The Federal Energy Regulatory Commission set a hearing for a proposal by New England Power Co. to divest its generating assets and add a termination charge reflecting generation costs that will be stranded due to early service termination.
This move, made on Jan. 29, marks the first time the FERC will consider a case-specific proposal for dealing with stranded costs in the context of corporate restructuring proposals, as allowed by Order 888 (Docket No. ER96-2367).
NEP had filed a proposed amendment to its service agreement with its Massachusetts retail affiliates, Massachusetts Electric Co. and Nantucket Electric Co., which would eliminate the 7-year notice requirement for service termination, allowing for timely implementation of retail competition in Massachusetts. NEP's contract-termination charge would recover any generation-related costs not offset by sale of generation units and termination of contracts, under which NEP now buys power. NEP filed a similar amendment for its Rhode Island retail affiliate Narragansett Electric Co.
But intervenors have taken issue with NEP's valuation of its generation assets, including nuclear decommissioning charges, and the potential impact of generation divestiture on various classes of customers.
For example, Providence Gas expressed concern that NEP's attempts to recover above-market transporation charges paid to interstate natural gas pipelines could adversely impact emerging competitive retail gas sales market in Rhode Island. (em LB