State's Consumer Advocate Seeks Changes Which Would Lower Default Service Rates

The New Hampshire Office of the Consumer Advocate has sought acceptance of testimony in a Public Service of New Hampshire semi-annual default service rate proceeding at the NH PUC in order to seek changes to the carrying charges applicable to default service over and under-collections, which would have the effect of lowering any bypassable reconciliation charge needed to be included in default service rates (or increasing any bypassable refund included in default service rates)

Notably, OCA does not propose uniformity in the interest rate which should be applied to under-collections and over-collections

OCA proposes that default service undercollections should accrue interest at the rate of A2/P2 90-day nonfinancial commercial paper, as published by the Federal Reserve.

Currently, all over and under-collections accrue interest at PSNH's average cost of debt, which OCA said is essentially PSNH’s long-term borrowing costs, since PSNH's blended cost of debt is, in OCA's words, "dominated" by long term debt

Generally, and on average, short term debt has lower interest rates than long-term debt, with OCA providing illustrative examples in its testimony, though specific rates and costs are dependent on the time at which the debt was entered into

For over-collections, OCA recommends that the balance should earn interest at 4.20 percent plus the Federal Reserve’s published one-year inflationary expectations.

Generally, OCA's proposed interest rate for over-collections would be higher than the proposed interest rate for under-collections

Docket DE 26-017