant to N.H. Admin. Rules,
Puc 1604.03 or Puc 1605.03, the Petitioner shall cause a copy of
this Order Nisi to be published once in a statewide newspaper of
general circulation or of circulation in those portions of the
state where operations are conducted, such publication to be no
later than April 14, 1998 and to be documented by affidavit filed
with this office on or before April 21, 1998; and it is
FURTHER ORDERED, that all persons interested in
responding to this petition be notified that they may submit
their comments or file a written request for a hearing on this
matter before the Commission no later than April 28, 1998; and it
is
FURTHER ORDERED, that any party interested in
responding to such comments or request for hearing shall do so no
later than May 5, 1998; and it is
FURTHER ORDERED, that this Order Nisi shall be
effective May 7, 1998, unless the Commission provides otherwise
in a supplemental order issued prior to the effective date.
By order of the Public Utilities Commission of New
Hampshire this seventh day of April, 1998.
Douglas L. Patch Bruce B. Ellsworth Susan S. Geiger
Chairman Commissioner Commissioner
Attested by:
Thomas B. Getz
Executive Director and Secretary