DR 98-197
                                     
                  Public Service Company of New Hampshire
                                     
                Fuel and Purchased Power Adjustment Clause
                                     
                        Order Approving Settlement
                                     
                         O R D E R   N O.  23,073
                                     
                             December 1, 1998
                                     
         APPEARANCES: Gerald M. Eaton, Esq. for  Public Service
     Company of New Hampshire; Dean, Rice and Kane, by Mark W. Dean,
     Esq. for the New Hampshire Electric Cooperative; Gary R. Gilmore,
     for the Campaign for Ratepayers' Rights; Michael Holmes, Esq., of
     the Office of Consumer Advocate for residential ratepayers; and
     Eugene F. Sullivan, III, Esq. for the Staff of the New Hampshire
     Public Utilities Commission.
     
     I.       PROCEDURAL HISTORY
                   On November 10, 1998, Public Service Company of New
     Hampshire (PSNH or the Company) filed with the New Hampshire
     Public Utilities Commission (NHPUC or the Commission) a
     Stipulation and Settlement signed by the Company, the Governor's
     Office of Energy and Community Services (OECS) and the Commission
     Staff (Staff) maintaining the currently effective Fuel and
     Purchased Power Adjustment Clause (FPPAC) rate of 0.383 cents/kWh
     for the period from December 1, 1998 through May 31, 1999.
         On November 10, 1998, the Commission issued an Order of
     Notice scheduling a Prehearing Conference on November 20, 1998,
     ordering a technical session to be held on the same day, setting
     deadlines for intervention and objections thereto, waiving in
     part the notification requirements, and setting a hearing date
     for November 24, 1998.  The New Hampshire Electric Cooperative
     (NHEC) filed a written request for intervention on November 10,
     1998.   
         On November 13, 1998, PSNH filed the Prepared Direct
     Testimony of Robert A. Baumann, Manager-New Hampshire Revenue
     Requirements and Fuel Recovery for Northeast Utilities Service
     Company, and exhibits supporting the calculation of the FPPAC
     rate.  
         The Commission granted the unopposed motions for
     intervention of CRR and NHEC.
     II.      POSITIONS OF THE PARTIES AND STAFF
     A.   Settlement
               The Settlement, signed by PSNH, the Staff, and OECS,
     proposes to keep the currently effective FPPAC rate of 0.383
     cents per kWh in effect for the period from December 1, 1998
     through May 31, 1999 for all retail customers.  Maintaining the
     current FPPAC rate will result in an estimated recovery of $13
     million and an estimated under-recovery of $83 million for the
     period ending May 31, 1999.  The estimated $83 million of
     under-recovery is composed of $67 million deferred recovery from
     the prior FPPAC period, $9 million in light loading, and $7
     million of Seabrook refueling cost (50% of the estimated total
     PSNH Seabrook refueling costs).  PSNH agrees to forego interest
     on the current period under-recovery.  Deferred costs that have
     not previously been subject to Commission review and approval
     will be subject to such review to demonstrate prudence at the
     next FPPAC proceeding.  The Stipulation is dependent upon PSNH
     being granted waivers from its lender banks under the Revolving
     Credit Agreement and the Series D and E Amended and Restated
     Letters of Credit and Reimbursement Agreements.
     B.     PSNH
               PSNH supported the Settlement through direct testimony. 
     PSNH testified that it was currently involved in discussions
     concerning restructuring and felt it necessary to seek solutions
     to the FPPAC proceeding which did not increase rates.
          PSNH stated in the hearing that the rates paid to Qualifying
     Facilities under short-term avoided cost were calculated in the
     same manner as used in past FPPAC dockets.  The proposed
     Qualifying Facilities rates are as follows:
                                      Short Term Rates (cents/kWh)
          Project Type             On-peak   Off-Peak   All Hours
     All Projects Under
     500 kW                        2.7441     2.3201     2.4831
     
     Projects Over 500 kW
     
     Great Falls Upper             2.8277     2.3621     2.5446
     
     Dunbarton Landfill                                  2.4581
     
     Rochester Landfill                                  2.4713
     
     Capacity cost is calculated as $2.40/kW-month.
     
     C.   Office of Consumer Advocate
               At the Prehearing Conference, the OCA stated it had no
     opposition to the Stipulation as filed.  At the hearing, the OCA
     raised questions about whether PSNH will recover in this FPPAC
     rate the discounts provided to special contract customers.
     D.   Governors Office of Energy and Community Service
               Although not an intervenor in the procedure, OECS was a
     signatory and supporter of the Settlement.
     E.   Campaign for Ratepayer's Rights
               At the Prehearing Conference, CRR stated it was pleased
     there is no intended rate increase and did not object to the
     Settlement.
     F.   Commission Staff
               Although the Staff did not provide testimony, it was a
     signatory and supporter of the Settlement.
     
     III.      COMMISSION ANALYSIS
               We have reviewed the proposed Settlement and supporting
     testimony and exhibits and find the Settlement to be in the
     public interest.  Based upon the circumstances regarding
     restructuring discussions at this time and upon PSNH's
     willingness to forego the interest on its deferred recovery for
     this FPPAC period we believe the Settlement to be in the best
     interest of PSNH's customers.  We understand PSNH has notified
     our Staff that the Company has received verbal confirmation of
     the necessary waivers from a two-thirds majority of its lender
     banks under the Revolving Credit Agreement and the Series D and E
     Amended and Restated Letters of Credit and Reimbursement
     Agreements to continue the FPPAC deferral of prior period costs. 
     We direct PSNH to file with the Commission a copy of written
     confirmation once it is available.
               In response to the OCA's concerns about the recovery of
     special contract discounts, PSNH represented that it will not
     seek such recovery in this FPPAC rate and that no part of its
     expected $83 million under-recovery is attributable to the
     special contract discounts.  Based on these representations as
     well as those made by PSNH in DR 98-139, our concerns in this
     regard have been adequately addressed.
     
               Based upon the foregoing, it is hereby
               ORDERED, that the Settlement which establishes a Fuel
     and Purchased Power Rate of 0.383 cents per kWh for the period
     December 1, 1998 to May 31, 1999 is APPROVED as just and
     reasonable, and it is 
               FURTHER ORDERED, that the Qualifying Facility rates are
     approved as filed.
               By order of the Public Utilities Commission of New
     Hampshire this first day of December, 1998.
     
     
                                                                  
       Douglas L. Patch     Susan S. Geiger       Nancy Brockway
           Chairman           Commissioner        Commissioner
     
     Attested by:
     
     
     
                                      
     Thomas B. Getz
     Executive Director and Secretary