Exhibit 10(c)


 


	
  STATE OF MAINE

  	
   

  	
  Docket No. 2006-24

  
	
  PUBLIC UTILITIES COMMISSION

  	
   

  	
   

  
	
   

  	
   

  	
  July 11, 2006

  
	
   

  	
   

  	
   

  
	
  MAINE PUBLIC SERVICE COMPANY

  	
   

  	
  CORRECTED(1) ORDER

  
	
  Proposed Distribution Rate Increase of

  	
   

  	
  APPROVING

  
	
  $3.24 Million or 19.7% Increase

  	
   

  	
  STIPULATION

  



 


ADAMS, Chairman;
REISHUS, Commissioner


I.              SUMMARY


We approve a Stipulation entered into by Maine Public Service Company
(MPS) and the Office of the Public Advocate. 
By the terms of the Stipulation, MPS is authorized to increase its distribution
rates by $1,750,000, or by 10.6%, effective July 15, 2006.  In conjunction with rate changes for
transmission and DSM (conservation) assessments effective the same day, MPS
total delivery rates will increase by 3.84%.


II.            BACKGROUND


On March 13, 2006, MPS filed a request for an increase in distribution
rates of $3.24 million, or 19.7%.  After
issuing a notice of the proceeding, the Examiner granted petitions to intervene
on behalf of the OPA, Houlton Water Company (Houlton) and Van Buren Light and
Power District (Van Buren).(2)


After an initial case conference, the intervenors and Advisory Staff
engaged in extensive discovery and participated in a technical conference, in
which MPS representatives answered additional and follow-up questions.  After MPS filed responses to the oral data requests
posed at the technical conference, MPS, the OPA and the Advisory Staff
participated in a number of settlement conferences.(3)  On June 23, 2006, MPS filed a Stipulation
signed by MPS and the OPA.  The Stipulation
purports to resolve all issues in the proceeding.  The Advisory Staff joined in the negotiations
and






(1) The correction is to the last sentence in paragraph 3 on page
2.  The word "provide" has been
changed to "preclude" and a comma has been added after the word
affiliate, in the same sentence.  This
change corrects typographical errors in the July 6 version, and makes the Order
consistent with the language in the Stipulation.


(2) The Examiner also granted limited
intervenor status to Bangor Hydro-Electric Company (limited to filing briefs or
other written argument).


(3)
The conferences were held at the Commission or by telephone and were noticed to
all parties.











recommends
approval of the Stipulation.(4)  Houlton
and Van Buren have not signed the Stipulation, but have indicated that they do
not oppose the Stipulation.


III.           DESCRIPTION OF THE STIPULATION


The parties agree that MPS will be permitted to increase its distribution
rates by $1,750,000, resulting in a revenue requirement of $18,221,503.  The parties agree that the revenue
requirement is based upon a 2005 test year, a rate of return on common equity
of 10.2% and a capital structure having a 50% equity component.


Although the stipulating parties do not agree on all the specific pro
forma adjustments that result in transforming the 2005 test year results into
an annual revenue requirement of $18,221,503, they do agree on certain
ratemaking adjustments that will have precedential effect going forward.  As set forth in Exhibit 4 to the Stipulation,
the parties agree that stranded cost amortization expense and income tax
expense shall be excluded for cost allocation calculations when apportioning
common costs of the Maine and Maritimes Corporation affiliated companies and that
the MPS Cost Allocation Manual will be interpreted to be consistent with
Exhibit 4 in future distribution rate cases at the Commission and transmission
rate cases at FERC.


The parties also agree on future cost allocation for MPS’s Oracle
financial software system which MPS implemented in June, 2004 and which
consists of an Oracle data base implemented by Delinea and hosted by Delinia.  The parties agree that MPS will amortize the
costs associated with the Oracle System over 10 years, as stated in more detail
in Section 6 (a) of the Stipulation.  In
addition, the parties agree that one-third of the “administrative and general”
costs associated with the Oracle System (defined as costs associated with the
software license maintenance fee, the Delinea hosting fee and Oracle-related
travel costs) shall be allocated to the parent company Maine & Maritimes
Group (MAM), and that the Cost Allocation Manual will be interpreted to preclude
the recovery by MAM, or any MAM affiliate, of Oracle System costs in any
charges from MAM to MPS.


In the 2005 MPS transmission rate case, the FERC accepted a stipulation
stating that the resolution of the cost recovery and cost allocation issues
arising from the implementation of the Oracle System by the Maine Commission
would be used by the FERC as a template for the resolution of the same issues
for transmission rate setting after 2005. 
Thus, the Oracle System cost allocation will be used in both future
distribution and transmission rate cases.


The stipulating parties also agree to a Service Quality Performance Proposal.  The Proposal requires MPS to issue yearly
reports regarding its service performance in ten categories, but has no
monetary penalty or reward feature.  The
parties state that adoption of the Proposal is not intended to establish any
presumption that the






(4)
The parties to the Stipulation have waived the requirement in this case that
the Advisory Staff's recommendations be contained in a written Examiner's
Report.



 2
 








categories
selected, or performance benchmarks adopted should be used in any future
alternative rate plan or other service performance benchmarking plan.  Finally, the Advisory Staff, MPS and the OPA
also agree to engage in a collaborative effort with other interested parties to
review and, if warranted, redesign the Company’s Power Pact Program.


IV.           DECISION


As we have now stated on many occasions, to accept a
stipulation the Commission must find that:


1.                                       the
parties joining the stipulation represent a sufficiently broad spectrum of
interests that the Commission can be sure that there is no appearance or
reality of disenfranchisement;


2.                                       the
process that led to the stipulation was fair to all parties; and


3.                                       the
stipulated result is reasonable and is not contrary to legislative mandates.


See
Central Maine Power Company, Proposed Increase in Rates, Docket
No. 92-345(II), Detailed Opinion and Subsidiary Findings (Me. P.U.C. Jan. 10,
1995), and Maine Public Service Company,
Proposed Increase in Rates (Rate Design), Docket No. 95-052, Order
(Me. P.U.C. June 26, 1996).  We have also
recognized that we have an obligation to ensure that the overall stipulated
result is in the public interest.  See Northern Utilities, Inc., Proposed Environmental
Response Cost Recovery, Docket No. 96-678, Order Approving
Stipulation (Me. P.U.C. April 28, 1997). 
We find that the proposed Stipulation in this case meets these criteria.


The Stipulation
before us was entered into by the utility, and the OPA.  In past cases, we have found that these
entities, representing often opposite views in the ratemaking process,
constitute a sufficiently broad spectrum of interests to satisfy the first
criteria.  See Public Utilities Commission, Investigation of Stranded Cost
Recovery, Transmission and Distribution Utility Revenue Requirements and Rate
Design of Bangor Hydro-Electric Company (Phase II), Docket No.
97-596, Order at 6 (Feb. 29, 2000) and Maine
Public Utilities Commission, Investigation of Retail Electric Transmission
Services and Jurisdictional Issues, Docket No. 99-185, Order
Approving Stipulation (Maine Public Service Company) at 3 (Aug. 11, 2000).  In this case, we also note that our Advisory
Staff was an active participant in the settlement process and has not indicated
any objection to the Stipulation.  We
are, therefore, satisfied that a broad spectrum of interests is represented by
the Stipulation.


Second, we
conclude that the process that led to the Stipulation was fair.  The settlement process was initiated by
procedural order of the Examiner, and the settlement discussions took place at
the Commission or by phone conference to which parties were given the dial-in
number.



 3
 








Finally, we find
that the stipulated result is reasonable, not contrary to the public interest
and consistent with Legislative mandates. 
Negotiations did not begin until the OPA and Advisory Staff reviewed MPS’s
filing and extensive data responses.  By
that time, both OPA and Staff could identify the issues presented by MPS’s
revenue requirement analysis and to have a preliminary view as to proper
resolution of those issues.


As indicated
above, the Advisory Staff recommends approval of the Stipulation.  In Staff’s view, the Stipulation represents a
reasonable compromise of the issues presented by MPS’s rate case.  The issues as reported to us by our Advisory
Staff, and as raised by either or both the OPA and Staff are: return on equity
and equity ratio; recovery of start-up costs, mostly incurred in 2004, to
implement Sarbanes-Oxley requirements; sales forecast; the reasonableness of
the Oracle System costs to MPS, including whether those costs are properly
allocated among MAM, MPS and the other subsidiaries; whether the common cost
allocator should include stranded costs and income taxes in the formula; the
non-recurring nature of certain test year expenses; and the effective tax rate
for MPS given that MPS does not file its own tax return but files as part of
the consolidated return for MAM.


In Staff’s view,
the Stipulation resolves these issues is in a manner that is both reasonable
and consistent with the Commission’s precedent and produces a revenue
requirement that falls within a reasonable range.  Although the stipulating parties (and Staff)
do not agree on the precise calculation of the stipulated revenue requirement,
we have reviewed that Staff’s calculation of the revenue requirement value of
those issues and its analysis of the likely outcomes if the case is fully
litigated and agree with Staff’s recommendation that the stipulated revenue
requirement is reasonable.  In addition,
we agree with Staff’s conclusion that the resolution of those issues that are
specifically spelled out are also reasonable. 
The Commission employed a consultant to assist in determining the
reasonableness of the Oracle System costs. 
There was some concern that the software system and hosting arrangement
was more elaborate than necessary for the T&D utility in order to meet the
needs of the entire MAM group.  In Staff’s
view, the Oracle System going-forward cost allocation is reasonable (the
allocation to MAM of one-third of the administrative and general costs) because
it is based upon the estimated costs of an alternative financial software
system used by another public utility.


The OPA’s
consultant raised the common cost allocation formula issue.  As stranded costs are not an operating cost,
it seems logical to exclude them from the formula meant to allocate common
on-going costs.  Likewise, income taxes
are negative for some of the affiliated companies.  It seems proper to also exclude then from the
formula.  We note that the agreement to
adopt this resolution of the common cost allocation formula in the transmission
rate case contest is a benefit that could not be achieved through litigation.


Accordingly, we



 4
 








ORDER


1.             That
the attached Stipulation filed on June 23, 2006 is approved;


2.             That
Maine Public Service Company shall file rates that are consistent with this
Order and the Stipulation; and,


3.             That
the Accounting Orders described in the Stipulation are granted by this Order
Approving Stipulation.


Dated at Augusta, Maine, this 11th day of July, 2006.


	
   

  	
  BY ORDER OF THE COMMISSION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Dennis L. Keschl

  	
   

  
	
   

  	
  Acting Administrative
  Director

  	
   

  



 


 


	
  COMMISSIONERS VOTING FOR:

  	
   

  	
  Adams

  
	
   

  	
   

  	
  Reishus

  



 



 5
 








NOTICE OF RIGHTS TO REVIEW OR APPEAL


5 M.R.S.A. § 9061 requires the Public Utilities
Commission to give each party to an adjudicatory proceeding written notice of
the party’s rights to review or appeal of its decision made at the conclusion
of the adjudicatory proceeding.  The
methods of review or appeal of PUC decisions at the conclusion of an
adjudicatory proceeding are as follows:


1.             Reconsideration
of the Commission’s Order may be requested under Section 1004 of the Commission’s
Rules of Practice and Procedure (65-407 C.M.R.110) within 20 days of the date
of the Order by filing a petition with the Commission stating the grounds upon
which reconsideration is sought.


2.             Appeal
of a final decision of the Commission may be taken to the Law Court by
filing, within 21 days of the date
of the Order, a Notice of Appeal with the Administrative Director of the
Commission, pursuant to 35-A M.R.S.A. § 1320(1)-(4) and the Maine Rules of
Appellate Procedure.


3.             Additional
court review of constitutional issues or issues involving the justness or
reasonableness of rates may be had by the filing of an appeal with the Law
Court, pursuant to 35-A M.R.S.A. § 1320(5).


Note:                   The attachment
of this Notice to a document does not indicate the Commission’s view that the
particular document may be subject to review or appeal.  Similarly, the failure of the Commission to
attach a copy of this Notice to a document does not indicate the Commission’s
view that the document is not subject to review or appeal.



 6















 





Kimball L. Kenway


kkenway@curtisthaxter.com


ELECTRONICALLY FILED ON JUNE 23, 2006


Dennis M. Keschl


Acting Administrative Director


Maine Public Utilities Commission


State House Station 18


Augusta, Maine  04333-0018


Re:                             MAINE
PUBLIC SERVICE COMPANY: Proposed Rate Change

MPUC Docket No. 2006-024


THIS IS A VIRTUAL DUPLICATE OF
THE ORIGINAL HARDCOPY SUBMITTED TO THE COMMISSION IN ACCORDANCE WITH ITS ELECTRONIC
FILING INSTRUCTIONS


Dear Dennis:


Enclosed for
filing in the above-noted matter please find a Stipulation which, if adopted by
the Commission, will resolve all issues in this case.  The Stipulation has been executed by
Mr. Bryant, on behalf of the Office of the Public Advocate, and the
undersigned, on behalf of Maine Public Service Company (“MPS”).  The parties wish to extend their thanks to
the Commission Staff Advisors, who assisted the parties in achieving this
Stipulation.


Please note that
the Stipulation contemplates that the new distribution rates will be
implemented on July 15, together with the implementation of new transmission
and DSM rates.  We ask that the matter be
placed on the Commission’s agenda for prompt action so that we may proceed with
the compliance phase of this case.


The non-signatory
parties, Houlton Water Company, Van Buren Power and Light District, and Bangor
Hydro-Electric Company, were provided with stipulation drafts and invited to
participate in all of the settlement meetings and conferences calls leading to
this Stipulation.  MPS will be contacting
them to discuss the Stipulation in the next few days.


Thank you for your
attention to this matter.


	
   

  	
  Very truly yours,

  
	
   

  	
  

  
	
   

  	
  Kimball L.
  Kenway

  



 


cc.  All Parties
(via electronic mail, except as otherwise requested)

















	
  STATE OF MAINE

  	
   

  	
   

  
	
  PUBLIC UTILITIES COMMISSION

  	
   

  	
  Docket
  No. 2006-24

  
	
   

  	
   

  	
   

  
	
  MAINE PUBLIC SERVICE COMPANY

  	
   

  	
   

  
	
  Proposed Distribution Rate Increase of

  	
   

  	
   

  
	
  $3.24 Million or 19.7% Increase

  	
   

  	
  STIPULATION

  



 


A.            Introduction,
Procedural History, and Summary of Stipulation.


On March 13, 2006, Maine Public Service Company (“MPS,”
“the Company”) filed a request for an increase in its distribution rates of
$3.24 Million, or 19.7%.  At the initial
case conference held on April 18, 2006, the Examiner granted full intervention
status to the Office of the Public Advocate (“OPA”), Houlton Water Company and
the Van Buren Power and Light District, and limited intervention status to
Bangor Hydro-Electric Company.


OPA issued, and MPS responded to, a series of written
data requests.  In addition, the
Commission held a technical conference on May 11 generating several oral data
requests which MPS has also completed. 
The parties have also engaged in informal discovery via email and
telephone conferences.


The parties also discussed, and exchanged proposals
regarding, the adoption, for MPS, of a service quality index.


Beginning on June 9, the parties have engaged in good
faith negotiations in an effort to settle and resolve all outstanding issues in
this case.  These discussions have
resulted in this Stipulation, in which the parties have agreed to the following
(all as more fully set forth and described below):


1.  MPS shall be
entitled to increase its distribution service rates by $1,750,000, or 10.6%, by
filing new distribution service rates designed to produce a distribution
revenue requirement of no more than $18,221,503, and a rate of return on common
equity of 10.2% (as shown on Exhibit 1), said rates to become effective for
service rendered on and after July 15, 2006.


2.  The Company
shall also implement:


(a) its new transmission rates, resulting from its
most recent transmission rate filing before the FERC, and


(b) its new DSM rate resulting from the DSM
assessments authorized by the Commission in Docket No. 2003-516


for
service rendered on and after July 15, the parties thereby intending to effect
a simultaneous change in all three rates. 
The specific impact of each of the three rate changes is set forth on
Exhibit 2 of this Stipulation.  As shown
on that Exhibit, the cumulative effect of the three simultaneous rate changes
is an approximate increase to electrical delivery rates of 3.84%.









 



3.  MPS’s
service performance shall be measured under the Service Quality Index standards
agreed to among the parties in accordance with Exhibit 3 of this Stipulation.


4.  MPS agrees
to engage with the OPA, the Staff and any other interested parties in a
collaborative effort to determine whether MPS’s PowerPact Program should be
redesigned.


5.  At the
conclusion of MPS’s 2005 transmission rate case, FERC Docket Nos. ER00-1053-016
and ER00-1053-017 (the “2005 Transmission Rate Case”), the FERC accepted a
Stipulation contemplating that for the purpose of establishing post-2005 MPS
transmission rates, the recoverability and inter-company cost allocation
pertaining to the Company’s costs associated with the acquisition,
installation, operation and maintenance of the Oracle system would depend upon
the determinations made and adopted by the Maine PUC in this case.  Accordingly, the parties have agreed to the
amount of the adjustment to be made to the Company’s FERC-determined
transmission revenue requirement based on the resolution of the Oracle cost
recovery issue established in this Stipulation.


These issues are discussed in detail in the next
Section of this Stipulation.


The parties agree that the record in this case, upon
which the Commission may judge the justness and reasonableness of the rates as
stipulated, shall consist of the Company’s initial prefiled testimony and
exhibits, the transcript of the May 11 Technical Conference, the Company’s
responses to the data requests propounded in this case and the Company’s
Supplemental Testimony and Exhibits dated June 15, 2006.


B. 
Stipulation.


The parties hereby agree as follows:


1.  Distribution
Revenue Requirement and Related Issues.


a.  Revenue
Requirement.  MPS shall be entitled
to increase its distribution rates on file with the Commission by an amount
sufficient to produce an increase of not more than $1,750,000, resulting in a
distribution revenue requirement of no more than $18,221,503. The agreed-upon
revenue requirement is based on


(i)  the Company’s actual audited calendar year
2005 test year results of operations, subject to various pro-forma adjustments
as described herein,


(ii)  a rate of return on common equity of 10.2%,
and


(iii) a capital structure
having a 50% equity component.(1)


b.  Cost
Allocation.  Set forth in Exhibit 4
is the methodology agreed to by the parties for apportioning the common costs
of the Maine and Maritimes Corporation affiliated companies, including
MPS.  The parties stipulate and agree
that henceforth, the MPS Cost Allocation Manual shall be interpreted in a
manner consistent with the cost allocation methodology used in this Exhibit 4,
which excludes stranded cost amortization expense and income tax expense from
the calculation, both






(1) The return on equity, equity ratio, cost rates of
each component of the capital structure and weighted overall cost of capital as
stipulated by the parties are set forth on Exhibit 1.



 2
 






 



for
the purposes of setting distribution rates and for the purposes of setting
transmission rates filed with the FERC.


2.  Resolution of Oracle System Issue in
Transmission Case.


MPS
implemented a new financial software solution in June of 2004 consisting of an
Oracle data base implemented by Delinea and hosted by Delinea (collectively,
the “Oracle System”).  In the 2005
Transmission Rate Case, the FERC accepted a Stipulation stating that the terms
of the resolution, by this Commission, of the cost recovery and cost allocation
issues arising from the implementation of the Oracle System would be used by
the FERC as a template for the resolution of the same issues for the purposes
of setting FERC-filed transmission rates after 2005.  In other words, the decision reached in this
case regarding MPS’s recovery of Oracle System costs would be carried over and
applied on a going-forward basis (beginning in 2006) to determine the recovery
of such costs in the Company’s transmission rates.(2)


Accordingly,
the parties (and, ultimately, the Commission) agree as follows:


(a)  No
portion of the investment or costs associated with the Oracle System shall be
disallowed for ratemaking purposes.


(b) 
MPS shall amortize the costs associated with the Oracle System as stated
in Section 6(a) hereof.


(c) 
One-third of the “administrative and general” costs associated with the
Oracle System (consisting of the costs associated with the software license
maintenance fee, the Delinea hosting fee, and Oracle-related travel costs)
shall be allocated to the parent company, Maine and Maritimes Group (“MAM”);
provided that the Cost Allocation manual shall be interpreted to preclude the
recovery by MAM (or any MAM affiliate) of Oracle System costs in any charges
from MAM to MPS, or otherwise.


The
parties agree that this protocol shall be used to establish the
Oracle-System-related portion of the Company’s revenue requirement (a) for the
purpose of the transmission rate case currently






(2)
The relevant portion of the Agreement Regarding Maine Public Service Company’s
2005 Informational Filing, the agreement among the parties resolving the 2005
Transmission Rate Case, states (on page 3) as follows:


The parties further agree that for the 2006
informational filing and subsequent filings during the current remaining life
of the Oracle System software implemented in 2004, the Parties shall support
the outcome of the 2006 distribution case in MPUC Docket No. 2006-24 regarding
the amount of Oracle System software costs determined by that case to be
recoverable from ratepayers including the allocation of such costs between
regulated and non-regulated activities, the allocation between distribution and
transmission, and the prudence of such costs, or any disallowance of those
costs for ratemaking purposes; provided that, the outcome of the 2006
distribution case in MPUC Docket No. 2006-24 does not apply to any costs
associated with the Oracle System software not specifically addressed in that
case. 



 3
 






 



before the FERC, (b) in
future transmission rate cases before the FERC,(3) and (c) in future
distribution rate cases before the Commission (and that the non-MPS parties
shall not oppose such treatment of such costs in future distribution
cases).  The ratemaking treatment of the
Oracle System costs agreed to herein shall not constitute a precedent for the
ratemaking treatment to be accorded to the costs associated with any future MPS
information technology acquisition.


3.  Collaborative Review of Power Pact Program.


The
Staff, the Company, and the OPA agree to engage in a collaborative effort with
any other interested parties to review and, if warranted, redesign the Company’s
Power Pact Program.


4.  Service Performance Standards.


Attached
as Exhibit 3 is a Service Quality Performance Proposal which the parties have
agreed to implement in accordance with its terms.  The Proposal requires MPS to issue yearly
reports regarding its service performance in ten categories, but has no
monetary penalty (or reward) feature. 
The adoption of the Proposal shall not establish any presumption that
the categories selected, or the performance benchmarks adopted, should be used
in any future alternative rate plan (or other service performance benchmarking
plan) for MPS.


5.  Rate Design; Compliance Rate Filing.


The
agreed-upon distribution rate increase shall be implemented on an “across-the-board”
basis, as said term is commonly used in proceedings before this
Commission.  MPS shall file the new rates
in the compliance phase of this Docket promptly following Commission approval
of this Stipulation, and the Staff agrees to process the proposed new rates
promptly so as to meet the July 15 rate implementation date for the
simultaneous rate change.


6.  Accounting Orders.


The
Parties agree to the entry of Accounting Orders confirming that MPS shall:


A.              Amortize the cost of
the Oracle System over a period of ten years, rather than the seven-year period
initially proposed by MPS, said amortization to be applied retroactively to the
June 30, 2004 implementation date of the Oracle System.


B.                Implement new
distribution depreciation rates to become effective January 1, 2007, attached
as Exhibit 5.






(3) The parties
and the Commission therefore agree not to oppose the Oracle-System-related
portion of any MPS filing before the FERC for the recovery of MPS’s Oracle
System costs that uses the cost allocation and recovery principles for such
costs included in this Stipulation.



 4














 


7.  Standard Stipulation Provisions.


a.  Purpose;
Rejection of Part Constituted Rejection of Whole.  The parties are entering into this
Stipulation for the purpose of finally disposing of all issues raised in this
Docket.  If the Commission does not
accept the entire Stipulation without material modification, then this
Stipulation shall be null and void, and shall not be binding upon the parties
in this or any future proceeding.


b.  No Precedent.  The making of this Stipulation by the Parties
shall not constitute precedent as to any matter of fact or law, nor, except as
expressly provided otherwise herein, shall it foreclose any party from making
any contention or exercising any right, including the right of appeal, in any
Commission proceeding or investigation, or in any other trial or action.


c.  Examiner’s Report.  The parties agree to waive the provisions of
Section 752(b) of the Commission’s Rules of Practice and Procedure, requiring
that any Examiner’s Report be in writing and that the parties be afforded an
opportunity to file written exceptions thereto. 
The parties thereby intend to permit the Advisors to provide an oral
Examiner’s Report or recommendation to the Commission at or before the
deliberative session held in this Docket, or, if the Advisors wish, to provide
a written Examiner’s Report to the Commission with the parties waiving the
right to file exceptions or comments hereto.


IN WITNESS
WHEREOF, the parties have caused this Stipulation to be executed and delivered
by their duly constituted officers or their respective attorneys.


	
  

  	
  OFFICE OF THE PUBLIC ADVOCATE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Eric
  J. Bryant, Esq.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MAINE PUBLIC SERVICE COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Kimball L. Kenway, Esq.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HOULTON WATER COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  John C. Clark, General Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  VAN BUREN LIGHT AND POWER DISTRICT

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Skip Dumais, Manager

  



 















 


Exhibit
1


Maine Public Service Company


Cost
of Capital


MPUC Docket No. 2006-24


	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Pre-Tax

  	
   

  
	
  As filed on 6-15-06

  	
   

  	
  Proportion

  	
   

  	
  Cost

  	
   

  	
  WACC

  	
   

  	
  WACC

  	
   

  
	
  Common Equity

  	
   

  	
  50.00

  	
  %

  	
  10.20

  	
  %

  	
  5.10

  	
  %

  	
  8.48

  	
  %

  
	
  Short-Term Debt

  	
   

  	
  6.38

  	
  %

  	
  5.37

  	
  %

  	
  0.34

  	
  %

  	
  0.34

  	
  %

  
	
  Long-Term Debt

  	
   

  	
  43.62

  	
  %

  	
  6.90

  	
  %

  	
  3.01

  	
  %

  	
  3.01

  	
  %

  
	
  Total

  	
   

  	
  100.00

  	
  %

  	
   

  	
   

  	
  8.45

  	
  %

  	
  11.84

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Note (1):

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Federal Tax Rate
  of:

  	
   

  	
  34.0000

  	
  %

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  State Tax Rate
  of:

  	
   

  	
  8.9300

  	
  %

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Weighted Tax
  Rate of:

  	
   

  	
  39.8938

  	
  %

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1 / (1 - 0.398938) =

  	
   

  	
  1.66370

  	
   

  	
   

  	
   

  	
   

  	
   

  



 



 1














 


Exhibit _2


Maine Public Service Company


Notice of Rate Increase


Docket Nos. FERC
ER00-1053-012, MPUC 2003-516, and MPUC 2006-24


	
   

  	
   

  	
  Total

  	
   

  	
  T

  	
   

  	
  D

  	
   

  	
  DSM Mil Rate

  	
   

  	
  Stranded Cost

  	
   

  
	
  Class

  	
   

  	
  % Change

  	
   

  	
  % Change

  	
   

  	
  % Change

  	
   

  	
  % Change

  	
   

  	
  % Change

  	
   

  
	
  Residential
  (Rate A or A1)

  	
   

  	
  6.44

  	
  %

  	
  -3.35

  	
  %

  	
  10.60

  	
  %

  	
  20.00

  	
  %

  	
  0.00

  	
  %

  
	
  Residential
  (Rate AH or AHN)

  	
   

  	
  6.05

  	
  %

  	
  -3.35

  	
  %

  	
  10.60

  	
  %

  	
  20.00

  	
  %

  	
  0.00

  	
  %

  
	
  General Service
  (Rate C, CF, or MC-G)

  	
   

  	
  5.10

  	
  %

  	
  -10.96

  	
  %

  	
  10.60

  	
  %

  	
  20.00

  	
  %

  	
  0.00

  	
  %

  
	
  Agricultural
  Produce Storage (Rate F)

  	
   

  	
  4.71

  	
  %

  	
  -10.96

  	
  %

  	
  10.60

  	
  %

  	
  20.00

  	
  %

  	
  0.00

  	
  %

  
	
  Snow Making Rate
  (Rate SNO)

  	
   

  	
  5.67

  	
  %

  	
  -10.96

  	
  %

  	
  10.60

  	
  %

  	
  20.00

  	
  %

  	
  0.00

  	
  %

  
	
  Municipal Water
  Pumping Service (Rate D-2)

  	
   

  	
  4.41

  	
  %

  	
  0.00

  	
  %

  	
  10.60

  	
  %

  	
  20.00

  	
  %

  	
  0.00

  	
  %

  
	
  Rate ES or MC-M

  	
   

  	
  1.21

  	
  %

  	
  -19.68

  	
  %

  	
  10.60

  	
  %

  	
  20.00

  	
  %

  	
  0.00

  	
  %

  
	
  Rate EP

  	
   

  	
  0.70

  	
  %

  	
  -18.70

  	
  %

  	
  10.60

  	
  %

  	
  20.00

  	
  %

  	
  0.00

  	
  %

  
	
  Rate EST

  	
   

  	
  1.50

  	
  %

  	
  -15.22

  	
  %

  	
  10.60

  	
  %

  	
  20.00

  	
  %

  	
  0.00

  	
  %

  
	
  Rate EPT

  	
   

  	
  0.22

  	
  %

  	
  -22.23

  	
  %

  	
  10.60

  	
  %

  	
  20.00

  	
  %

  	
  0.00

  	
  %

  
	
  Rate ST

  	
   

  	
  -1.82

  	
  %

  	
  -22.49

  	
  %

  	
  10.60

  	
  %

  	
  20.00

  	
  %

  	
  0.00

  	
  %

  
	
  Rate HT

  	
   

  	
  -4.09

  	
  %

  	
  -18.64

  	
  %

  	
  10.60

  	
  %

  	
  20.00

  	
  %

  	
  0.00

  	
  %

  
	
  Lighting (Rate
  SL or T)

  	
   

  	
  10.50

  	
  %

  	
  64.76

  	
  %

  	
  10.60

  	
  %

  	
  20.00

  	
  %

  	
  0.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Average Retail Rate
  Increase

  	
   

  	
  3.84

  	
  %

  	
  -13.43

  	
  %

  	
  10.60

  	
  %

  	
  20.00

  	
  %

  	
  0.00

  	
  %

  



 















 


Exhibit 3


Maine
Public Service Company

MPUC Docket No. 2006-24

Service Quality Index Proposal


1.             Reporting Requirement: 
Beginning April 1, 2007 and every April 1 thereafter, MPS shall report
to the Commission and to the Public Advocate its performance for the prior calendar
year pursuant to the indicators contained in this Service Quality Index.


2.             Customer
Average Interruption Duration Index (“CAIDI”):  The baseline is 71.2 minutes.  CAIDI is defined and calculated in accordance
with IEEE Standard 1366-1998, or any successor version.  When more than 5% of MPS’s customers are
affected by outages, all outages occurring in MPS’s service territory
associated with that event will be excluded from the calculation of this
indicator until service is restored to 95% of the affected customers.  In
its annual report, MPS shall describe all circumstances leading to the
exclusion of outage data under this section.


3.             System
Average Interruption Frequency Index (“SAIFI”):   The baseline is 1.71.  SAIFI is defined and calculated in accordance
with IEEE Standard 1366-1998, or any successor version.  When more than 5% of MPS’s customers are
affected by outages, all outages occurring in MPS’s service territory
associated with that event will be excluded from the calculation of this
indicator until service is restored to 95% of the affected customers.  In
its annual report, MPS shall describe all circumstances leading to the
exclusion of outage data under this section.


4.             Service
Order Timeliness:  The baseline is 99.11% of all service
orders fulfilled within three days of the day requested.  For those
customers who need permits or whose installation represents new construction,
the three days shall begin to run from the date MPS personnel determine the
customer is ready to receive service.


5.             Personnel
Accidents Incidence  Rate. The
baseline shall be 3.5 lost-time accidents per 200,000 hours worked, as defined
by OSHA.


6.             MPUC
Complaint Ratio:  The baseline is set at 0.86 complaints
per 1,000 customers per year.  Complaints will be counted in the year they
are accepted by the Consumer Assistance Division (CAD) of the MPUC. 
Acceptance of complaints by the CAD will be in accordance with existing CAD
standards.


7.             Bill
Error Rate:  The baseline is 0.31% annual error rate for
customer bills.


8.             Percent
of Business Calls Answered: 
The baseline is 85% of calls answered within 30 seconds.  For
purposes of this indicator, business calls are defined as calls to the Company’s
customer service business line, which receives both business calls and outage
reports, as specified on customer bills and which are answered, either directly
or after referral from the Company’s Interactive Voice Response (IVR), by a MPS
representative ready to render assistance and to accept information necessary
to process the call.  The time is measured from the time the call is
received at the Company or, in



 1
 






 



the event the call is
initially answered by the IVR system, from the time the customer elects to
speak to a Company representative.  Customers shall be given an
opportunity to elect to speak to a Company representative at the first level of
options presented by the IVR system to the customer.  An acknowledgment
that the customer is waiting on the lines does not constitute an answer.


9.             Estimated
Meter Readings.  The
baseline is 1.5%. This indicator will be the percent of meter readings that are
estimated.


10.          Customer “Report Card:”  Each April
1, beginning in 2007, MPS will distribute an annual report card to all
customers on the Company’s service quality and reliability performance for the
previous  calendar year as measured by
the SQI indicators.  The report card will list the indicators and
baselines and will indicate the Company’s actual performance for the previous Reporting
Year.


MPS will include
on each customer’s first bill issued after April 1, 2007, the following
statement:  “A Report Card related to MPS’s service quality performance
for the last year is provided with this month’s bill (and is also available
on-line at www.mainepublicservice.com)”.


At least thirty
days in advance of the issuance of the report card, MPS shall provide a
proposed draft thereof to the OPA and the Commission.  MPS shall be entitled to issue the report
card as drafted unless within fifteen days of the issuance of the proposed
draft either the OPA or the Commission notifies the Company in writing (with a
copy to the Commission or the OPA, as the case may be) that it objects to the
draft.  If the Company receives a timely
objection to the draft, it will suspend issuing the report card until such time
as the Commission has approved the report card for issuance to customers.


11.          Right
to Reopen.  There shall
be no automatic penalty pursuant to this Stipulation imposed on MPS for a
failure to meet one or more of the baseline performance standards.  However, the parties agree that any party may
move to amend this Stipulation to add an automatic penalty provision similar to
that in effect for other investor-owned electric distribution companies if
there is evidence that service quality performance has deteriorated.  In no case shall this Stipulation be
interpreted to prevent the Commission from exercising any authority it may
possess to open an investigation into any aspect of MPS’ service quality and
customer service or to adopt additional service quality performance standards
applicable to MPS or other electric distribution companies after notice and
opportunity for hearing.



 2














 


Exhibit
4


 


Maine
Public Service Company


MPUC
Docket No. 2006-24


Common
Cost Allocation Rates


 


	
   

  	
   

  	
  Year-to-Date

  	
   

  	
  Expense from

  	
   

  
	
   

  	
   

  	
  Ending

  	
   

  	
  March through

  	
   

  
	
   

  	
   

  	
  February 2005

  	
   

  	
  November 2005

  	
   

  
	
  MPS CONSOLIDATED:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Operation & Maintenance

  	
   

  	
  1,707,691

  	
   

  	
  8,936,456

  	
   

  
	
  Depreciation

  	
   

  	
  459,269

  	
   

  	
  2,092,349

  	
   

  
	
  Amortization

  	
   

  	
  48,969

  	
   

  	
  220,249

  	
   

  
	
  Taxes Other Than Income

  	
   

  	
  298,607

  	
   

  	
  1,264,106

  	
   

  
	
  Total
  Operating Expenses

  	
   

  	
  2,514,537

  	
   

  	
  12,513,160

  	
  *

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OTHER UNREGULATED AFFILIATES:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Operation & Maintenance

  	
   

  	
  1,137,817

  	
   

  	
  6,270,145

  	
   

  
	
  Depreciation

  	
   

  	
  10,252

  	
   

  	
  60,362

  	
   

  
	
  Amortization

  	
   

  	
  22,603

  	
   

  	
  95,639

  	
   

  
	
  Taxes Other Than Income

  	
   

  	
  15,656

  	
   

  	
  47,833

  	
   

  
	
  Total Operating Expenses

  	
   

  	
  1,186,328

  	
   

  	
  6,473,979

  	
  *

  



 


Common Costs Allocation Rates (Operating Expenses
Excluding Stranded Cost Amortization and Income Taxes):


 


	
  Maine Public Service Company

  	
   

  	
  67.9

  	
  %

  	
  65.9

  	
  %

  
	
  Other Unregulated Affiliates

  	
   

  	
  32.1

  	
  %

  	
  34.1

  	
  %

  



 









 



Exhibit 5


Maine Public Service
Company


Depreciation Rates


MPUC Docket No. 2006-24


 


	
   

  	
   

  	
   

  	
   

  	
  Current

  	
   

  	
  Proposed

  
	
  Account

  	
   

  	
  Description

  	
   

  	
  Rate

  	
   

  	
  Rate

  
	
  Transmission

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  352

  	
   

  	
  Structures & Imp

  	
   

  	
  1.26

  	
   

  	
  1.99

  
	
  353

  	
   

  	
  Substation Equip

  	
   

  	
  1.70

  	
   

  	
  1.58

  
	
  355.1

  	
   

  	
  Poles, Towers

  	
   

  	
  2.48

  	
   

  	
  2.40

  
	
  355.2

  	
   

  	
  Right of Way

  	
   

  	
  1.33

  	
   

  	
  1.20

  
	
  355.3

  	
   

  	
  Environ Permits

  	
   

  	
  2.12

  	
   

  	
  1.20

  
	
  356

  	
   

  	
  Overhead Conductor

  	
   

  	
  1.48

  	
   

  	
  2.41

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Distribution

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  360

  	
   

  	
  Right of Way

  	
   

  	
  2.97

  	
   

  	
  0.70

  
	
  361

  	
   

  	
  Structures & Imp

  	
   

  	
  2.46

  	
   

  	
  1.43

  
	
  362

  	
   

  	
  Substation Equip

  	
   

  	
  2.68

  	
   

  	
  2.01

  
	
  364

  	
   

  	
  Poles & Fixtures

  	
   

  	
  3.19

  	
   

  	
  3.01

  
	
  365

  	
   

  	
  Overhead Conductor

  	
   

  	
  2.96

  	
   

  	
  2.50

  
	
  365010

  	
   

  	
  Overhead Conductor - Loring

  	
   

  	
  0.99

  	
   

  	
  2.50

  
	
  366

  	
   

  	
  Underground Conduits

  	
   

  	
  2.10

  	
   

  	
  1.46

  
	
  367

  	
   

  	
  Underground Con & Devices

  	
   

  	
  3.59

  	
   

  	
  0.57

  
	
  368.1

  	
   

  	
  Transformers

  	
   

  	
  3.35

  	
   

  	
  4.70

  
	
  368.2

  	
   

  	
  Capacitors

  	
   

  	
  3.14

  	
   

  	
  4.70

  
	
  369

  	
   

  	
  Services

  	
   

  	
  3.87

  	
   

  	
  4.15

  
	
  370

  	
   

  	
  Customers Meters

  	
   

  	
  6.34

  	
   

  	
  4.47

  
	
  371.2

  	
   

  	
  Area Lighting & Signal

  	
   

  	
  5.76

  	
   

  	
  3.30

  
	
  371.3

  	
   

  	
  Water Heater Controls

  	
   

  	
  5.55

  	
   

  	
  3.30

  
	
  371.4

  	
   

  	
  Outage Detection Devices

  	
   

  	
  3.14

  	
   

  	
  3.30

  
	
  373

  	
   

  	
  Street Lighting

  	
   

  	
  4.28

  	
   

  	
  3.32

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  General

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  390

  	
   

  	
  Structures & Imp

  	
   

  	
  2.03

  	
   

  	
  1.87

  
	
  391.1

  	
   

  	
  General Office Equipment

  	
   

  	
  3.90

  	
   

  	
  4.74

  
	
  391.2

  	
   

  	
  Office & Computer Equip

  	
   

  	
  13.75

  	
   

  	
  6.34

  
	
  391.21

  	
   

  	
  DOS Circuit

  	
   

  	
  21.35

  	
   

  	
  6.34

  
	
  391.216

  	
   

  	
  OASIS Equip

  	
   

  	
  13.75

  	
   

  	
  6.34

  
	
  393

  	
   

  	
  Stores Equipment

  	
   

  	
  2.18

  	
   

  	
  4.73

  
	
  394

  	
   

  	
  Shop Equipment

  	
   

  	
  2.12

  	
   

  	
  5.74

  
	
  395

  	
   

  	
  Lab Equipment

  	
   

  	
  3.69

  	
   

  	
  6.77

  
	
  397.1

  	
   

  	
  Communication - Radio

  	
   

  	
  3.82

  	
   

  	
  3.30

  
	
  397.2

  	
   

  	
  Communication - Phone

  	
   

  	
  3.82

  	
   

  	
  3.30

  
	
  398

  	
   

  	
  Misc Equipment

  	
   

  	
  0.88

  	
   

  	
  2.53

  



 


“exhibit 6 of
stipulation”