DR 98-005
Public Service Company of New Hampshire
1998 Conservation and Load Management Pre-Approval
Filing
Order Approving 1998 Conservation and Load Management
Pre-Approval Filing
O R D E R N O. 22,905
April 28, 1998
APPEARANCES: Catherine E. Shively, Esq., for
Public Service Company of New Hampshire; David W. Marshall,
Esq., for the Conservation Law Foundation; Heidi L. Kroll
for the Governor's Office of Energy and Community Services;
Kenneth E. Traum for the Office of the Consumer Advocate;
and Michelle A. Caraway for the Staff of the New Hampshire
Public Utilities Commission.
I. PROCEDURAL HISTORY
On January 30, 1998, Public Service Company of New
Hampshire (PSNH) filed with the New Hampshire Public
Utilities Commission (Commission) its 1998 Conservation and
Load Management (C&LM) Pre-Approval Filing. PSNH seeks
approval for a C&LM budget of $2,399,355 of which $117,128
represents Lost Fixed Cost Recovery (LFCR). PSNH proposes
to continue the following programs which have been
previously approved by the Commission: Residential
Conservation, Energy Crafted Home, EnergyCHECK, Energy
Services and Education.
By an Order of Notice issued February 11, 1998,
the Commission scheduled a prehearing conference for
February 26, 1998, set deadlines for intervention requests
and objections thereto, outlined a proposed procedural
schedule, and required the Parties and Commission Staff
(Staff) to summarize their positions with regard to the
filing for the record. On February 24, 1998, the
Conservation Law Foundation (CLF) filed a Motion to
Intervene. There were no objections to the Motion to
Intervene and the Commission granted the motion. The Office
of the Consumer Advocate (OCA) is a statutorily recognized
intervenor. On March 10, 1998, the Commission issued Order
No. 22,868 approving the procedural schedule. On March 16,
1998, the Governor's Office of Energy and Community Services
(ECS) filed a late Motion for Limited Intervention.
Pursuant to the approved procedural schedule,
PSNH, CLF, ECS, and OCA (collectively the Parties) and Staff
engaged in formal discovery and technical sessions. On
March 23, 1998, the PSNH, CLF, OCA and Staff filed
testimony. ECS filed written comments. On March 30, 1998,
the Parties and Staff participated in a settlement
conference.
Subsequent to the settlement conference, PSNH, OCA
and Staff entered into a Stipulation. CLF and ECS were not
signatories to the Stipulation. An unsigned Stipulation was
submitted to the Commission on April 2, 1998. A hearing was
held on April 6, 1998 at which time testimony supporting the
Stipulation was presented to the Commission. In addition,
testimony was offered by CLF that supported an expanded C&LM
program. At the hearing, the Commission granted ECS' late
filed Motion for Limited Intervention and ECS submitted a
statement indicating support for an expanded C&LM program.
II. STIPULATION
PSNH, OCA and Staff agreed that the 1998 C&LM
Pre-Approval Filing, as set forth in PSNH's January 30, 1998
filing with a funding level of $2,399,355, should be
modified as set forth in the Stipulation and as summarized
below:
1. PSNH will implement the Residential Conservation
Program (RCP) as proposed with priority on serving low
income customers, with the following modification. A
customer co-pay of $100 will be incorporated in the
non-income eligible portion of the RCP for customers
who have weatherization measures installed. In the
event that the co-pay adversely affects customer
participation, PSNH will consult with the Parties and
Staff regarding appropriate action to address the
problem.
2. The Parties and Staff expressed concern that the Total
Resource Cost (TRC) test ratio for the Energy Crafted
Home program using PSNH's estimate of future market
prices had a ratio of 0.6. The TRC test ratio was
recalculated using the LaCapra estimate of future
market prices with the same result. Nevertheless, the
Parties and Staff support continuation of the program
as proposed by PSNH with the incentive cap noted below.
The Parties and Staff note the significant market
transformation aspect of the program and the general
educational and other benefits that result from the
program in support of its continuation. Additionally,
incentives paid under the Energy Crafted Home program
will be capped at $15,000 per home (with the exception
of one home which PSNH has previously committed to pay
an estimated incentive of $24,000).
3. The Parties and Staff expressed concern that the TRC
test ratio calculated for the EnergyCHECK program using
PSNH's estimate of future market prices had a ratio of
less than 1.0. However, based on the fact that the TRC
test ratio for the EnergyCHECK program using the
LaCapra estimate of future market prices is equal to
1.0, the Parties and Staff support continuation of the
program as proposed by PSNH. In the event that the
reduced incentive levels proposed by PSNH adversely
affect customer participation as suggested by some
Parties, PSNH will consult with the Parties and Staff
regarding appropriate action to address the issue.
4. The Energy Services Program and Educational Programs
will be continued as proposed by PSNH.
5. OCA and Staff accept PSNH's estimate of $117,128 for
LFCR as reasonable based on the previously agreed upon
LFCR methodology and proposed program levels. OCA and
Staff also accept as reasonable PSNH's estimate of
General Administration expenses of $36,000 and NUSCO
charges of $31,200.
6. PSNH, OCA and Staff agree to consult regarding the
feasibility and implementation of modifications to
PSNH's 1998 programs in response to recommendations of
the Energy Efficiency Working Group accepted by the
Commission.
7. Following the conclusion of the audit by the Commission
Audit Staff, PSNH, OCA and Staff agree that, subject to
agreement of the Staff and PSNH or resolution by the
Commission, any final over or undercollected balance
with interest applied and as determined by the audit
will be added to or subtracted from the funds otherwise
available for C&LM expenditures in 1998.
8. PSNH will file its 1999 C&LM Pre-Approval petition by
October 1, 1998 and will incorporate, as applicable,
Commission approved recommendations of the Energy
Efficiency Working Group.
CLF and ECS did not sign the Stipulation because
both parties believe that the C&LM budget was too low so as
to provide optimal cost-effective programs and that the
implementation of a customer co-pay in the RCP will have
adverse effects on participation and cost-effectiveness.
CLF recommends the Commission approve a budget of
$6,899,027, an increase of $4,499,672 or 188% over the
amount provided for in the Stipulation. The written
testimony of Cort Richardson on behalf of CLF states that
program:
inadequacies are primarily attributable to a single
cause-- that is, the severe underfunding of the program
reflected by PSNH's proposed budget... PSNH's proposed
funding level is well below that of most other major
New England utilities, including PSNH's sister
companies in the NU system...PSNH's extremely low DSM
funding proposal creates deficiencies in the quality
and anticipated performance of the Company's 1998 C&LM
programs... Underfunding the DSM budget and sub-optimal
program designs will discourage program
comprehensiveness and lead to lost energy efficiency
opportunities. PSNH's program portfolio lacks
commitments to regional market transformation
initiatives which have the potential to offer many
significant benefits to ratepayers, the NH economy and
society at large. (Ex. 6.)
CLF's recommended budget of $6.9 million included two
programs in addition to those included in the Stipulation:
Residential Lighting Program and Residential Market
Transformation Initiatives funded at $850,000 and $450,000,
respectively. Mr. Richardson testified that market
transformation programs are very cost-effective although
they do not appear to be when screened using the
Commission's preferred benefit-cost methodology, the Total
Resource Cost test. CLF recommends that PSNH participate in
joint utility sponsored market transformation programs this
year that are part of regional initiatives assisted by the
Northeast Energy Efficiency Partnerships and national
efforts sponsored by the federal government and other
organizations.
III. COMMISSION ANALYSIS
In our restructuring rehearing order (Order No.
22,875 dated March 20, 1998), we indicated that while we
believe the most appropriate policy is to stimulate the
development of market-based energy efficiency programs, we
also believe the transition to market based programs may
take longer than the two year period mandated in the
original Plan (Restructuring New Hampshire's Electric
Utility Industry: Final Plan). We further said that there
may be a place for utility sponsored programs beyond the
transition period and we established a working group to help
us develop standards for evaluating energy efficiency
programs and to assist us in designing an appropriate
cost-effectiveness test to apply to future programs. In
Order No. 22,875, we directed utilities to cap their program
funding level at existing levels until we received and ruled
on the working group's recommendations. The section of
particular relevance to this docket in the rehearing order
is that: "efforts during the transition toward market-based
DSM programs should focus on creating an environment for
energy efficiency programs and services that will survive
without subsidies in the future."
After careful review of the Stipulation,
supporting testimony and exhibits provided at the April 6,
1998 hearing and our position concerning energy efficiency
programs as detailed in the rehearing order, we will approve
the Stipulation as filed; however, we also direct Staff to
convene a meeting of the Parties to see if they can reach an
agreement on a limited expansion of the 1998 C&LM Program to
include regional and/or national market transformation
programs that are consistent with the position we took in
the rehearing order. Although this is consistent with our
position regarding market transformation programs in the
rehearing order, it is not consistent with capping funding
levels for energy efficiency programs. Nonetheless, we
believe that PSNH represents a unique situation in that
PSNH's funding level for its C&LM programs is minimal
compared to other utilities and because of PSNH's
relationship with Northeast Utilities, it may have a unique
opportunity to be involved in regional programs. We remind
Staff and the Parties that any expansion of PSNH's 1998 C&LM
Program is for market transformation initiatives only and
that the kinds of programs we expect Staff and the Parties
to consider should be reviewed in the same context as the
Energy Crafted Home (ECH) program as described in the
Stipulation:
The Parties and Staff note the significant market
transformation aspect of the program and the general
educational and other benefits that result from the
program in support of its continuation.
We want Staff and the Parties to view any expansion of
PSNH's 1998 C&LM Program in the same light: do they have
significant market transformation potential, do they provide
educational benefits, are they regional or national programs
that can be offered at a lower price? If Staff and the
Parties cannot agree on a limited expansion of programs that
meet these criteria, then we may have to hold further
proceedings in this docket. We ask Staff and the Parties to
report back to us within 30 days on their efforts.
Additionally, we reserve our right to further
modify the PSNH's 1998 C&LM Program depending on the results
of the Energy Efficiency Working Group's recommendations.
Based upon the foregoing, it is hereby
ORDERED, that PSNH's 1998 C&LM Pre-Approval
Filing, as amended by the Stipulation, is hereby APPROVED;
and it is
FURTHER ORDERED, that Staff and the Parties meet
to discuss market transformation initiatives that can be
incorporated into PSNH's 1998 C&LM program; and it is
FURTHER ORDERED, that Staff and the Parties report
back to us within thirty days of this order.
By order of the Public Utilities Commission of New
Hampshire this twenty-eighth day of April, 1998.
Douglas L. Patch Bruce B. Ellsworth Susan S.
Geiger
Chairman Commissioner Commissioner
Attested by:
Claire D. DiCicco
Assistant Secretary