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News Digest

Fortnightly Magazine - November 1 1999

utilities are using the ice storm as an excuse to negotiate lower prices. Hydro-Quebec called the ice storm a "force majeure" or "act of God," which should have no impact on the contract. The arbitration panel is expected to issue a decision early in 2000. The utilities said they are willing to renegotiate the deal.

The 335-megawatt contract with Hydro-Quebec accounts for 38 percent of the electric supply in Vermont, and makes up 20 percent of Hydro-Quebec's power exports.

ISO Funding. New York regulators approved the transfer of certain utility transmission assets and operational control of certain grid systems to the New York State Independent System Operator, and at the same time approved a $12 million revolving credit arrangement and $54 million in a new load agreement to provide working capital support to the ISO during its initial years of operation. Case 99-E-1176, Sept. 9, 1999 (funding), Sept. 16, 1999 (transfer) (N.Y.P.S.C.).

Power Plants

Nuclear Plant Sales. GPU Inc. on Sept. 14 announced that it has reached an agreement to sell its 619-MW Oyster Creek nuclear plant in New Jersey to AmerGen for $10 million, assigning full responsibility to AmerGen for decommissioning the plant, but with funding from GPU for the $430 million decommissioning trust. GPU customers would save $150 million on decommissioning and other plant-related transition costs they would bear if the plant were shut down.

GPU would lease back output from Oyster Creek at a fixed price for three years and fund outage costs, including reload fuel for the fall 2000 refueling at Oyster Creek, estimated to cost around $84 million. AmerGen will repay that amount to GPU in nine equal annual installments starting on the first anniversary of the date of closing.

AmerGen, a joint venture of PECO Energy Co. and British Energy Co., is acquiring other nuclear plants (Three Mile Island Unit 1, Clinton Power Station and Nine Mile Point Units 1 and 2) and reportedly is negotiating to buy others.

Millstone Divestiture. Noting a financial turnaround from the restart of the Millstone nuclear plant, the board of directors of Northeast Utilities on Sept. 14 approved payment of the company's first common stock dividend (10 cents a share) since March 1997.

Meanwhile, on Sept. 15, the utility announced that its subsidiaries, Connecticut Light & Power Co. and Western Massachusetts Electric Co., would auction off the Millstone plant, with no NU subsidiaries eligible to bid. CL&P is required by Connecticut restructuring law to divest its nuclear assets by Jan. 1, 2004.

Plant Valuation. Pennsylvania's PECO Energy is disputing the $912 million tax assessment by the Montgomery County Board of Assessment Appeals for PECO's Limerick nuclear power plant, arguing that because of decommissioning costs, the nuclear plant has no value.

A new law effective in May states that while a tax assessment is subject to the appeal process, the utility can stipulate the value of the property. That law allows deregulated utilities to be treated the same as any property owner, and pay real estate taxes based on an assessed valuation.

Studies & Reports

Electric Price Survey. Consumers in New