New Hampshire Utility Attempts to Reorganize : Proposal Could Mean Steep Rate Hikes Even if Seabrook Reactor Never Runs

Public Service Co. of New Hampshire on Tuesday filed a bankruptcy reorganization plan that would leave it federally regulated and able to charge ratepayers for its Seabrook nuclear plant whether or not the reactor ever operates.

The company said it will seek rate increases of 30% to 40% over three to five years.

Nine months after it became the first major investor-owned utility to seek protection from creditors since the Depression, New Hampshire’s largest utility disclosed a plan to escape state regulation. Governor-elect Judd Gregg and other state officials vowed to oppose the move.

U.S. Bankruptcy Judge James Yacos had said that if Public Service met Tuesday’s deadline for filing a reorganization proposal, he would bar competing plans for another two months while the utility keeps trying to reach an agreement with creditors and other parties in the case.

“The negotiation process does not end with the filing of this plan,” said Charles Bayless, senior vice president and chief financial officer. “We feel it is just the beginning of another stage of negotiations.

“What we are filing today is our opening position with the parties. I can tell you none of them agrees with it,” Bayless said.

“The economy can certainly accept that kind of rate increase. The question is whether the politicians can accept it,” he said, referring to the proposed rate hikes.

An agreement with creditors would shorten greatly what could be a protracted bankruptcy case. But previous talks between the state and the utility were fruitless. So was a seven-hour session involving all parties, called by Gov. John Sununu on Dec. 17.

Public Service says it seeks a reorganization plan that is fair to all parties. State officials fear that the utility is trying to satisfy its creditors’ demands at the expense of ratepayers.

Under federal regulation, the utility likely would be able to start charging its 360,000 ratepayers for its 36% share in the $5.7-billion Seabrook nuclear power plant before it operates or if it is canceled. State law bars such charges.

On paper, Seabrook represents two-thirds of Public Service’s assets, and except for Seabrook the utility is thriving. The reactor was completed in July, 1986, but its fate--and therefore its value--remains unclear, potentially complicating the utility’s reorganization.

Public Service has said it may be entitled to increases of up to 40% under federal regulation. Shareholders reportedly demanded 40% over two years. The state reportedly offered at least 4% a year for five years.

Four New England utilities have expressed interest in taking over some or all of Public Service’s assets other than Seabrook.

At least one bondholders’ group also offered a reorganization plan for Public Service, though that was before the company sought bankruptcy protection. Holders of some key third-mortgage bonds proposed spinning Seabrook off into a separate company.