The general court finds that:
I.Restructuring of electric utilities to provide greater competition and more efficient regulation has been found by the general court to be in the public good and New Hampshire is now aggressively pursuing restructuring and increased customer choice in order to provide electric service at lower and more competitive rates.
II.The transition to competitive markets for electricity is a complex endeavor and requires the development of creative and flexible mechanisms to facilitate the movement from monopoly to competition.
III.The establishment of structured financing options for public utilities will enhance and facilitate the expeditious transition to competition, choice for retail electric customers, and reductions in electric rates for all customer classes
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The general court finds that:
I. Restructuring of electric utilities to provide greater competition and more efficient regulation has been found by the general court to be in the public good and New Hampshire is now aggressively pursuing restructuring and increased customer choice in order to provide electric service at lower and more competitive rates.
II. The transition to competitive markets for electricity is a complex endeavor and requires the development of creative and flexible mechanisms to facilitate the movement from monopoly to competition.
III. The establishment of structured financing options for public utilities will enhance and facilitate the expeditious transition to competition, choice for retail electric customers, and reductions in electric rates for all customer classes consistent with the near term rate relief principle of RSA 374-F:3, XI, without creating any debt or obligation of the state or other adverse impacts upon the state's finances or credit rating. Structured financing options may facilitate and help mitigate stranded cost recovery that the commission determines is appropriate, equitable, and balanced pursuant to authority granted in RSA 374-F:3, XII and 374-F:4.
IV. Structured finance options are best pursued in the context of settlement agreements between a utility and the state concerning the implementation of competition.
V. Rate reduction bonds are instruments underwritten for recovery by a guaranteed promise of customer repayment as part of the stranded cost recovery charge on a customer's bill. These bonds' irrevocable guarantee of repayment creates a secure expectation of performance and thus allows for an attractive rate of refinancing of a utility's stranded costs.
VI. Stranded costs are at some risk of not being recovered under traditional rate regulation and market pressures. Electricity prices in New Hampshire are so high as to cause some customers to aggressively consider fuel switching, conservation, or self generation. Technological innovation may soon allow small scale self generation units to become increasingly viable in the near future. Over time, technological innovation will increasingly threaten the recovery of stranded costs.
VII. Once stranded costs are securitized through rate reduction bonds, a utility immediately recovers through a lump sum payment that portion of its stranded costs underwritten by the bond. As such, the risk of not recovering that portion of a utility's stranded costs is completely removed. The utility may then favorably recapitalize its debt structure taking advantage of its improved risk profile.
VIII. A lump sum payment derived from a rate reduction bond provides a large infusion of cash with which a utility will refinance its higher cost debt and equity, subject to commission approval as to application of proceeds. This infusion of cash may also afford a utility an enhanced opportunity to participate in restructured electric generation, gas, telecommunication, or other markets.
IX. The financial and security advantages that accrue to a utility in the form of improved debt structure, risk reduction, and new cash resources could make such a utility an attractive investment opportunity. Such utility's publicly traded stock value is likely to rise significantly, especially if such a utility had faced significant investor uncertainty.
X. The extraordinary benefits that utilities and their investors will receive through issuance of rate reduction bonds are appropriate and fair, but only to the extent that customers also receive equitable and extraordinary benefits. Unless these customer benefits can be achieved at the same time that utilities receive the extraordinary benefits of securitization, the use of revenue reduction bonds and the irrevocable obligation they create for customers is not in the public interest. The benefits to customers should be substantially consistent with the following principles:
(a) Customers should have the opportunity to choose among a range of competitive suppliers in a manner that promotes public trust in the benefits of competitive options. Public trust is not achieved if a utility uses rate reduction bonds to maintain a commanding presence in all of the traditional utility functions of transmitting, distributing, and generating electricity.
(b) Electricity prices should be consistent with RSA 374-F:3, XI, the near term rate relief principles for all customer classes.
(c) Electricity prices should approach the regional average as soon as practicable.
(d) Electricity prices should narrow rather than widen any rate gap for New Hampshire customers.
(e) There should be risk sharing by the utility of the non securitized portion of the utility's stranded cost should regional average prices not be approached as soon as practicable, and, in any event, substantially before the maturity of the securitization bonds.
(f) Any municipality shall be allowed to continue the process of establishment, acquisition, and expansion of plants according to RSA 38.
(g) Further renegotiations between representatives of the 6 wood-to-energy facilities and the one trash-to-energy facility, Public Service Company of New Hampshire, the public utilities commission, and other interested parties in order to reduce customer cost of this source of electricity should be encouraged.
(h) On or before the date a definitive agreement is filed at the commission, Public Service Company of New Hampshire (PSNH) shall offer to resolve any outstanding litigation and disputes that may exist with the New Hampshire Electric Cooperative (NHEC) on terms which produce rate reductions for NHEC customers which are comparable to rate reductions obtained by PSNH customers. Prior to legislative consideration of the authorization to use structured finance options, the general court expects that both PSNH and NHEC will resolve all outstanding litigation and disputes. The general court further expects that both PSNH and NHEC will negotiate in good faith to resolve outstanding litigation and disputes.
(i) Any dispute, litigation, or regulatory proceedings concerning any electric restructuring issue, in any forum where the utility's position is adverse to the state of New Hampshire or the commission should cease or be terminated prior to the finalized use of structured financing options.
(j) The commission should retain jurisdiction over any proposed settlement.
(k) Any proposed settlement should be filed at the public utilities commission prior to further legislative consideration of authorization to use structured financing options.
(l) The commission should consider the impact that structured financing options have on today's customers as well as future customers.
XI. End users shall continue to have the opportunity to generate electricity for their own use without an exit fee.