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News Digest

Fortnightly Magazine - January 15 2000

approximately $3 billion. As the largest coal-fired plant in Western Europe, Drax generates approximately 8 percent of the electricity in England and Wales.

Eighty percent of the purchase price will be financed by a mixture of non-recourse senior bank lending, subordinated bridge lending, and equity provided by AES.

Nuclear Plant Sales. The Massachusetts department OK'd the sale of Montaup Electric Co.'s 2.9 percent interest in the 1,150-MW Seabrook nuclear generation facility to Little Bay Power Corp., a wholly owned subsidiary of BayCorp Holdings Ltd., for $3.2 million. Little Bay will assume all future decommissioning liabilities after Montaup pre-funds its share of the decommissioning costs by increasing the balance in the Seabrook Decommissioning Trust Fund from the current $2.4 million to $12.4 million, which is Montaup's share of the prospective total liability. D.T.E. 99-9, Nov. 4, 1999 (Mass.D.T.E.).

EWG Status. The New Hampshire PUC granted exempt wholesale generator status to certain non-nuclear generating assets that Connecticut Light & Power Co. and Western Massachusetts Electric Co. plan to sell as part of the restructuring of the region's electric market.

The commission said the EWG status would increase the value of the generation assets, thereby reducing the stranded costs to be recovered. Order No. 23, 354, Nov. 29, 1999 (N.H.P.U.C.).

Courts

Gas Pipeline Interconnects. A federal appeals court asked the Federal Energy Regulatory Commission to explain further why it changed its policy on when pipelines must allow interconnections to their interstate systems.

The FERC had blocked a tariff that required shippers to prove market demand and no adverse impact to justify an interconnection, but the court said the FERC gave no adequate rationale for that test. Panhandle Eastern Pipe Line Co. v. FERC, No. 98-1048, Nov. 26, 1999 (D.C.Cir.).

PUD Service Territories. An Oregon court ruled that state public utility districts do not have exclusive service rights within their territories, so that a rural electric cooperative from outside the area could sell power at retail to a customer within the district. Douglas Elec. Co-op. v. Central Lincoln People's Util. Dist., Nos. 97CV4616CC et al., Nov. 24, 1999 (Ore.App.).

Bankrupt Power Marketers. In a dispute between Virginia Electric & Power Co. and a Southern Co. marketing affiliate concerning their agreed-upon "book-out" to reconcile a series of reciprocal power buys and sales without actual delivery, a federal district ruled that a third company - a bankrupt power marketer - was not an "indispensable party" to the case, even though it had signed deals with both parties and thus provided the "link in the chain" to allow the book-outs.

The court let the case proceed even though the third-party marketer (Power Co. of America) enjoyed bankruptcy protection and could not be joined in the suit, despite the risk that a second judge in PCA's bankruptcy case might issue an inconsistent finding of fact on whether the book-out was binding. Southern Co. Energy Marketing L.P. v. VEPCO, No. Civ.A. 99-1221-A, Nov. 19, 1999 (E.D.Va.).

Gas Take-or-Pay Contracts. Reversing an appeals court ruling, the Texas Supreme Court held that the "good faith" obligations of the Uniform Commercial Code did not