The Federal Energy Regulatory Commission (FERC) has accepted a settlement agreement between Massachusetts Electric Co. (ME), the Massachusetts Bay Transportation Authority (MBTA), and Boston Edison Co., which decides stranded investment and wheeling issues arising from ME's loss of MBTA as a retail customer (Docket No. ER94-129-000). The case arose in 1991, when the Massachusetts legislature designated MBTA a "domestic electric utility," allowing MBTA to leave ME. MBTA then signed a wholesale supply agreement with Boston Edison. ME claimed that MBTA must pay a stranded cost charge equal to the amount MBTA would have paid had it remained an ME customer. ME argued that as a full-requirements customer of New England Power Co. (NEP), its stranded cost charge should reflect the purchased-power costs it pays to NEP and passes on to ratepayers under a purchased-power adjustment clause.
According to Peter Flynn, an ME attorney, the agreement settles the matter by setting the distribution wheeling rate and the stranded investment charge that ME will charge MBTA. The two charges have been negotiated into one number that changes over four years. For the period from April 1994 through March 1995, the rate is $3.70 per kilowatt-month. The following year the rate is $4.65 per kilowatt-month. In years three and four, the rate is $4.25 per kilowatt-month. (em LB t
W. Lynn Garner is senior writer and Lori A. Burkhart an associate legal editor of PUBLIC UTILITIES FORTNIGHTLY.
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