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File No. 70-8773
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 2 TO THE
FORM U-1
APPLICATION AND DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
UNITIL CORPORATION
UNITIL RESOURCES, INC.
UNITIL SERVICE CORP.
216 Epping Road
Exeter, New Hampshire 03833
(Name of companies filing this statement and
address of principal executive offices)
UNITIL CORPORATION
(Name of top registered holding company
parent of each applicant or declarant)
Gail A. Siart
Treasurer
UNITIL CORPORATION
216 Epping Road
Exeter, New Hampshire 03833
(Name and address of agent for service)
The Commission is requested to mail copies of
all orders, notices and communications to:
William S. Lamb, Esq.
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
125 West 55th Street
New York, New York 10019-5389
Unitil Corporation, a New Hampshire corporation
("Unitil") and a registered holding company under the Public
Utility Holding Company Act of 1935 (the "Act"), its wholly owned
subsidiary, Unitil Resources, Inc., a New Hampshire corporation
("URI") and its service company subsidiary, Unitil Service Corp.,
a New Hampshire corporation ("Unitil Service"), each of Exeter,
New Hampshire (collectively, the "Applicants"), hereby file this
Pre-Effective Amendment No. 2 to their Application and
Declaration on Form U-1 (the "Application") with the Securities
and Exchange Commission (the "Commission").
The Applicants are seeking authorization from the
Commission under Sections 6(a), 7, 9(a), 10, 12 and 13(b) of the
Act and Rules 45, 54, 87, 90 and 91 thereunder for URI to expand
its business activities to include wholesale and retail energy
marketing and related activities.
Item 1. DESCRIPTION OF PROPOSED TRANSACTION
A. Request for Authority for URI to Provide Energy
Marketing and Related Services
As authorized by order dated May 24, 1993 (HCAR No.
25816) (the "1993 URI Order"), URI is currently engaged in the
business of providing energy related management and consulting
services to entities outside the Unitil holding company system.
Unitil is hereby seeking authorization for URI expand its
authorized activities to include engaging in transactions as a
"marketer" of electricity, natural gas and other energy
commodities ("Energy Marketing"). In general terms, following
the proposed expansion, URI's Energy Marketing activities will
involve arranging the sale and purchase, transportation,
transmission and storage of electricity, natural gas or other
energy commodities for a commission as well as entering into
contracts to purchase electricity, natural gas or other energy
commodities from suppliers and resell it to utility and
nonutility customers.
____________________
While initially concentrated in the New England region,
URI's potential customer base ultimately may include
individuals and entities located outside the New England
region.
URI's Energy Marketing arrangements may be undertaken
on long or short term durations and pursuant to individualized
terms and conditions, and sales of energy to groups of customers
would likely be aggregated together for purposes of obtaining
competitive wholesale energy supplies. In some cases, URI may
acquire energy supplies and then market that energy to customers
as competitively as possible, whereas in other cases, URI may
establish contracts with customers and then acquire energy
supplies to meet the customer's requirements. Although the
transactions URI proposes to engage in may take a variety of
different forms, a typical transaction might involve the purchase
of power from a utility or nonutility generator, contracting with
other utilities for the transmission of that power, and the
resale of that power by URI to a utility or to an end-user.
Although URI believes that the bulk of its Energy
Marketing activities will involve marketing electricity or gas,
it also believes that in order to compete effectively with other
suppliers in the competitive marketplace who can provide a full
range of energy options to meet customer demands, URI will also
need to be able to engage in transactions for energy sources
other than electricity and gas. Unitil and URI therefore
also seek authority to undertake competitive market transactions
involving other energy commodities such as oil, refined petroleum
products, liquids, coal, wood and other similar combustible
substances.
____________________
Fitchburg Gas and Electric Light Company ("FG&E"), an
electric and gas utility subsidiary of Unitil, is engaged in
the gas utility business. Three of Unitil's public utility
subsidiaries, namely Concord Electric Company ("Concord"),
Exeter & Hampton Electric Company ("E&H") and FG&E,
currently purchase other petroleum fuels for their own use.
In addition, electric supplies acquired to meet the
electrical needs of Unitil's retail customers include
generating sources using the entire spectrum of fuel
sources, including coal and wood.
In addition, customer requirements, particularly at the
retail level are also expected to include conservation and other
technical services ("Energy Management"). Specifically, URI may
engage in general demand side management and energy usage
consulting services. URI may also provide limited engineering
services to customers for power quality management (ensuring
uninterruptible supplies, proper grounding of equipment and
related matters) and power factor correction, both of which are
designed to help customers manage their power efficiency, supply
and cost. The provision of these Energy Management
services will not involve the issuance of any securities. URI
seeks authority to undertake such Energy Management services on a
competitive basis, in order to be able to satisfy customer
requirements under competitive market conditions. Unitil
believes that these Energy Management services, together with
Energy Marketing services, will allow URI to offer complete
Energy Management services and solutions to customers on a
competitive basis. Indeed, Unitil expects that URI's Energy
Marketing services and Energy Management services will often be
marketed jointly to customers who are seeking the maximum value
on a total energy basis from their energy suppliers.
____________________
Concord, E&H and FG&E currently provide demand side
management services to their customers, including, among
other things, hot water heater tank and pipe wrapping,
energy efficient lighting, heating and cooling programs,
energy audits and provision of rebates in connection with
energy efficient equipment.
Concord, E&H and FG&E currently perform these functions for
their own systems and, on occasion, perform such services
for customers.
At the outset, Unitil Service, pursuant to its service
agreement with URI, will provide the staff and facilities
necessary to perform all of the Energy Marketing and the bulk of
the related activities of URI, including gas and power supply
planning and contracting, marketing, sales, customer services,
engineering, operations management, conservation services design
and contracting and related management and professional services.
Unitil Service currently provides similar services to other
Unitil system companies. Moreover, Unitil Service
personnel have extensive knowledge of the markets for electric
power and natural gas and in evaluating potential electric power
and natural gas suppliers, negotiating supply contracts and
arranging for the transmission and pooling of electric power,
both because the Unitil system operating companies obtain most of
their electric power supply through competitive wholesale power
purchases and because of their experience with Unitil's gas
business. URI will reimburse Unitil Service at cost for the
services provided, in the same manner as any other Unitil
affiliate company. If needed in the future, URI could employ its
own staff.
____________________
Some personnel of Unitil's operating utility subsidiaries
may perform certain of the technical and engineering
functions that are part of URI's demand side management
services. No operating utility personnel will provide any
services for URI's operations if it impairs their ability to
provide services to the relevant system operating utility.
In order to manage the risk associated with its Energy
Marketing and related activities, URI will use marketing hedging
techniques, match obligations to market prices,
contractually limit damages and volume and enter into relatively
short term contracts, all of which are efforts to minimize the
financial exposure of Unitil through its guarantees. URI will
not engage in speculative trading in the energy market, will
limit hedging activity to no more then the total amount of
commodities of URI that are subject to market price fluctuation
and will engage in such activities in accordance with Unitil
system policy with respect to price risk. Unitil will not seek
recovery through higher rates to the Unitil system's utility
customers in order to compensate Unitil for any possible losses
that it may sustain on investments in URI or for any inadequate
returns on such investments.
____________________
Such techniques include futures, forwards, swaps and option
contracts relating to the energy commodities in which URI
deals.
In connection with the proposed business expansion, on
the federal level, URI must seek authority from the Federal
Energy Regulatory Commission ("FERC") under Section 205 of the
Federal Power Act to conduct wholesale electric power marketing
activities and such activities will be subject to appropriate
limitations, conditions and control as determined by federal law
and the FERC. Specifically, URI will be unable to purchase
electric energy or capacity from, or sell these products to, any
affiliated companies in the Unitil holding company system unless
specifically authorized by the FERC. In addition, URI
will be unable to charge competitive, market based rates at
wholesale unless its affiliated utility companies have filed open
access transmission tariffs acceptable to the FERC, and until URI
has satisfied the FERC that it has mitigated any market power
which it may have. URI represents that it will not
engage in any wholesale electric power marketing activities until
all requisite approvals from the FERC under Section 205 of the
Federal Power Act have been obtained. With regard to wholesale
gas marketing, because Unitil does not own an interest in an
interstate pipeline, URI is authorized under Section 284.402 of
the Natural Gas Act to engage in gas marketing activities
pursuant to a statutory blanket marketing certificate.
____________________
See USGen Power Services, L.P., 73 FERC para. 61,302 (1995).
See Heartland Energy Service, Inc., 68 FERC para. 61,223
(1994).
On the state level, transactions between URI and retail
consumers will occur under appropriate state commission
authorization. Although URI itself will not own any facilities
for generating, transmitting or distributing power or the
transmission and distribution of gas and therefore will not be
deemed a utility under most state laws, including New Hampshire
and Massachusetts law, URI will only be able to undertake retail
electric power marketing activities in the context of state
legislative or regulatory initiatives, such as the New Hampshire
Retail Wheeling Pilot Program and the Massachusetts
Industry Restructuring Proceedings. URI's retail gas
marketing activities will occur pursuant to state approved local
distribution company transportation tariffs and other regulations
and URI's other retail energy commodity activities will only be
undertaken in accordance with all applicable state regulations.
Thus, URI's retail energy marketing activities will be
effectively limited to those permitted by the state regulators in
any state in which URI intends to conduct such activities.
Currently, URI has been authorized to engage in retail power
sales pursuant to the terms of the NH Pilot Program by the NHPUC.
Under the NH Pilot Program, each franchised New Hampshire utility
must allow customers representing 3% of their peak load to have
access to alternative suppliers of electricity for a two year
period. The NHPUC has determined that state franchised utilities
will not be permitted to sell power at retail to NH Pilot Program
customers, but affiliated power marketers may participate in the
NH Pilot Program as suppliers. To participate in the NH Pilot
Program, suppliers must obtain membership in the New England
Electric Power Pool ("NEPOOL") or contract with a NEPOOL member
in order to ensure adequate power supply resources. As
previously discussed, New Hampshire is also considering
legislation that would require state franchised utilities to file
plans by July 1997 to provide all customers with open access to
alternative suppliers. Unitil can compete in the NH Pilot
Program only through separate affiliate companies such as URI.
Moreover, such affiliated companies will have limited ability
under the NH Pilot program to contract with customers of non-
affiliated electric utilities in New Hampshire. URI also meets
the requirements to participate in two pilot programs (the "Mass
Pilots") in Massachusetts being conducted by Massachusetts
Electric Company ("Mass Electric"), a subsidiary of New England
Electric System ("NEES"), under the auspices of the MDPU. Under
the first Mass Pilot, residential, small commercial and
industrial customers of Mass Electric, representing 100 million
kilowatthours per year, will be allowed to chose from the retail
suppliers participating in the program. Under the second Mass
Pilot, it is expected that there will be two separate requests
for proposals to supply 200 kilowatthours to the members of the
Massachusetts High Technology Council, Inc. currently being
served by Mass Electric and New England Power Company, a NEES
subsidiary engaged in wholesale power sales, will be restricted
to winning only one bid. The terms of the Mass Pilots have been
reviewed and approved by the MDPU and URI will be eligible to
participate in the Mass Pilots as a supplier. As noted
in the MDPU approval, "in the transition to a competitive market
structure, the pilot programs will provide valuable experience to
[Mass Electric], customers and other participants that will be
active in a competitive market." Because the Unitil system is
franchised in Massachusetts and will be required to participate
in the Massachusetts Industry Restructuring Proceedings and URI
will likely function as the supplier in any resulting programs,
participation in the Mass Pilots will provide particularly
valuable experience to URI and is clearly related to the
system's operations in Massachusetts. Although it is expected
that URI will be authorized to engage in retail activities in the
future in a number of states and most particularly URI expects to
participate as permitted in the Massachusetts Industry
Restructuring Proceedings and the New Hampshire legislative
efforts in the near future, request is hereby made for the SEC to
reserve jurisdiction over retail energy marketing activities
other than sales of electricity in New Hampshire pursuant to the
NH Pilot Program and sales of electricity in Massachusetts
pursuant to the Mass Pilots, pending completion of the record
with information confirming that all necessary state commission
approvals for such retail activities have been granted. Unitil
has notified the MDPU and the NHPUC, the two state regulatory
commissions with jurisdiction over the operating public utilities
in the Unitil holding company systems, of the plan to expand
URI's business activities. Overall, URI will not enter into any
electric power purchase or sale contracts that are not within
federal or state regulatory purview and URI's gas and other
energy commodity marketing activities and Energy Management
activities will be undertaken in accordance with all applicable
federal and state laws.
____________________
Under the provisions of NHRSA 374:26-a, enacted in June of
1995, the New Hampshire Public Utilities Commission (the
"NHPUC") on November 20, 1995, in Docket DR 95-250, issued
Guidelines (the "Guidelines") for a Retail Wheeling Pilot
Program (the "NH Pilot Program"). Under this program
suppliers will have the opportunity, as of May 1996, to make
retail sales to a selected group of retail customers in New
Hampshire under a competitive program operated under the
auspices of the NHPUC. In addition, the New Hampshire
Legislature has recently passed House Bill No. 1392
providing for a transition to full retail competition by
January 1, 1998 and which, if signed by the Governor, would
require state franchised utilities to file compliance plans
by July 1, 1997.
On May 1, 1996, the Massachusetts Department of Public
Utilities (the "MDPU") issued proposed rules in Docket
D.P.U. 96-100 for the restructuring of the electric
industry. Final rules are expected to be adopted in
September 1996, requiring the unbundling of utility
rates by January 1, 1997, and the implementation of a
competitive generation market by January 1, 1998.
See Exhibit D-1.
The proposed expansion of URI's activities will not
result in URI becoming an electric utility company within the
meaning of section 2(a)(3) of the Act or a gas utility company
within the meaning of Section 2(a)(4) of the Act. URI will not
own or operate any facilities used for the generation,
transmission or distribution of electric energy for sale or the
distribution at retail of natural gas for heat, light or power,
and will not invest, directly or indirectly, in such facilities
or operations of any third party, whether through a joint
venture, partnership or debt or equity financing. The Commission
has previously indicated that marketers engaged in the sale
activities in which URI intends to engage are not electric
utility companies as defined in Section 2(a)(3) of the
Act, and has authorized gas marketing subsidiaries as
non-utility subsidiaries.
____________________
See, e.g., Enron Power Marketing, Inc., SEC No-Action
letter, Ref. No. 94-1-OPUR, (Jan. 5, 1994); CRSS Power
Marketing, Inc., SEC No-Action letter, Ref. No. 94-4-
OPUR, (March 31, 1994); Electric Clearinghouse, Inc.,
SEC No-Action letter, Ref. No. 94-5-OPUR, (Apr. 13,
1994); Inter-Coast Power Marketing Co., SEC No-Action
letter, Ref. No. 95-15-OPUR, (Dec. 6, 1994); AIG
Trading Corporation, SEC No-Action letter, Ref. No. 95-
1-OPUR, (Jan. 20, 1995) and Tucson Electric Power Co.,
SEC No-Action letter, Ref. No. 95-20-OPUR,
(September 26, 1995).
Consolidated Natural Gas, HCAR No. 24329 (Feb. 27,
1987).
Section 9(a)(1) of the Act provides that without prior
approval from the Commission, "it shall be unlawful for any
registered holding company or any subsidiary company
thereof, . . ., to acquire, directly or indirectly, any
securities or utility assets or any other interest in any
business." The expansion of the business activities of URI to
include Energy Marketing and Energy Management appears to qualify
as an acquisition of an interest in a new business. Section 10
contains the requirements for an application for such
authorization as well as a number of standards that must be met
for approval, including that the acquisition would not be
"detrimental to the carrying out of the provisions of section
11." Finally, Section 11(b)(1) limits Unitil to a single
integrated utility system and "such other business as are
reasonably incidental, or economically necessary or appropriate"
to the operations of the integrated public utility system of the
holding company. In addition, any services to be performed by
Unitil Service for URI must meet the standards of Section 13 of
the Act and the rules promulgated thereunder.
Energy Marketing and Energy Management are functionally
related to the operations of Unitil's integrated public utility
system as they are closely related to utility operations and
engaging in such activities is in the public interest and the
interest of investors and consumers as well as other Unitil
system companies. First, Unitil believes the utility industry
has evolved in a manner that makes Energy Marketing an essential
part of an operating utility system and entering into this
business is a significant and necessary step in allowing Unitil
to compete in the utility industry. As the Division of
Investment Management recognized in its recent report on the
Regulation of Public Utility Holding Companies, the
utility industry is undergoing dramatic changes and restructuring
that requires utility companies to expand beyond traditional
utility services in order to remain competitive. As a result:
the SEC must continue to respond flexibly to
change in the utility industry. Toward this
end, the Division believes that the
registered holding companies should be
permitted to invest in diversified activities
without unnecessary regulatory obstacles and
recommends consideration of a rule that would
exempt, subject to certain conditions,
investments in specified energy-related
activities from prior SEC approval.
Unitil believes that the proposed Energy Marketing and related
Energy Management Services activities will enhance its ability to
compete in a utility industry which is undergoing dramatic
changes that require utility companies to expand beyond
traditional utility services and offer a complete range of energy
services in order to remain competitive. As the Commission has
recognized, fundamental changes in the energy industry are
leading to an increasingly competitive and integrated market, in
which marketers deal in interchangeable units of energy expressed
in BTU's, rather than natural gas or electricity. The
gas and electric utility industry is undergoing a rapid evolution
toward a broadly based energy-related business, one that is no
longer focused solely on the traditional, regulated, production
and distribution functions of a utility, and one in which a
number of companies, including exempt holding companies, stand-
alone utilities, and power marketing companies, that are not
subject to the Act, are marketing and brokering energy
commodities in an effort to meet growing customer demand for a
full range of energy options.
____________________
The Regulation of Public Utility Holding Companies
(June 1995) (the "Report").
Report at 87.
See Consolidated Natural Gas Company, HCAR No. 26512
(April 30, 1996) (hereinafter, the "CNG Order") ("it
appears that the restructuring of the electric industry
now underway will dramatically affect all United States
energy markets as a result of the growing
interdependence of natural gas transmission and
electric generation, and the interchangeablity of
different forms of energy, particularly gas and
electricity").
For example, UtiliCorp United and Pacific Gas &
Electric Enterprises both have established nonutility
energy services subsidiaries to offer, among other
things, gas and electric power to customers nationwide.
Electric Utility Week, May 8, 1995 (regarding
UtiliCorp); The Energy Daily, August 23, 1995
(Regarding PG&E). See also, Business Wire, April 29,
1996 (discussing NorAm Energy Corp.'s plans for
nationwide gas and electric energy services).
Similarly, Panhandle Eastern Corp. has recently changed
its name to PanEnergy Corp. to "reflect the company's
expanding scope of energy services beyond the
traditional interstate natural gas pipeline business."
(Reuters, April 24, 1996), and Enron Corp. and NGC
Corp., which have significant gas and power marketing
operations, are expanding their operations, indicating
that "customers in the future will want energy
services, not a specific fuel." Inside FERC, February
23, 1996.
Unitil also believes that URI's engaging in Energy
Marketing activities is consistent with national policy, is
beneficial to the Unitil system and is in the public interest as
well as the interests of investors and consumers. Specifically,
URI's Energy Marketing services will contribute to the recognized
national policy to promote efficient and competitive energy
markets. The entry into the market of new power and
gas marketers should promote greater competition in the electric
and gas marketplace and result in lower prices for these
commodities. Thus, various sources of competitively priced
electricity and gas will become more readily available to the
electric power and gas market in general and to the existing
Unitil system operating companies in particular. All consumers
of electric power will benefit as the alternatives for supply of
electricity and gas increase and competition among electric power
and gas suppliers grows, including Unitil system customers.
Unitil believes that these benefits, coupled with URI's risk
management methods and with Unitil's undertaking not to seek
recovery through higher rates to the Unitil system utility
customers for losses on investments in URI for Energy Marketing
activities, minimizes risks to system customers and ensures that
such activities are not detrimental to the proper functioning of
the Unitil system.. To the extent that URI's activities promote
the competitiveness of the Unitil system and to the extent that
URI generated additional profit from its Energy Marketing and
Energy Management services, this business expansion should have a
positive impact on the value of Unitil's capital stock and
therefore be to the benefit of investors as well as consumers.
____________________
See CNG Order ("The Commission has recognized the
national policy to promote efficient and competitive
energy markets"), citing Eastern Utilities Associates,
HCAR No. 26232 and the Report at 22-23 and 30-31.
URI's Energy Marketing and Energy Management
activities also will benefit the Unitil system companies by
permitting allocation of Unitil Service's expenses across a
broader base. To the extent that these new activities
permit greater utilization of Unitil Service's existing
resources, all of the Unitil system companies will benefit.
____________________
For example, a higher percentage of certain fixed costs
of Unitil Service that are allocated based on
proportional use of services from Unitil Service will
likely be allocated to URI, instead of to rate-based
companies.
Finally, URI's proposed Energy Marketing and related
Energy Management Services activities are closely related to the
core utility operations and energy business of the Unitil system,
"reasonably incidental, or economically necessary or appropriate"
to the utility operations of the Unitil system, and "necessary or
appropriate in the public interest or for the protection of
investors and consumers and not detrimental to the proper
functioning" of the Unitil system, as required by the plain
language of section 11(b)(1) of the Act. In addition, the
Commission has previously approved the same type of wholesale and
retail Energy Marketing and related activities proposed here as
being "functionally related" and consistent with the requirements
of section 11(b)(1) as they have been construed by the
Commission.
____________________
See infra notes 23 and 25.
As recommended in the Report, the Commission has
released for public comment a proposed new Rule 58,
which creates a "safe harbor" to exempt from the prior approval
requirements of Sections 9(a)(1) and 10, the acquisition of up to
the greater of $50 million or 15% of the holding company's
consolidated capitalization by registered holding companies of
the securities certain "energy-related" businesses (and, in the
case of gas holding companies, gas-related businesses).
As proposed, the definition of energy related activity includes
"the brokering and marketing of energy commodities, including but
not limited to electricity and natural or manufactured gas," as
well as "the rendering of energy conservation and demand-side
management services." Although the rule has not been promulgated
as of yet and is thus unavailable for the Applicants, proposed
Rule 58 clearly indicates that the Commission may interpret such
marketing and services as acceptable activities within the
parameters of Section 11(b)(1) as it is currently written.
Indeed, the new rule does not contain any geographic or revenue
requirements (e.g., an energy related activity need not occur
within the service territory of the holding company's operating
public utilities, nor must any percentage of operating revenues
from any energy related activity derive from services provided to
associated companies), thereby indicating that Section 11(b)(1)
does not require marketers in a registered holding company system
to meet those standards.
____________________
60 Fed. Reg. 33,642 (June 28, 1995) (the "Release").
As previously discussed, the Unitil system contains
both electric and gas operations.
Moreover, in the recent CNG Order, the Commission
authorized a registered holding company to form a new subsidiary
to "purchase, sell, supply, market, broker or otherwise trade
electricity, gas or other fuels; provide electricity or fuel
management services; and engage in activities or perform services
related to the foregoing." In the CNG Order, the
Commission recognized that activities virtually identical to the
proposed wholesale Energy Marketing services of URI are
functionally related to utility operations within the meaning of
Section 11(b)(1) of the Act in light of current industry
conditions and that the entry into the energy marketing business
by registered holding companies promotes the development of
competitive markets and is consistent with national
policy. It should be noted that in the CNG Order, the
Commission authorized activities in addition to those
contemplated by URI (i.e., Clean Air Act compliance activities)
but did reserve jurisdiction over all retail activities, pending
authorization by the relevant state commissions and, if
necessary, FERC, for the CNG to engage in such activities. The
Commission subsequently has authorized two registered holding
companies operating in New Hampshire and Massachusetts to form
new subsidiaries to participate in the NH Pilot Program and the
Mass Pilots, the same retail activities for which Unitil, a
holding company operating in Massachusetts and New Hampshire, is
requesting authority for URI herein. URI's
participation in the NH Pilot Program and the Mass Pilots is a
part of Unitil's plan to participate effectively in the core of
its business in New Hampshire and Massachusetts. Indeed, in the
case of the NH Pilot Program, the NHPUC has requested that the
Commission permit Unitil and other registered systems that have
utility subsidiaries in New Hampshire to participate in the NH
Pilot Program. Unitil believes such participation meets the
standards of Section 11(b)(1) of the Act.
____________________
CNG Order at 3.
CNG Order at 11-12.
New England Electric System, HCAR No. __ (May __,
1996) and Eastern Utilities Associates, HCAR No. __
(May __, 1996).
Finally, although the CNG Order is an order authorizing
a registered gas system to participate in energy marketing
activities, the Commission based its decision largely on the fact
that "the utility industry is evolving toward a broadly based
energy-related business that is no longer focused solely on
traditional, regulated, production and distribution functions of
a utility, and focused on the evolution of the energy
market through the Federal Power Act, the Energy Policy Act of
1992 ("EPAct") and other legislative initiatives. While the
Commission did note some gas utility-specific initiatives, its
general holding is applicable to energy marketing by both gas and
electric holding company systems. In the case at hand, the
Unitil system is primarily an electric utility system, although
it is also a gas utility system, and Unitil believes in the
interests of national policy and consistent with the standards of
the Act, it should be permitted to compete on the same level and
engage in the same energy marketing activities as gas-only
registered systems.
____________________
CNG Order at 11, citing the Release.
It should be noted that even prior to the CNG Order,
the Commission has authorized various registered companies to
engage in a wide range of gas and some energy marketing
activities in the past. Similarly, the Commission
authorized Northeast Utilities' operating utility subsidiaries
and Northeast Utilities Service Company to expand their business
activities to include the marketing and brokering of power to
non-affiliates both within and outside the operating companies'
service territory. Additionally, a number of other
registered holding companies have entered into the energy
marketing business through their affiliated exempt wholesale
generators ("EWGs"). Pursuant to the terms of EPAct
and Section 32 of the Act, an entity with EWG status, which is
determined by the FERC, is not a public utility company for
purposes of the Act and may be acquired by registered holding
company systems. In a number of decisions, the FERC has noted
that the congressional conference report that accompanied EPAct
specifically stated that the "definition of an EWG has been
drafted to permit an EWG to sell wholesale power that it has not
generated itself." The FERC has interpreted this
language to mean that an EWG can conduct energy marketing
activities involving power it did not generate, and can be
certified to charge market based rates in such transactions,
without jeopardizing its status as an EWG, subject to certain
limitations established by the FERC. Because Unitil
does not currently own an interest in an EWG, it is seeking
separate Commission authorization for its Energy Marketing
activities.
____________________
Release at 12, citing Consolidated Natural Gas Co.,
HCAR No. 24329 (Feb. 27, 1987) (authorizing gas
marketing subsidiary) and Entergy Co., HCAR No. 25848
(June 8, 1993) (authorizing sale of consulting services
to non-affiliates, including expertise relating to
brokering of power).
Northeast Utilities Service Company, HCAR No. 26359
(August 18, 1995). Although Northeast Utilities ("NU")
stated that such marketing activities will occur
principally in the New England, New York, Pennsylvania,
New Jersey, Maryland and Delaware area, no specific
geographic limitations on such activity were imposed by
the Commission. It should be noted that NU's
application to the FERC for authorization to charge
market based rates was initially denied primarily
because the transmission tariff filed by NU did not
follow the pro forma tariff promulgated by FERC. Such
application was recently conditionally granted on the
condition that NU delete the non-conforming language
from its transmission tariff within 15 days of February
14, 1996. See Northeast Utilities Service Company, 74
FERC para. 61,135 (1996).
See, e.g., CNG Power Services Corporation, 71 FERC
para. 61,378 (1995); Southern Energy Marketing, Inc.,
71 FERC para. 61,376 (1995); Wholesale Power Services,
Inc. 72 FERC para. 61,284 (1995) (power marketing by
CINergy affiliate); and Energy Power Marketing
Corporation, 73 FERC para. 61,063 (1995).
See, e.g., CNG Power Services Corporation, 71 FERC
para. 61,378 (1995); LG&E Power Marketing, Inc., 60
FERC para. 61,083 (1994). See also, H.R. Conf. Rep.
No. 102-108, 102nd Cong. 2nd Sees. 388 (1992). The EWG
is defined as "a person engaged directly, or indirectly
through one or more affiliates..., and exclusively in
the business of owning or operating, or both owning and
operating, all or part of one or more eligible
facilities and selling electricity at wholesale."
(emphasis added).
See supra note 11.
Similarly, the Energy Management services for which URI
is requesting authorization herein are functionally related
activities and are permissible within the meaning of Section
11(b)(1) of the Act. Proposed Rule 58 lists "the rendering of
energy conservation and demand side management and services" and
"the development and commercialization of electro-technologies
related to energy conservation, storage and conversion, energy
efficiency . . . and similar innovations" as well as "the sale of
technical, operational, management, and other similar lands of
services and expertise, developed in the course of utility
operations" as energy related activities. In addition, the
Commission has authorized registered holding company subsidiaries
to engage in demand side management services and utility-related
consulting and engineering services numerous times in the past.
See Central and South West Corporation, HCAR No. 26367 (Sept. 1,
1995) (authorizing subsidiary to engage in energy consulting and
demand side management services to customers); American Electric
Power Company, HCAR No. 26267 (April 5, 1995) (authorizing
subsidiary to provide demand side management services); and
General Public Utilities Corp., HCAR No. 25108 (June 26, 1990)
(authorizing engineering and management services subsidiary).
See also, American Electric Power Company, HCAR No. 22468 (April
28, 1982); The Southern Company, HCAR No. 22132 (July 17, 1981);
and New England Electric System, HCAR No. 22719 (Nov. 19, 1982)
(in each case, authorizing formation of new subsidiary to sell
energy management and consulting services to third parties).
Overall, authorization for URI to engage in Energy
Marketing and Energy Management activities will aid in the
development of a more competitive energy marketplace.
Participation by energy marketers such as URI will increase
competitive market pressures and, thus, increase the likelihood
that new products and services will develop as market needs are
identified and that, as a result, customer choice will increase.
As set forth above, URI's proposed Energy Marketing and related
Energy Management activities are closely related to the core
energy business of the Unitil system and are "reasonably
incidental or economically necessary or appropriate" thereto
within the meaning of Section 11(b)(1) of the Act and
accordingly, Unitil should be permitted to engage in competitive
Energy Marketing and Energy Management activities through URI,
which will then allow URI to compete on the same basis as other
companies.
B. Request for Authority for Unitil to Provide
Indemnifications and Guarantees to URI
URI may, from time to time, need Unitil to indemnify
third parties, to guarantee performance of its obligations or
payment of its debts and/or to act as surety for its activities.
The need for such guarantee authority relates to the market
practice pursuant to which energy marketing companies, such as
URI, demonstrate their financial credibility with customers.
Energy marketing companies, though entering into many contracts
for high volumes of gas or power, are often not highly
capitalized due to the nature of their operations. This absence
of high capitalization has caused some would-be customers to be
apprehensive of the risk of dealing with such marketing
companies. However, often times such marketing companies are
subsidiaries of financially strong parent companies.
Consequently, the usual method for establishing the financial
credibility of the marketing company is by the parent (such as
Unitil) standing behind its subsidiary through guarantees, thus
allowing the subsidiary to compete effectively in increasingly
deregulated markets. The Applicants request approval through
December 31, 2000 for Unitil to indemnify and guarantee the power
and fuel transactions of URI. Such indemnities and guarantees
will not exceed more than $30,000,000 in the aggregate
outstanding at any one time.
C. Request for Authority for Unitil
Service to Provide Services to URI
As stated above, URI will contract with Unitil Service
for personnel to perform most of URI's Energy Marketing and
Energy Management activities. Services provided by Unitil
Service personnel to URI will not impair the ability of Unitil
Service personnel to continue to provide services to other system
companies. As a result, the Applicants do not anticipate the
need to hire additional employees at the outset in order to
perform assignments obtained by URI at this time.
While Unitil Service employees are assigned to a URI activity,
they will continue to be employees of and paid by Unitil Service.
URI will reimburse Unitil Service for their compensation,
including benefits, during that time pursuant to the terms of the
existing service company agreement between URI and Unitil
Service. Unitil Service will also continue to provide URI with
accounting, credit, financial, management, technical and clerical
support in accordance with the terms and conditions of the
existing service agreement between URI and Unitil Service. No
more than five percent of the employees of the Unitil holding
company system will render, directly or indirectly, services to
URI at any one time. In addition, URI will continue to be
subject to the existing limitation that no more than 5% of the
employees of Unitil's public utility subsidiaries render,
directly or indirectly, services to URI at any one
time. All costs associated with such staff (including
compensation, overhead and benefits) will be fully reimbursed by
URI in accordance with Rules 90 and 91. Reimbursements for these
costs will be on a thirty-day cycle in accordance with the
requirements of the existing service agreement between URI and
Unitil Service. The Applicants request authority for Unitil
Service to provide the additional services to URI, necessary to
allow URI to undertake Energy Marketing and Energy Management
activities as testified above.
____________________
If URI's operations expand significantly, the
Applicants may decide that it has become viable to hire
a separate staff for URI, which would also ensure that
URI's increased operations do not impair other system
company operations.
See 1993 URI Order. Although the Commission has
limited certain registered holding company systems to
no more than 2% of operating company personnel to be
engaged in certain non-utility operations in other
situation, given Unitil's small size, 2% of such
personnel would be insufficient for URI's operations.
Moreover, it is important to keep in mind that unlike
the situation in the NEES Order, URI is not a newly
formed subsidiary engaged solely in retail marketing
activities. URI, in fact, will not only undertake
wholesale activities and Energy Management activities
but will also continue to offer the consulting services
authorized in the 1993 URI Order. URI will need
personnel for each of these activities. Unitil
believes that the 5% limit coupled with its undertaking
that URI's use of personnel will not interfere with
Unitil's operating companies operations provides a
sufficient safeguard for the operating companies.
D. Involvement of Unitil System
Companies with Exempt Wholesale
Generators and Foreign Utility
Companies
Neither Unitil nor any subsidiary thereof presently
has, or as a consequence of the proposed transaction will have,
an interest in any EWG or foreign utility company ("FUCO"), as
those terms are defined in Sections 32 and 33 of the Act,
respectively. None of the proceeds from the proposed
transactions will be used by URI to acquire any securities of, or
any interest in, an EWG or FUCO. Moreover, neither Unitil nor
any subsidiary thereof is, or as a consequence of the proposed
transaction will become, a party to, and such entities do not and
will not have any rights under, a service, sales or construction
agreement with any EWGs or FUCOs except in accordance with the
rules and regulations promulgated by the Commission with respect
thereto. All applicable requirements of Rule 53(a)-(c), 17
C.F.R. Section 250.53(a), (b) and (c) are satisfied as required
by Rule 54 and, in any event, Unitil does not own any interest in
any EWG or FUCO.
E. Reports to be Filed with the Commission
URI will continue to file quarterly reports with the
Commission within 60 days after the end of each calendar quarter
as currently required by the 1993 URI Order. These reports will
include the following additional information:
(1) Description of the Energy Marketing and Energy
Management activities undertaken by URI, including
the type of activity, the name(s) of clients, the
location(s) where the activities took place, the
nature of the legal instrument under which such
activities were performed; and the compensation
received during the quarter and cumulatively to
date. URI will also provide the Commission with a
break-down of the number of kilowatt hours sold,
by customer class, by URI broken down between
retail and wholesale power marketing or power
sales;
(2) Description of expenses incurred by URI in
connection with Energy Marketing and Energy
Management activities, during the quarter and
cumulatively to date;
(3) Description of the staffing of URI's Energy
Marketing and Energy Management projects during
the quarter and cumulatively to date, including
the number and type of personnel assigned by
Unitil Service, noting the percentage of time
committed to the projects; and
(4) A balance sheet, a twelve months ending income
statement and a statement of cash flow on either a
divisional basis or consolidating basis that will
identify wholesale and retail power marketing,
energy commodity sales and Energy Marketing and
Energy Management services.
In addition, URI will continue to file with the
Commission an annual report of its activities for the preceding
calendar year using, where appropriate, the Form U-13-60
reporting format pursuant to Rule 94.
Item 2. FEES, COMMISSIONS AND EXPENSES
The fees, commissions and expenses of the Applicants
expected to be paid or incurred, directly or indirectly, in
connection with the transactions described in this Application
are estimated as follows:
Commission filing fee
relating to the Application . . . . . . . . . $ 2,000
Legal fees . . . . . . . . . . . . . . . . . . $25,000
Miscellaneous . . . . . . . . . . . . . . . . . $ 5,000
Total . . . . . . . . . . . . . . . . . . $32,000
Item 3. APPLICABLE STATUTORY PROVISIONS
The sections of the Act, and rules or exemptions
thereunder, that the Applicants consider applicable to the
transactions described in this Application are set forth below:
(i) Authorization for URI to Sections 9(a) and 10
provide energy marketing
and related services
(ii) Services provided by Section 13(b), Rules
Unitil Service to URI 87(b)(1), 90 and 91
(iii) Indemnification of third Sections 6(a), 7 and
parties, guarantees of 12(b), Rules 45 and
payment and performance, 54
acting as a surety
To the extent that the transactions described in this
Application are considered by the Commission to require
authorization, approval or exemption under any section of the Act
or the rules thereunder other than those specifically referred to
in this Application, Unitil, URI and Unitil Service hereby
request such authorization, approval or exemption.
Item 4. REGULATORY APPROVALS
The FERC has jurisdiction over any interstate wholesale
electric power sales by URI, and any related interstate
transmission arrangements as well as wholesale gas sales.
Unitil's wholly-owned subsidiary, Unitil Power Corp., has a
pending application filed with the FERC for approval of its
proposed tariff for power sales to suppliers participating in the
NH Pilot Program, including URI. Proposed power marketing
transactions of URI with retail customers, and rates and terms
for those transactions must meet the requirements of state law
and will be conducted under the regulatory purview of the
appropriate state utility regulatory commissions. URI has
submitted the requisite information to the NHPUC and is
authorized to participate in the NH Pilot Program as a supplier
in accordance with the requirements established by the NHPUC.
URI also meets the criteria approved by MDPU to participate as a
supplier in the Mass Pilots. No state regulatory body or agency
and no Federal agency or commission, other than this Commission,
has jurisdiction over the proposed securities and service
transactions described in this Application.
Item 5. PROCEDURE
The Commission issued and published the requisite
notice under Rule 23 with respect to the filing of this
Application on March 8, 1996, and no intervention occurred within
the specified time period. The Commission may therefore issue an
order granting and permitting this Application to become
effective.
The Applicants respectfully request that appropriate
and timely action be taken by the Commission in this matter. No
recommended decision by a hearing officer or other responsible
officer of the Commission is necessary or required in this
matter. The Division of Investment Management of the Commission
may assist in the preparation of the Commission's decision in
this matter. There should be no thirty-day waiting period
between the issuance and the effective date of any order issued
by the Commission in this matter, and it is respectfully
requested that any such order be made effective immediately upon
the entry thereof.
Item 6. EXHIBITS AND FINANCIAL STATEMENTS
a. Exhibits
D-1 Letter Order of MDPU
D-2 Summary of Terms of Retail Pilot Programs
F-1 Opinion of Counsel
F-2 "Past Tense" Opinion of Counsel
(to be filed by amendment)
G-1 Proposed Form of Public Notice (previously filed)
b. Financial Statements
(1) Unitil Corporation and Subsidiary
Companies
Consolidated Statements of Earnings (previously
filed)
(2) Unitil Corporation and Subsidiary
Companies Consolidated Balance
Sheets (previously filed)
(3) Unitil Corporation and Subsidiary
Companies Consolidated Statements of
Cash Flows (previously filed)
(4) Unitil Corporation and Subsidiary
Companies Notes to Consolidated
Financial Statements (previously
filed)
Item 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS
None of the matters that are the subject of this
Application involve a "major Federal action" nor do they
"significantly affect the quality of the human environment" as
those terms are used in section 102(2)(C) of the National
Environmental Policy Act. None of the transactions that are the
subject of this Application will result in changes in the
operation of the company that will have an impact on the
environment. The Applicants are not aware of any Federal agency
which has prepared or is preparing an environmental impact
statement with respect to the transactions which are the subject
of this Application.
SIGNATURE
Pursuant to the requirements of the Public Utility
Holding Company Act of 1935, the undersigned companies have duly
caused this Application to be signed on their behalf by the
undersigned thereunto duly authorized.
Unitil Corporation
Unitil Resources, Inc.
Unitil Service Corp.
By: /s/ Gail A. Siart
Gail A. Siart
Secretary and Treasurer
Unitil Corporation
Vice President and Treasurer
Unitil Resources, Inc.
Senior Vice President
Unitil Service Corp.
Date: May 20, 1996
May 20, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Gentlemen:
This opinion is furnished to the Securities and
Exchange Commission (the "Commission") in connection with the
filing with the Commission of the Application/Declaration on
Form U-1 (File 70-8773) of Unitil Corporation (the "Company") and
its wholly-owned subsidiaries, Unitil Resources, Inc. ("URI") and
Unitil Service Corp. ("Unitil Service") under the Public Utility
Holding Company Act of 1935 (the "Application"). The Application
seeks an expansion of the Commission's authorization of the
activities of URI and the provision of related services by Unitil
Service.
We have acted as counsel for the Company, URI and
Unitil Service and in connection with this opinion we have
examined originals or copies certified or otherwise identified to
our satisfaction of:
(1) The charter documents and by-laws of the Company,
URI and Unitil Service, as amended to date;
(2) Minutes of meetings of the Company's, URI's and
Unitil Service's shareholders and directors, as kept in
their respective minute books;
(3) The Commission's order dated May 24, 1993 (HCAR
No. 25816) authorizing the current activities of URI; and
(4) The documents and agreements pertaining to the
transactions described in the Application and such other
certificates, documents and papers as we deemed necessary or
appropriate for the purpose of rendering this opinion.
In such examination, we have assumed the genuineness of
all signatures, the authenticity of all documents submitted to us
as originals and the conformity to the original documents of all
documents submitted to us as copies. As to any facts material to
our opinion, we have, when relevant facts were not independently
established, relied upon the aforesaid agreements, instruments,
certificates and documents. In addition, we have examined such
questions of law as we considered necessary or appropriate for
the purpose of rendering this opinion.
Based on the foregoing, and subject to the final
paragraph hereof, we are of the opinion that when the Commission
has taken the action requested in the Application:
(1) All state laws applicable to the transactions described
in the Application have been complied with;
(2) The Company, URI and Unitil Services are validly
organized and duly existing;
(3) When issued as described in the Amendment, any evidence
of indebtedness issued by URI to non-affiliates, and
any guarantee by the Company in respect thereof, will
be valid and binding obligations of URI and the
Company, respectively, in accordance with their terms,
subject to laws of general application with respect to
rights and remedies of creditors and subject to
equitable principles; and
(4) The consummation of the transactions described in the
Application will not violate the legal rights of the
holders of any securities issued by the Company, URI or
Unitil Service.
We hereby consent to the use of this opinion as an
exhibit to the Application.
We are not, in this opinion, opining on laws other than
the laws of the State of New Hampshire and the federal laws of
the United States.
Very truly yours,
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
April 3, 1996
Thomas G. Robinson, Esq.
Massachusetts Electric Company
25 Research Drive
Washington, MA 01582
Re: Retail Access Pilot Programs
Dear Mr. Robinson:
On March 4, 1996, Massachusetts Electric Company
("MECo" or "Company") submitted two retail access pilot programs
to the Department of Public Utilities ("Department") for review.
In the first pilot program, the Company proposes to implement
retail choice to residential and small commercial and industrial
customers in the communities of Lawrence, Lynn, Northampton, and
Worcester. The second pilot program extends retail
choice to members of the Massachusetts High Technology Council
("MHTC") who are currently served under the Company's G-3
rate. The Company proposes to commence the residential
and small commercial and industrial pilot effective September 1,
1996, and the MHTC pilot effective July 1, 1996. The
Company has provided unbundled rates for each pilot program that
tie directly to its February 16, 1996 industry restructuring
proposal. See D.P.U. 96-25, Exhibit PTZ-13.
____________________
The residential and small commercial and industrial pilot
would be available to customers currently served under the
R-1, R-2, R-4, G-1, and G-2 rates for up to 10,000 customers
representing 100 million kilowatthours per year (50 million
set aside for residential customers) of electricity usage.
The second pilot program would provide retail choice for up
to 200 million kilowatthours of electricity usage.
The residential and small commercial and industrial pilot
would terminate on December 31, 1997, and the MHTC pilot
would continue until direct access is generally available to
customers.
The Company stated that approval of the pilot programs
is appropriate for several reasons (MECo Cover Letter at 2).
First, the pilot programs will allow the Company to test the
metering and billing protocols that will be used to develop
broader programs. Second, the pilot programs will allow
suppliers to aggregate loads, transfer capability
responsibilities, and work through the NEPOOL settlement process.
Third, the pilot programs will provide a test of the market. In
addition, the Company stated that, because participation is
voluntary and participants may return to MECo's filed rates at
any time, customers will not be harmed by the pilot programs.
The Company also stated that, because New England Power Company
will bear the risk of any under-recovery, non-participants will
not be harmed by the pilot programs (DPU-IR-3).
In the transition to a competitive market structure,
the pilot programs will provide valuable experience to the
Company, customers, and the other participants that will be
active in a competitive market. Accordingly, with the
understanding that the Company's customers that do not
participate in the programs are not harmed by their
implementation, the Department approves the pilot programs. In
addition, the Department understands that the Company will file a
pilot distribution tariff with the Federal Energy Regulatory
Commission, with the rates, terms and conditions approved by the
Department. Finally, in approving the pilot programs, the
Department makes no findings on the merits of the Company's
restructuring proposal (D.P.U. 96-25).
Sincerely,
/s/
John B. Howe, Chairman
/s/
Mary Clark Webster, Commissioner
/s/
Janet Gail Besser, Commissioner
cc: Mary L. Cottrell
George Dean, Assistant Attorney General
Summary of Retail Electric Pilot Programs
1. New Hampshire
The NHPUC has stated that the NH Pilot Program is designed
"to determine whether retail competition in the electric utility
industry can promote lower retail rates for all customers without
compromising the reliability and safety of the power supply
system." Order of the New Hampshire Public Utilities Commission
on the Retail Competition Pilot Program Establishing Final
Guidelines and Requiring Compliance Filings (Order No. 22,033,
dated Feb. 28, 1996). The NH Pilot Program will gather
information on the demand, by customer class, for competitive
electric services and the interest of competitive generators to
supply those services. It will also test whether customers of
all classes have sufficient bargaining power to benefit from a
deregulated power market. The NHPUC guidelines request state
utilities to file transmission tariffs with the FERC and the New
Hampshire commission to guard against discriminatory and
anticompetitive transmission access. Providing additional
protection, the NHPUC will remain involved in the implementation
of the New Hampshire Pilot Program. The NHPUC will monitor the
progress of the New Hampshire Pilot Program, in part, through
information required to be submitted by franchised utilities,
competing suppliers and New Hampshire Pilot Program customers.
In addition, the NHPUC will be available to resolve disputes
between customers, utilities and competitive suppliers.
The New Hampshire Pilot Program requires participating
customers to negotiate their supply of electric power. The
customer, either directly or through an energy broker, marketer
or other agent, will be responsible for obtaining generation,
transmission and distribution services. The customer may opt to
purchase all the services from one supplier. The customer bears
all financial and reliability risks. To mitigate such risks, the
New Hampshire Pilot Program requires all competitive electric
suppliers to obtain NEPOOL membership or contract with a NEPOOL
member.
2. Massachusetts
In a submission to the Massachusetts Commission proposing
the pilot programs, Mass Electric represented that the
Massachusetts Pilots will test the potential for customers to
lower their electric bills in a competitive marketplace. Mass
Electric further stated that the Massachusetts Pilots are
designed to allow Mass Electric to work out logistical and
administrative details of retail choice, such as metering and
billing, before retail wheeling is implemented on a state-wide
basis. In addition, the pilot programs proposed by Mass Electric
provide safeguards to protect consumers. As in the New Hampshire
Pilot Program, the Massachusetts Pilots require electric
suppliers to be, or to contract with, members of NEPOOL. In
addition, pilot participants may opt to return to standard
service at any time. Finally, Mass Electric has represented that
it will not attempt to shift any losses to captive ratepayers.
The Massachusetts Commission approved implementation of the
pilots in reliance on these factors, with the specific
understanding that customers of Mass Electric that do not
participate are not harmed. See Letter, dated April 3, 1996,
from the Chairman and commissioners of the Massachusetts
Commission to Thomas G. Robinson, counsel for Mass Electric. The
Massachusetts Commission further conditioned its approval on Mass
Electric filing distribution tariffs for the pilot programs with
the FERC, with the rates, terms and conditions approved by the
Massachusetts Commission.
The first Massachusetts Pilot, beginning July 1, 1996, will
provide retail choice to high technology customers that are
member of the Massachusetts High Technology Council ("Technology
Council") (this program is hereinafter referred to as the "MHTC
Pilot"). The second Massachusetts Pilot will offer
retail choice to residential and small commercial and industrial
customers in the communities of Lawrence, Lynn, Northampton and
Worcester beginning September 1, 1996 (this program is
hereinafter referred to as the "Community Pilot"). Under
the MHTC Pilot, the Technology Council will solicit bids from
alternative power suppliers, and select one supplier for each
bid, on behalf of its Pilot participants. Under the community
Pilot, a program administrator will be responsible for
choosing the power supply options, and marketing and
administering the program for participating customers. Winning
bidders in both Massachusetts Pilots must be a member of NEPOOL
or, if not, have an agreement with a NEPOOL member, which will
ensure that NEPOOL requirements concerning supply and reliability
are met.
____________________
The MHTC Pilot will provide retail choice for up to 200
million kilowatthours of electricity usage.
The Community Pilot will be available to up to 10,000
customers representing 100 million kilowatthours per year of
electricity usage.
The administrator will be hired by Mass Electric. Mass
Electric will pay the administrator a fixed fee plus a bonus
for delivering program participants, the total of which
shall not exceed $75,000. The Community Pilot provides that
this amount will be added to the generation price that
customers pay.
Mass Electric will charge all power suppliers for
distribution, transmission and access, at regulated rates.