SB 341 - FINAL VERSION

3/12/98 1043s

7may98.....1531h

1998 SESSION

98-2723

03/09

SENATE BILL 341

AN ACT relative to the implementation of electric utility restructuring.

SPONSORS: Sen. Hollingworth, Dist 23

COMMITTEE: Executive Departments and Administration

AMENDED ANALYSIS

This bill establishes electric utility restructuring policy principles for default service and transition service. This bill also provides that implementation of electric utility restructuring may be delayed by a finding of the public utilities commission that delay is required due to events beyond the control of the commission.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

3/12/98 1043s

7may98.....1531h

98-2723

03/09

STATE OF NEW HAMPSHIRE

In the Year of Our Lord One Thousand Nine Hundred and Ninety-Eight

AN ACT relative to the implementation of electric utility restructuring.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 Statement of Intent. The general court finds that:

I. Circumstances beyond the control of the public utilities commission may delay implementation of electric utility restructuring and customer choice beyond July 1, 1998. Further delay will harm the state's economy and cause a continued burden on the state's citizens, commerce, and industry.

II. Delays resulting from court orders have heightened the need to consider negotiated settlements to expedite restructuring, near term rate relief for customers, and customer choice.

III. The distinction between transition service and default service needs to be clarified.

IV. There should be a transition service procured through competitive means. The commission should ensure that the terms of transition service accomplish the principle of near term rate relief while taking into account the need for developing customer choice.

V. Procuring transition service through competitive means in RSA 374-F:3, V, as amended by this act, includes, but is not limited to:

(a) The option of establishing a ceiling price for transition service, separate from or in conjunction with the competitive sale of electric-utility-owned or affiliate-owned generation assets, entitlements, and power purchase contracts, whereby such ceiling pricing constitutes a fixed rate or price path, that rises over time; and

(b) The option of having transition service supplied by the current owner of such generation assets while the sale is pending and by the purchaser of such generation assets after the sale is closed, for the duration of the term that transition service is available.

2 New Section; Public Utilities; Definition of Terms; Utilities Exempted; Electric Generation Companies, When Public Utilities. Amend RSA 362 by inserting after section 4-b the following new section:

362:4-c Electric Generation Companies, When Public Utilities.

I. The term "public utility" shall not include any corporation, company, association, limited liability company, joint stock association, partnership or person, their lessees, trustees or receivers appointed by any court, solely by virtue of owning, operating, or managing any plant or equipment or any part of the same which has received a certificate of site and facility as an energy facility or as a bulk power supply facility pursuant to RSA 162-H after July 1, 1998, or are sold after July 1, 1998, for the generation or sale of electricity or for transmission of electricity from such a plant to an interconnection with the transmission grid. General or facility-specific safety and reliability standards established by the commission for electric generation facilities shall also apply to those facilities exempted from public utility regulation under this paragraph.

II. Any entity exempted by this section may seek public utility status from the commission if it so chooses.

3 New Paragraph; Public Utilities; Electric Utility Restructuring; Definitions; Default Service Added. Amend RSA 374-F:2 by inserting after paragraph I the following new paragraph:

I-a. "Default service" means electricity supply that is available to retail customers who are otherwise without an electricity supplier and are ineligible for transition service.

4 New Paragraph; Public Utilities; Electric Utility Restructuring; Definitions; Transition Service Added. Amend RSA 374-F:2 by inserting after paragraph IV the following new paragraph:

V. "Transition service" means electricity supply that is available to existing retail customers prior to each customer's first choice of a competitive electricity supplier and to others, as deemed appropriate by the commission.

5 Public Utilities; Electric Utility Restructuring; Restructuring Policy Principles; Universal Service; Transition Service and Default Service. Amend RSA 374-F:3, V to read as follows:

V. Universal Service.

(a) Electric service is essential and should be available to all customers. A utility providing distribution services must have an obligation to connect all customers in its service territory to the distribution system. A restructured electric utility industry should provide adequate safeguards to assure universal service. Minimum residential customer service safeguards and protections should be maintained. Programs and mechanisms that enable residential customers with low incomes to manage and afford essential electricity requirements should be included as a part of industry restructuring.

(b) As competitive markets emerge, customers should have the option of stable and predictable ceiling electricity prices through a reasonable transition period, consistent with the near term rate relief principle of RSA 374-F:3, XI. Upon the implementation of retail choice, transition service should be available for at least 2 but not more than 4 years after the start of competition, for customers who have not yet chosen a competitive electricity supplier. Transition service should be procured through competitive means and may be administered by independent third parties. The price of transition service should increase over time to encourage customers to choose a competitive electricity supplier during the transition period. Such transition service should be separate and distinct from default service.

(c) Default service should be designed to provide a temporary safety net and to assure universal access and system integrity. Default service should be procured through the competitive market and based on short-term market prices, and may be administered by independent third parties. The cost of administering default service should be borne by the customers of default service. If the commission determines it to be in the public interest, the commission may implement measures to discourage misuse, or long-term use, of default service. Revenues, if any, generated from such measures should be used to defray stranded costs.

(d) The commission should establish transition and default service appropriate to the particular circumstances of each jurisdictional utility.

6 Public Utilities; Electric Utility Restructuring; Implementation; Date. RSA 374-F:4, I is repealed and reenacted to read as follows:

I. The commission is authorized to require the implementation of retail choice of electric suppliers for all customer classes of utilities providing retail electric service under its jurisdiction. The commission shall require such implementation at the earliest date determined to be in the public interest by the commission. However, in no event may the implementation be delayed beyond July 1, 1998 without legislative approval or a finding of public interest by the commission that delay is required due to events beyond the control of the commission. In addition, at the earliest practical date, the commission should make effective the unbundling of components of rates into at least distribution, transmission, and generation for each jurisdictional utility.

7 Effective Date. This act shall take effect upon its passage.