2004-400, APPEAL OF PINETREE POWER, INC. & a.

curiae. and Mr. Kreis on the brief, and Mr. Arnold orally), for the State, as amicus public utilities commi ssion (Wynn E. Arnold, senior assistant attorney general, Kelly A. Ayotte, attorney general, and Donald M. Kreis, staff attorney,

attorney, on the brief, and Ms. Ross orally), for Office of Consumer Advocate. F. Anne Ross, consumer advocate (Ms. Ross and Rorie Hollenberg, staff

for Public Service Company of New Hamp shire. Linda T. Landis & a., of Manchester, on the brief, and Ms. Landis orally,

Light Company. Tamworth, Inc., Bridgewater Power Company, L.P., and Hemphill Power & brief, and Bryan K. Gould orally), for Pinetree Power, Inc., Pinetree Power - Brown, Olson & Wilson, P.C., of Concord (Robert A. Olson & a. on the

(New Hampshire Public Utilities Commission)

No. 2004 - 400 Public Utilities Commission

page is: http://www.courts.state.nh.us/supreme. a.m. on the morning of their release. The direct address of the court's home reporter@courts.state.nh.us. O pinions are available on the Internet by 9:00 Errors may be reported by E - mail at the following address: errors in order that corrections may be made before the opinion goes to press. Hampshire, One Noble Drive, Concord, New Hampshire 03301, of any editorial Readers are requested to notify the Reporter, Supreme Court of New well as formal revision before publication in the New Hampshire Reports. NOTICE: This opinion is subject to motions for rehearing under Rule p. 2 22 as 2

because of the cost recovery terms proposed by PSNH, but held that the modification would not be in the public interest of PSNH’s retail customers Following four days of hearings, the PUC determined that the

generators are not operating. the Wood Plants to purchase back - up power from PSNH when the Wood Plants’ that the Wood Plants purchase; and ( p. 2 2) any possible increase in rates paid by the competition the pro ject would create for the same low - grade wood supplies rights or interests may be adversely affected by the Schiller Project due to: (1) The Wood Plants intervened in the PUC proceeding, asserting that their

Stat e Forester, the Office of Consumer Advocate, and numerous legislators. New Hampshire Department of Resources and Economic Development, the Society for the Protection of New Hampshire Forests, the Audubon Society, the among others, the New Hampshire Timberland Owners’ Association, the and thus energy security. Supporters of th e Schiller Project proposal included, maintaining economic and power reliability; and (5) increasing fuel diversity renewable energy market with a source of Renewable Energy Credits (RECs); (4) wood; ( p. 2 2) improving air qu ality by reducing air emissions; (3) aiding the region’s enhancing the State economy by creating a sustainable market for low - grade retail customers.” PSNH offered five justifications for the Schiller Project: (1) assertin g that the Schiller Project would be in the “public interest of PSNH’s Unit 5 so that it could burn wood as well as fossil fuels (Schiller Project), In August 2003, PSNH petitioned the PUC for authority to modify Schiller

PSNH for sales in the wholesale energy market. those rate orders over the next few years, the Wood Plants could compete with Appeal of Public Serv. Co. of N.H., 130 N.H. p. 2 285 (1988). Upon the expiration of Hampshire that sell their output to PSNH under long - term rate orders. See Th e Wood Plants are four wood - fired electric generating plants in New

burn oil and coal to produce electricity. include Schiller Station in Portsmouth. Schiller’s three units (Nos. 4, 5 and 6) seventy percent of New Hampshire’s residents. PSNH’s generating assets denied, 533 U.S. 916 ( p. 2 2 001). It provides retail electric service to more than residents. Appeal of Campaign for Ratepayers Rights, 145 N.H. 671, 673, cert. generation, transmission, and distribution services to New Hampshire PSNH, the State’s largest public utility, has historically provided electric

af firm. Hampshire’s (PSNH) petition to modify one of its energy generation assets. We Hampshire Public Utilities Commission (PUC) granting Public Service of New Light Company (collectively, Wood Plants) – appeal a decision of the New Tamworth, Inc., Bridgewater Power Company, L.P., and Hemphill Power & GALWAY, J. Four intervenors – Pinetree Power, Inc., Pinetree Power – p. 3 3

(Supp. 2004), and that the interest to which the PUC is to give priority is rate so is in the “public interest of PSNH’s retail customers,” see RSA p. 3 369 - B:3 - a contend that PSNH cannot modify or retire its generating facilities unles s doing scheme is to afford New Hampshire residents rate relief. Accordingly, they The Wood Plants assert that the objective of the relevant statutory

We give the PUC’s policy c hoices considerable deference. Id. supplant the PUC’s balancing with one more nearly to our liking. Id. at 675. that seek to balance competing economic interests, our responsibility is not to lawfu l and reasonable. Id. at 674 - 75. When we are reviewing agency orders Ratepayers Rights, 145 N.H. at 674. Findings of fact by the PUC are presumed the evidence, that the order is unjust or unreasonable. Appeal of Campaign for demonstrating that the order is contrary to law or, by a clear preponderance of A party seeking to set aside an order of the PUC has t he burden of

customers. We disagree. proposed modification of Schiller Unit 5 is in the public interest of its retail The Wood Plants first contend that PSNH failed to establish that the

each issue in turn. approve a cost recovery methodology pursuant to RSA p. 3 369 - B:3 - a. We address of RSA 541 - A:35; and (3) that the PUC does not have rate - making authority to or unreasonable; (2) that the PUC’s orders fail to comply with the requirements Project is in the public interest of PSNH’s retail custo mers was either unlawful of PSNH’s Schiller Project: (1) that the PUC’s determination that the Schiller The Wood Plants raise three issues in their appeal of the PUC’s approval

as required by RSA p. 3 369 - B:3 - a. reconsideration motion, to be in the public interest of PSNH’s reta il customers found the proposed Schiller Project, as conditioned by the terms set forth in the reconsideration and denied the Wood Plants’ motion for rehearing. The PUC Following a hearing, the PUC grante d the Joint Movants’ motion for

rehearing, to which PSNH objected. PUC’s order. The Wood Plants objected to the motion and filed a motion for cost recovery mechanism that contained a risk - sharing plan based upon the (Joint Movants) filed a joint motion for recons ideration proposing a simplified Energy and Planning, and the New Hampshire Timberland Owners Association the Schiller Project, PSNH, the Officer of Consumer Advocate, the Office of To addres s the PUC’s concerns over the cost - recovery methodology for

associated with the project’s incremental costs and incremental revenues. order. Those conditions concerned how to allocate the risks and rewards public, in general, if PSNH met certain additional conditions detailed in the modification could be in the public interest of PSNH’s retail c ustomers and the p. 4 4

362 - 382 a nd governs public utilities. RSA chapter 369 - A governs electric rate are instructive. Title 3 p. 4 4 of the New Hampshire statutes encompasses chapters interest” of PSNH’s retail customers, the statutes governing utility restructuring Although RSA 369 - B:3 - a does not define what constitutes the “public

the project is in the public interest of retail cust omers of PSNH. favorable rate effects, are [sic] the basis of our determination that positive contribution, combined with the likelihood of customer - B:3 - a evaluation of the effect on PSNH’s retail customers. This common sense suggests a positive contribution to the RSA 369 such as economic benefits and environmental improvements, Thus, because the project yields certain overall public policy goods

customers of PSNH, stating: PUC determined the Schiller Pro ject to be in the public interest of retail specifically regarding PSNH. Here, after extensive testimony and evidence, the RSA 369 - B:3 - a is a clear directive by the legislature to the PUC

of those charged with its administration. Id. statute’s overall objective, and give substantial deferen ce to the interpretation scheme. Id. at 3 p. 4 40. Where statutory language is ambiguous, we examine the interpret statutes not in isolation, but in the context of the overall statutory language. Appeal of Ashland E lec. Dept., 141 N.H. 336, 338 (1996). We interpretation, we begin our inquiry with the examination of statutory To the extent that a dispute raises a new issue of statutory

RSA 369 - B:3 - a.

retirement. do so, and provides for the cost recovery of such modification or finds that it is in the public interest of retail customers of PSNH to PSNH may modify or retire such generation assets if the [PUC] such divestiture. Prior to any divestiture of its generation assets, customers of PS NH to do so, and provides for the cost recovery of assets if the [PUC] finds that it is in the economic interest of retail subsequent to April 30, 2006, PSNH may divest its generation place before April 30, 2006. Notwithstanding RSA 37 p. 4 4:30, The sale of PSNH fossil and hydro generation assets shall not take

assets pursuant to RSA 369 - B:3 - a. The statute states: The PUC regulates divestiture and modification of PSNH’s generation

and that PSNH failed to prove this benefit. more to gain from [a modification] than they stand to lose” or, a “net benefit,” relief. Specifically, the Wood Plants argue that PSNH’s customers “must have p. 5 5

generation assets require an analysis of the public interest of its retail analysis of the economic interests of customers, modifications to PSNH’s whereas divestiture of PSNH’s generating assets after 2006 will require an cost recovery of such modification or retirement.” Id. (emphasis added). Thus, in the public interest of retail customers of PSNH to do so, and provides for the “PSNH may modify or retire such generation assets if the [PUC] finds tha t it is standard of review for a generating station modification was amended to read: customers of PSNH to do so . . . .” RSA 369 - B:3 - a (emphasis added). The may occur only “if the [PUC] finds that it is in the economic interest of retail When finalized, SB 170 provided that the divestiture of PSNH generation assets

retirement. provides for the cost recovery of such divestiture, expansion, or economic inte rest of retail customers of PSNH to do so, and or retire its generation assets if the [PUC] finds that it is in the IV(b)(1)(B). Subsequent to this period, PSNH may divest, expand, place during the transition service period defined in RSA 369 - B:3, The sale of PSNH fossil an d hydro generation assets shall not take

introduced, the bill stated: original drafting to its final language is especially helpful. As originally revisions, and hearings on Senate Bill 170. The wording of the statute, from its Project was the type of project contemplat ed by the legislature in its drafting, The legislative history of RSA 369 - B:3 - a is also instructive. The Schiller

rates. that the “public interest” of PSNH’s customers encompasses more than simply RSA 374 - F:3, IX (Supp. 2 004). This statutory scheme supports the conclusion and can have “significant environmental, economic, and security benefits.” energy resources are to “be balanced against the impact on generation prices” energy policy as set forth in RSA 378:37 (199 p. 5 5), commitments to renewable (Supp. 2004). Further, in addition to being consistent with New Hampsh ire restructuring include “health and environmental benefits.” RSA 374 - F:3,V(f)(5) ch. 374 - F (Supp. 2004). According to this chapter, customer benefits of RSA chapter 374 - F also governs electric utility restructuring. See RSA

include rate relief. B:1, I, II (Supp. 2004). Thus, the customer benefits of restructuring clearly retail electric service at “lower costs,” and facilitating competition. RSA 3 p. 6 69 legislature stated that one of the purposes of RSA chapter 369 - B is providing and more competitive rates.” RSA 369 - A:1, I (Supp. 2004). Similarly, the efficient regulation,” “increased customer choice,” and electric service at “lower restructuring electric utilitie s includes providing “greater competition and more financing and functions of the PUC. The legislature stated that the purpose of reduction financing, and RSA chapter 369 - B governs electric rate reduction 6

consistent with the record evidence. The PUC explicitly found that: (1) PS NH’s The PUC’s findings of fact and conclusions of law are thorough and

economic effects on the local economy. an expert report commissioned by PSNH predicting $19.3 million in annual Wood Plants concede that the PUC relied upon record evidence, in the form of and analysis of the facts and evidence, and the governing statutes. In fact, the submitted by the parties, the positions of the parties, the PUC’s examination evidence as reflected in the orders included the underlying fact s and testimony extensive proceedings that included testimony and exhibits. This detailed Schiller Project demonstrate that the PUC relied upon evidence elicited from Here, the PUC’s five orders issued in conjunction with the proceedings of the Plants contend. See Petition of Support Enforcement Officers, 147 N.H. at 9. clearly reflect that it did not “solely” summarize the evidence, as the Wood on each issu e,” RSA 3 p. 6 63:17 - b, II (1995 & Supp. 2004), the PUC’s orders While the PUC must include in a final order “[t]he positions of each party

Support Enforcement Officers, 147 N.H. at 9. with an adequate basis upon which to review its decision. See Petition of PUC was required to make findings sufficiently detailed to provide this court 2004); Petition of Support Enforcement Officers, 147 N.H. 1, 9 (2001). The conclusions of law to support its determination. See RSA 541 - A:35 (Supp. RSA 541 - A:35 requires the PUC to make detailed findings of fact and

evaluate the PUC’s decision.” the orders “fail to provide an adequate basis upon which this court can uncontested contradictory evidence.” Accordingly, the Wood Plants argue that upon which it relied or failed to explain how it reconciled its findings with did make, the Wood Plants argue that the PUC “failed to identify the evidence alternative to obtain the same claimed benefits.” As for the findings the PUC conferred a net benefit on the ratepayers and that the project was the best retail customers lacked the “necessary predicate fin dings that the project PUC’s findings that the Schiller Project was in the public interest of PSNH’s requirements of RSA 541 - A:35. Specifically, the Wood Plants argue that the The Wood Plants next argue that the PUC’s orders do not conform to the

that the Wood Plants have failed to sustain their burden of proof. public interest test to the Schiller Project was unjust or unreasonable, we hold the Wood Plants have failed to demonstrate that the PUC’s application of the case law to apply the “net benefits” test asserted by the Wood Plants. Beca use required by the statute. We find no basis in either the statutory scheme or We conclude that the PUC applied the correct “public interest” standard

standard for modification is broader tha n just economic interests. customers. See id. By the plain language of the statute, the public interest p. 7 7

investment. utility the opportunity to realize a reasonable retur n on its alternative results in just and reasonable rates and provides the service, rate base and rate of return, provided that any such other than the traditional methods which are based upon cost of hearing, the [PUC] may approve alternative forms of regulation Upon petition of a regulated utility . . . and after notice and

Incentive Regulation,” states: RSA 3 p. 7 74:3 (1995). RSA 374:3 - a, entitled “Alternative Forms of Regulation; by the same so far as necessary to carry into effect t he provisions of this title.” supervision of all public utilities and the plants owned, operated or controlled ch. 369 - B. The legislature has, however, granted the PUC “the general legislature has not prescribed what type of cost recovery is required. See RSA modifications found to be in the public interest of its retail customers, but the The PUC is required by statute to provide a cost recovery methodology for

authorit y to allow PSNH financial incentives to undertake the modification. contemplates a cost recovery for any approved modification, the PUC lacked the Finally, the Wood Plants argue that because RSA 369 - B:3 - a only

fact and conclusions of law sufficient for our review. See RSA 541 - A:35. insufficiency in the PUC’s orders, and that the PUC made detailed findings of We thus conclude that the Wood Plants did not demonstrate any legal

that the project was in the public interest of PSNH’s retail customers. likelihood of customer - favorable rate effects, were the basis of its determination improvements, and that these positive contributions, combined with the that the project would yield certain economic benefits and environmental market for RECs. The PUC concluded, based upon the evidence presented, project would perform in two markets — the market for el ectricity and the the PUC found credible the predictions of the parties’ experts about how the project benefits and stated that the case was based upon the extent to which rejected the Wood Plants’ con tention that the record lacked evidence as to arguments, analyzed the experts’ opinions, and drew conclusions. The PUC previous orders, outlined the arguments of the parties, assessed the respective Further, in its orders, the PUC reviewed the extensive history from its

sources, and improved reliability of the unit. lower emissions at Schiller Station, adding to the fuel diversity of power including the existence of a sustainable market for low - grade wood products, reasonable; and (4) there were multiple benefits of the Schiller Project, PSNH and PUC staff estimates of rate relief from the Schiller Project were incremental revenue to be generated by the Schiller Project were reasonable; (3) project cost estimate was reasonable; (2) the PUC staff’s estimates of the p. 8 8

concurred. BRODERICK, C.J., and NADEAU, DALIANIS and DUGGAN, JJ.,

cost recovery methodology. that the PUC acted beyond its authority in approving the proposed incentive conclude, therefore, that the Wood Plants failed to meet their burden of proof its rate - makin g authority to approve the joint cost recovery proposal. We a, and required, see RSA 363:17 - a. Accordingly, the PUC appropriately used customers’ and PSNH’s interests was both legally permitted, see RSA 374:3, :3 estimated to result from approval of the Schiller Project. This balancing of the Here, the PUC required a sharing of the risks and rewards that were

the customer and the interests of the regulated utilities.” RSA 363:17 - a (1995). In determining the rates, the PUC is to be the “arbiter between the interests of