Court Opinion

ID: 8049708
Source: CourtListenerOpinion
Date Created: 2022-09-09 04:10:36.943468+00
Date Added: 2024-06-11T16:37:39.123110
License: Public Domain

Batchelder, J.,
dissenting in Part I: I dissent from the majority opinion upon matters of procedure and substance.
Today’s decision is expedited in response to a request for an early decision. This request was submitted as part of the appellee’s brief filed on the Friday preceding a Monday argument. The request was supported by an affidavit of an official of Public Service Company of New Hampshire (PSNH), predicting dire financial consequences unless a decision favorable to the company in this appeal was rendered five business days prior to November 30, 1984, which in this case was four days after oral argument.
Such a request should have been the subject of a motion more timely filed, and the factual support should have been subject to examination by the appellants, as well as a hearing, if requested. Such a procedure would have honored the rights of the appellants and would have been more in keeping with this court’s judicial responsibilities. In the absence of such a procedure, the court is responding to a factual assertion by a party, when such facts are not contained in the record. The granting of this request diminishes to a marked degree the opportunity for the kind of analysis and examination of the record that a financing of this magnitude demands. The majority thereby establishes, in my view, a precedent of far-reaching consequences. Must the court now respond to similar requests in other cases, and, if so, upon what fulcrum do we balance the competing merits of such a request?
An issue raised by this appeal which is yet to be resolved is whether securities authorized by the public utilities commission (PUC) remain valid obligations of PSNH notwithstanding appellate review of the authorization. See State ex ret. Wisconsin Elec. Power Co. v. Bardwell, 71 Wis. 2d 718, 239 N.W.2d 78 (1976). Due to the expedited nature of the disposition of this case, the majority has chosen to defer resolution of this important issue to a later date, resulting in a bifurcation of this opinion. In general, a practice of rendering installment opinions should not be encouraged.
In this case, in particular, deferring the issue to a separate installment is a mistake. PSNH in its brief in this case anticipates the near future of the three-phase financing in the following language:
*727“In the event necessary regulatory approvals are subsequently obtained to allow the Seabrook owners to increase the level of Seabrook construction expenditures above $5 Million per week, PSNH will be faced with a cash requirement which cannot be met from the proceeds of the present financing, under the terms of the PUC’s authorizing Order in this case. In that event, time may once again become of the essence with respect to issuing the ‘Newbrook’ securities and obtaining the proceeds to meet increased construction obligations. It follows that determination of the ‘Bard-well’ issue in this case, where it is now clearly the subject of adversary contention, will become directly applicable to the course to be followed in the Newbrook case, already under way.”
The Newbrook case may be underway, but testimony is not to commence until December 3, and will presumably take weeks or months to complete. The outcome of that docket, DF 84-200, is speculative both as to result and time. Under the existing agreement among the participating utilities in the Newbrook enterprise, PSNH’s portion of funds to complete the project must be prefinanced or “in the bank” by December 31, 1984, or by February 28, 1985, in the event the participating utilities agree to such an extension. Because of this rush of events, I believe the parties are entitled to have the Bardwe.ll issue resolved in this financing and not deferred to a later date.
Turning to the substantive issues in this appeal, it must be recognized that this financing is the second phase in a three-phase package designed to reestablish PSNH’s financial integrity. Each step is interrelated with and depends upon the other two. The third stage has been styled the “Newbrook” plan.
The PUC may approve a proposed issue and sale of securities only after it has determined that the financing is consistent with the public good. RSA 369:1, :4. In Appeal of Roger Easton, 125 N.H. 205, 211, 480 A.2d 88, 90 (1984), we held that the PUC may not confine its inquiry solely to a financing’s terms, but must consider the financing in light of all the surrounding circumstances. In Appeal of Seacoast Anti-Pollution League, 125 N.H. 465, 482 A.2d 509, (1984), a majority of this court held that an “Easton review” of PSNH’s overall financing plan could be deferred until the time of the separate proceeding to consider the Newbrook proposal. Id. at 474, 482 A.2d at 516. The court further ruled, however that:
“when there are reasonable grounds to believe that [material] facts have changed, the commission has a duty to recon*728sider prior determinations of the public interest that may have been rendered obsolete. When such reasonable grounds exist, the PUC cannot refuse to make the required inquiry by postponing it until after a financing decision, that might render it academic.”
Id. at 474, 482 A.2d at 516.
This language in Appeal of Seacoast Anti-Pollution League required the reconstituted PUC to monitor carefully changes in circumstances. Given PSNH’s precarious financial condition and the proposed financing’s magnitude, the PUC was obligated to reconsider its position upon any significant change of circumstances. I believe that the appellants have sustained their burden in establishing two such changes, and I therefore conclude that the commission erred in refusing to reopen the record and reevaluate the financing in light of these changes.
First, the projected cost of long-term debt securities to be sold by the Newbrook company in the final financing phase has been increased to $730 million from $350 million. This added cost, though facially not a matter of concern until the Newbrook financing phase, increases the risk for investors inherent in the present financing phase, and therefore increases the cost of this financing.
Second, two of PSNH’s wholesale customers, Exeter & Hampton Electric Company and Concord Electric Company, notified PSNH that they intend to terminate their power purchase contracts as of September 30, 1986. These companies currently account for 11% of PSNH’s total power sales and 8% of PSNH’s total revenues. Their loss as customers may lower significantly the demand on PSNH for electric power and force even greater increases in rates to fund this financing.
In ordinary circumstances, such changes might not require a widening of the commission’s scope of review. However, when viewed in the light of the size of this financing, the proposed record interest rates in excess of 20%, and the financial plight of PSNH, these changes required the strictest PUC scrutiny. Commissioner Aeschliman in her separate opinion in the September 27 order recognized the significance of these changes, stating: “These two new facts are directly relevant to the feasibility of the Company’s financing plans and to the amount of financing that should be approved in this docket given the emergency nature of the proceeding and the limited scope.” The remaining members of the PUC, however, refused to reevaluate the commission’s position in light of these changes and thereby avoided a determination whether the financing was consistent with the public good.
*729This financing involves aspects of debt and equity. Where capitalization is involved, this court has held that “[t]he primary concern of the Commission in ascertaining the public interest for purposes of capitalization is the protection of the consuming public.” Petition of the New Hampshire Gas & Electric Co., 88 N.H. 50, 57, 184 A. 602, 607 (1936). Accordingly, the commission may not approve a financing which threatens to increase utility rates unreasonably. As we stated in Petition of the New Hampshire Gas & Electric Co., “if it appears, upon all the evidence, that the capitalization sought is so high that the utility, because of [its] inability to earn operating costs, depreciation and other charges, will not be able to give its consumers at reasonable rates the service to which they are entitled, then the primary public interest may be found to be affected injuriously.” Id.
This financing of $425 million is four times larger than any previous financing of the company. Payment of the debt portion of this financing and of dividends to holders of the equity portion will require PSNH to generate significant new revenue. The likelihood of rate increases is clear and undisputed. The extent of these increases may well be affected by the two changes in circumstances.
The majority today relies in part upon the commission’s findings relative to the short-term effects of this financing. Debentures which mature in the year 2004 and warrants for the purchase of up to 22.5 million shares of common stock exercisable for 7 years are not short-term. The long-term effect on the company’s capital structure by virtue of the issuance of warrants for purchase of 22.5 million shares of common stock has not been analyzed, nor, according to the PUC majority, will it be examined even in DF 84-200. When, under Easton and New Hampshire Gas and Electric, will such an examination occur? A bell having been rung cannot be unrung.
PSNH, without the present financing, is admittedly on the threshold of bankruptcy. By refusing to recognize the changed circumstances in this case, the PUC did not heed the language of the majority in Appeal of Seacoast Anti-Pollution League supra, and has deferred to another day the root question which should have been the focus of this financing review: namely, the wisdom of PSNH’s continued participation in the Seabrook project.
The statutory role of the commission is that of an “arbiter between the interests of the customer and the interests of the regulated utility].” RSA 363:17-a (Supp. 1981). This role has not been fulfilled in this financing. Today’s crisis has now become tomorrow’s crisis.
For these reasons, I would remand this docket to the PUC for an Easton hearing, which is why I joined the chief justice in his dissent *730in Appeal of Seacoast Anti-Pollution League supra and why I dissent today.