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Electricity service regulation had been problematic in New Hampshire since the PSNH bankruptcy more than ten years ago. Ownership changed, but difficulties persisted following Northeast Utility’s acquisition of PSNH and the emergence of the utility from bankruptcy proceedings. The utility operated under a rate agreement that built in substantial annual increases for retail customers. The Public Utilities Commission sought to introduce retail competition, entering orders that would have required a very substantial write-off of the utility’s generation and regulatory assets, many associated with the Seabrook nuclear project. Federal litigation ensued and restructuring as then ordered did not become effective. Federal courts had stayed the Commission’s exercise of its jurisdiction on restructuring, and threatened even more pervasive intrusion into the state’s utility regulatory process. Customers, the commission, and the utility needed some solution that would allow all to move forward effectively and economically. 

Liberty’s first engagement for the Commission was to perform a management and operations audit and to assess likely revenue requirements anticipatory to a major base-rate case for PSNH; the first to follow the period of built-in annual increases. The Governor and the Staff of the Commission then asked Liberty to work as part of a team assigned to explore settlement of restructuring proceedings that the litigation had tied up for years. Liberty’s help was instrumental in securing a settlement of the restructuring litigation, establishing delivery service rates for the three-year period following the introduction of competition, valuing generation assets to be divested, establishing methods for providing default or standard offer service, structuring the recovery of stranded costs, and gaining legislative support for the stranded cost securitization. One of the strongest features of the settlement reached was preservation of the option for retention of the company’s low-cost fossil and hydro stations.  

The significant write-off that the utility accepted and the retention of these stations as base-rate assets have done much to make PSNH rates for the first time in many years to an extremely competitive position in comparison to its New England peers. Liberty’s work has gained the firm a strong reputation for expertise, candor, and sound judgment with regulators, elected officials, utility representatives, customer groups and the residents of the Granite State.  

Liberty later assisted the Commission in exercising its statutory responsibility to sell utility interests in the Seabrook nuclear station. Ultimately encompassing a number of different owners from several different states, this sale was very unusual. New Hampshire law required the Public Utilities Commission not merely to review and approve a utility-run sale, but to administer the sale itself. Liberty assisted in efforts to bring the varying ownership interests together, to select and contract with an asset sale manager, to review the sale’s marketing and legal documents, to actively monitor due diligence activities, to review, analyze, and compare bids received, to assist in selecting the winning bidder, and to assure that final sale documents were appropriate. 

Liberty’s work for the Commission has continued. Liberty performed another audit intended to examine delivery service revenue requirements as PSNH prepared to move out of the transition, period during which electricity delivery rates have been fixed. PUC hearings on those new rates will commence in the near future. Liberty is expected to testify about them for the Commission Staff.  Liberty has also supported the Commission’s efforts to reconcile actual stranded cost recovery to date with approved levels, which vary according to the proceeds of asset divestitures and changes in the prices of PSNH purchases and sales of energy in the marketplace. One of Liberty’s senior consultants has also served as a technical engineering advisor to the Commission for a number of years.


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