Certified Final Objection No. 130 of the

Joint Legislative Committee on Administrative Rules

At its meeting on October 16, 2003, the Joint Legislative Committee on Administrative Rules (Committee) voted, pursuant to RSA 541-A:13, IV, to enter a preliminary objection to Final Proposal 2003-50 containing rules Puc 2200 of the Public Utilities Commission (PUC) relative to uniform rules for disclosure and reporting by competitive electric power suppliers, electric utilities, and suppliers of electric service to retail customers on the resource mix and environmental characteristics of the electric service they take. The PUC responded pursuant to RSA 541-A:13, V(c) to the preliminary objection with a request for a revised objection in a letter from the PUC Board Chairman dated November 21, 2003, which the Committee granted on December 4, 2003. The PUC thereafter responded pursuant to RSA 541-A:13, V(e) to the revised objection with an amended proposal and cover letter dated January 20, 2004.

At its meeting on March 5, 2004, the Committee voted, pursuant to RSA 541-A:13, V(f), to enter a final objection to Final Proposal 2003-50 as amended by the PUC. The final objection has been filed with the Director of the Office of Legislative Services for publication in the New Hampshire Rulemaking Register. The effect of a final objection is stated in RSA 541-A:13, VI:

After a final objection by the committee to a provision in the rule is filed with the director under subparagraph V(f), the burden of proof shall be on the agency in any action for judicial review or for enforcement of the provision to establish that the part objected to is within the authority delegated to the agency, is consistent with the intent of the legislature, is in the public interest, or does not have a substantial economic impact not recognized in the fiscal impact statement. If the agency fails to meet its burden of proof, the court shall declare the whole or portion of the rule objected to invalid. The failure of the committee to object to a rule shall not be an implied legislative authorization of its substantive or procedural lawfulness.

The following summarizes the bases for the Committee’s final objection:

Puc 2202.16

The Committee objected that Puc 2202.16 is, pursuant to Committee Rule 403.01(d), contrary to the public interest by not being clear and understandable and, pursuant to Committee Rule 402.02(b)(2), contrary to legislative intent by conflicting with RSA 541-A:3 and RSA 541-A:22, I.

Puc 2200 implements Section 7 of Chapter 268 of the Laws of 2003, which requires the PUC to establish reporting requirements "that will inform customers on an ongoing basis about the resource mix and environmental characteristics of the electrical service that they take."

Puc 2202.16 defines "transition service" to mean "transition service as defined in RSA 374-F:2, V." This statute defines the term as "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 to the commission." The term "transition service" had been defined in the final proposal with similar

words, and contained the exact phrase "as deemed appropriate by the commission." The Committee had preliminarily objected that this phrase was unclear as to what was meant or required and unclear what criteria and procedure which would be used by the PUC to make this determination.

Pursuant to RSA 541-A:22, I, "no agency rule is valid or effective against any person or party, nor may it be enforced by the state for any purpose, until it has been filed" pursuant to RSA 541-A. RSA 541-A:3 sets out the steps for adopting a rule through the regular rulemaking process. The Committee determined that replacing the text of the definition with a reference to the statutory definition in RSA 374-F:2, V did not clarify the phrase "as deemed appropriate by the commission." Therefore, the Committee concluded that Puc 2202.16 in the objection response was still unclear, and this would lead to oral rulemaking in violation of RSA 541-A:3 and RSA 541-A:22, I.

Puc 2204.01

The Committee objected that Puc 2204.01(a) is, pursuant to Committee Rule 403.01(d), contrary to the public interest by not being clear and understandable and, pursuant to Committee Rule 402.02(b)(2), contrary to legislative intent by conflicting with RSA 541-A:3 and RSA 541-A:22, I.

Puc 2204.01 states that resource mix and environmental characteristics required to be disclosed by a competitive electric power supplier (CEPS), electric utilities, and electric service suppliers "shall be based on one or more of the following:

(a) The electric service product provided;

(b) Whether the CEPS, electric utility or electric service supplier owns electric generation units;

(c) A power supply contract portfolio; or

(d) NEPOOL [New England Power Pool] generation information system certificates.

It was unclear to the Committee what "shall be based on" means or requires, as the natures of the four criteria were dissimilar. The Committee concluded that Puc 2204.01 is unclear and would be in violation of RSA 541-A:3 and RSA 541-A:22, I to the extent that oral rulemaking would be necessary to implement the rule.

Puc 2204.04(a)

The Committee objected that Puc 2204.04(a) is, pursuant to Committee Rule 403.01(d), contrary to the public interest by not being clear and understandable and, pursuant to Committee Rule 402.02(b)(2), contrary to legislative intent by conflicting with RSA 541-A:3 and RSA 541-A:22, I.

Puc 2204.04(a) addresses product disclosure requirements where a CEPS, electric utility, or electric service supplier offers an electric service product from "system power and its owns [sic] generation resources." The PUC "shall determine after consultation" with the utility or supplier "the appropriate product disclosure requirement" based on certain criteria set out in Puc 2204.01(a)(1)-(4):

"(1) Whether the CEPS, electric utility or electric service supplier trades certificates in the NEPOOL Generation Information System;

(2) The extent to which the CEPS, electric utility or electric service supplier uses system power;

(3) The extent to which it can otherwise provide information on its owned generation to its customers through its website or other means; and

(4) The method which best allows comparison with information on other labels produced by other suppliers."

The Committee noted that the rule establishes a case-by-case setting of disclosure requirements in the circumstance of owned generation power, but the procedure for this case-by-case determination by the PUC of disclosure requirements is not given. In the Committee’s view the four criteria were also unclear in how they will be applied to the determination of what the disclosure requirements will be in each case. The Committee concluded that Puc 2204.04(a) is therefore unclear and would lead to oral rulemaking in violation of RSA 541-A:3 and RSA 541-A:22, I.

Puc 2205.01(b) and (c)

The Committee objected that Puc 2205.01(b) and (c) are, pursuant to Committee Rule 403.01(d), contrary to the public interest by not being clear and understandable.

Puc 2205 specifies how information is to be displayed to utility customers on the "label", the bill insert or flyer which is separate from the utility bill itself and contains information on the resource mix and emissions characteristics of electric service. Puc 2205.01(b) addresses electric service products produced from renewable resources, and Puc 2205.01(c) addresses an electric service product produced from owned generation resources, bilateral contracts, system power, or a combination thereof.

Both Puc 2205.01(b) and (c) require that the label include a statement containing, in part, the words: "The information on this label may not represent the characteristics of the resources used to generate your energy supply." In the view of the Committee, the statement implied that the information in the label might be entirely incorrect relative to the resources used. Based on the requirements in Puc 2200 and the testimony from the PUC, the Committee determined that it would be more accurate for the statements in Puc 2205.01(b) and (c) to have said that "the information on this label may not precisely represent the characteristics of the resources used" [emphasis added]. The Committee concluded that Puc 2205.01(c) and (d) are therefore not clear and understandable.

Puc 2206.03(c)

The Committee objected that Puc 2206.03(c) is, pursuant to Committee Rules 403.01(d), contrary to the public interest by not being clear and understandable and, pursuant to Committee Rule 402.02(b)(2), contrary to legislative intent by conflicting with RSA 541-A:3 and RSA 541-A:22, I.

Puc 2206.03(c) states that, after an investigation described in Puc 2205.03(a) or (b), "the commission shall initiate an administrative fine proceeding pursuant to RSA 365:41 or 374-F:7, III in the event it has reason to believe a CEPS, electric utility or electric service supplier has intentionally not complied with this section [sic] 2200." In the view of the Committee, it was unclear what criteria will be used to determine the actual amount of the fine. The Committee concluded that Puc 2206.03(c) is therefore unclear and would lead to oral rulemaking in violation of RSA 541-A:3 and RSA 541-A:22, I.

Puc 2206.03(f)

The Committee objected that Puc 2206.03(c) and (f) are, pursuant to Committee Rules 403.01(d) and 403.02(b)(3), contrary to the public interest by not being clear and understandable and capable of uniform application and, pursuant to Committee Rule 402.02(b)(2), contrary to legislative intent by conflicting with RSA 541-A:3 and RSA 541-A:22, I.

Puc 2206.03(f) states that, in assessing the penalties for violations of Puc 2200, "the commission shall take into account, in addition to the nature, extent and gravity of the particular violation:

(1) The respondent’s prior history of violations;

(2) The efforts of the respondent in demonstrating compliance with these rules;

(3) The efforts undertaken by respondent to deter future violations of these rules; and

(4) Such other factors which are relevant to the particular circumstances of the violation."

In the view of the Committee, it was unclear how these factors would be applied, since there was no criterion or goal provided to evaluate the factors so that they could be applied uniformly to achieve an equitable result in the amount of the fine. Moreover, the Committee determined that it was unclear what the phrase in Puc 2206.03(f)(4)—"[s]uch other factors which are relevant to the particular circumstances of the violation"—means or includes. Therefore, the Committee concluded that Puc 2206.03(f) is unclear and not capable of uniform application and would lead to oral rulemaking in violation of RSA 541-A:3 and RSA 541-A:22, I.