CONCORD STEAM CORPORATION
ORDER No. 25, 966
DG 16-769
New Hampshire Public Utilities Commission
November 10, 2016
Petition
for Emergency Rates and to Discontinue Service
Order
Approving Settlement Agreement and Emergency Rates
Orr
& Reno, by Susan S. Geiger, Esq., for Concord Steam
Corporation; The New Hampshire Department of Justice, Office
of the Attorney General, by Christopher G. Aslin, Esq., for
the Department of Administrative Services; Upton &
Hatfield, LLP, by John F. Teague, Esq., for the Concord
School District; James W. Kennedy, Esq., City Solicitor, for
the City of Concord; and Alexander F. Speidel, Esq. for the
Staff of the Public Utilities Commission.
Martin
B Honigberg Chairman.
In this
order, the Commission approves a settlement agreement and
companion increase in distribution rates, on an emergency
basis, for Concord Steam Corporation. The emergency
distribution rates approved in this order are lower than the
interim emergency rates approved by the Commission in Order
No. 25, 947 (September 28, 2016), but do represent an
increase in the rates approved by the Commission in Concord
Steam Corporation's last distribution rate case, Order
No. 25, 499 (April 25, 2013). The permanent emergency rates,
which will be effective as of December 1, 2016, are as
follows: $35.37 per one thousand pounds (Mlb) of steam for
the first 500 Mlbs of steam sales; $34.21 per Mlb for sales
of 501to 2000 Mlbs; and $30.72 per Mlb for steam sales over
2000 Mlbs. The rates are being approved pursuant to RSA
378:9.
Also in
this order, the Commission approves Concord Steam's
proposal, as delineated in the settlement agreement, for its
discontinuation of service on or about May 31, 2017.
I.
CONTINUED PROCEDURAL HISTORY
The
procedural history of the earlier phases of this docket are
described in Order No. 25, 947 (September 28, 2016),
approving interim emergency rates for Concord Steam
Corporation (Concord Steam). That Order deferred the
Commission's consideration of permanent emergency rates
to a public hearing scheduled for October 5, 2016, and
granted intervenor status to the Concord School District.
Id. at 5-6.
On
October 4, 2016, Concord Steam, the New Hampshire Department
of Administrative Services (Department of Administrative
Services), and Commission Staff, filed a Settlement Agreement
presenting a resolution to the outstanding issues in this
proceeding. Hearing Exhibit 6. Stephen Frink of the
Commission's Gas & Water Division also filed direct
testimony regarding the general terms of the Settlement
Agreement, the proposed permanent emergency rates, and the
terms of the discontinuation of service agreed to by Concord
Steam. Hearing Exhibit 8.
At the
hearing on October 5, Michael P. Connor, Deputy Commissioner
of the Department of Administrative Services; Peter
Bloomfield, President of Concord Steam Corporation; and Mr.
Frink provided additional oral testimony regarding the
Settlement Agreement.
II.
THE SETTLEMENT AGREEMENT
The
substantive terms of the Settlement Agreement (Hearing
Exhibit 6) are reproduced as follows:
A. RATES AND RATE ADJUSTMENTS
1.
Effective November 1, 2016 Concord Steam's 2015 adjusted
annual usage rate revenue of $2, 004, 501 will be increased
by $1, 400, 000 resulting in Target Usage Revenue of $3, 404,
501 for the months of October 1, 2016 through May 31, 2017.
This increase results in the following usage rates: $35.37
per one thousand pounds (Mlb) of steam for the first 500 Mlbs
of steam sales; $34.21 per Mlb for sale of 501-2000 Mlbs; and
$30.72 per Mlb for steam sales over 2000 Mlbs. [A report of
proposed rate changes was attached to the Settlement
Agreement].
2. The
usage rate for the Abbot-Downing and Christa McAuliffe
Schools will be $3.08 per Mlb, effective through May 31,
2017. All other Concord Steam tariff charges and rates will
apply to these schools.
3.
Monthly Usage Rate Adjustment Mechanism:
Concord
Steam may increase approved usage rates to eliminate a
projected under recovery that exceeds 5% of the Target Usage
Revenue. Concord Steam shall provide the Commission with a
monthly calculation of the projected over/under recovery of
the Target Usage Revenue of $3, 404, 501. The monthly
calculation will be filed, along with any resulting revised
usage rates for the subsequent month, not less than five (5)
business days prior to the first day of the subsequent month,
and shall include a revised tariff if adjusting the usage
rates.
Projected
Target Usage revenue shall be calculated as follows: Actual
monthly usage revenues to date plus projected monthly usage
revenue (projected sales may be adjusted for customer
losses), less actual and projected monthly usage revenue from
fixed usage rate sales (i.e., sales to Rundlett,
Abbot-Downing and Christa McAuliffe Schools).
4. If
there is a projected over recovery of Target Usage Revenue in
excess of 5% in the final over/under calculation (May 2017
Report), Concord Steam will refund the projected over
recovery through a credit on customer bills and/or issuing a
refund check.
5.
Concord Steam may request an increase in emergency rates in
the event of an extraordinary expense but only as part of a
full rate review.
6.
Concord Steam shall recover rate case expenses through a
surcharge on customers' bills. The rate case expense
surcharge of $0.61 per Mlb will be effective as of November
1, 2016. Concord Steam will file a reconciliation of rate
case expenses and actual and projected rate case expense
surcharge revenue on or before February 15, 2017 and a
revised rate case expense surcharge for effect on March 1,
2017, if necessary, to eliminate a projected over or under
recovery. Rate case expenses and the revised surcharge will
be subject to Commission review and approval by secretarial
letter.
B.
DISCONTINUATION OF SERVICE
7.
Concord Steam will discontinue service to its steam customers
on or about May 31, 2017. At that time, Concord Steam will
return to the steam plant and piping located on the Hugh
Gallen State Office Park South Campus to its owner, the State
of New Hampshire [Department of Administrative Services].
With the exception of the steam piping loop for six (6)
Downtown State Buildings
1 discussed below, Concord Steam will
abandon the remaining steam piping system and fill the
manholes along the system with flowable fill (light concrete)
to eliminate the possibility of collapse in the future.
8. To
ensure that the State shall have access to steam for heating
purposes beyond the termination of service by Concord Steam
until such time as the State is able to complete a conversion
of the Downtown State Buildings to alternative heating
sources, Concord Steam agrees to conduct all necessary work
to isolate a section of Concord Steam's steam pipes
necessary to enable the State to distribute self-generated
steam to the Downtown State Buildings (the "Downtown
Loop"). Such isolation work shall be completed at
Concord Steam's expense no later than five (5) business
days after termination of steam service by Concord Steam.
9. At
the time of discontinuance of Concord Steam's utility
service, Concord Steam shall convey the Downtown Loop and all
necessary easements, licenses, or other property interests
necessary to maintain and operate the Downtown Loop to a
special purpose entity to be created as a holding company for
the Downtown Loop (the "Holding Company").
10. The
Holding Company shall promptly enter into a triple-net lease
with the State [Department of Administrative Services] (the
"Lease") for access to and use of the Downtown Loop
by the State. The terms of the Lease shall be negotiated by
the parties and submitted to the Commission prior to Concord
Steam's discontinuance of service and the Parties agree
that the Commission shall resolve all disputes that may arise
over negotiation of the terms of the Lease. The rent for the
Downtown Loop shall consist of the State's agreement to
pay all expenses related to the Downtown Loop during the term
of the Lease, including liability insurance naming the
Holding Company as an additional insured. As additional rent
for the Downtown Loop the State also agrees to pay Concord
Steam for incidental Holding Company expenses such as
Secretary of State Registration fees, tax return filing
expenses and similar administrative expenses. Annual lease
payments by the State to the Holding Company for the
incidental Holding Company expenses shall be $2, 000.
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