ML20031F659
| ML20031F659 | |
| Person / Time | |
|---|---|
| Site: | Seabrook  |
| Issue date: | 04/10/1981 |
| From: | Bonsall J, Pote D, Sprague G MASSACHUSETTS, COMMONWEALTH OF |
| To: | |
| Shared Package | |
| ML20031F654 | List: |
| References | |
| D.P.U.-518, NUDOCS 8110200271 | |
| Download: ML20031F659 (8) | |
Text
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j April.10, 1981 w
D.P.U. SIS application of Canal Electric Company and New Bedford Joint Gas and Edison Light Company under G.L. c. 16t, S S 97 and 101, for i
approval by the Department of Public Utilities of the purchase by Canal Electric Company and sale by New Bedford Gas and Edison Light Company of certain property and a determination the terms thereof are consistent with the public interert.
that APPEARANCES:
Michael F. Donlan, Esq.
May, Bilodeau, Dondis, & Landergan 294 Washington Street Boston, Massachusetts 02108 FOR:
CANAL ELECTRIC COMPANY and COMMONWEALTH ELECTRIC COMPANY (FORMERLY NEW BEDFORD GAS AND EDISON LIGHT COMPANY)
Francis X. Bellotti, Attorney General by:
Robert L. Dewees, Esq.
Assistant Attorney General One Ashburton Place Boston, Massachusetts 02108 FOR:
THE DEPARTMENT OF THE ATTORNEY GENERAL Canal Electric Company (" Canal") and Commonwealth Electric Company Company, formerly named New Bedford Gas and Edison Light
(" Commonwealth Electric") (hereinafter jointly referred to as
" Petitioners") subjset to the provisions of G.L. c. 164, as amended, filed a joint petition on December 2h, 1980, reauesting that the Department of Public Utilities ("Depiu Went") approve the purchase by Canal and the sale by Ctrmonwealth Electric of certain property and reauesting t make various findings and orders related thereto.
that the De A-Petition A public hearing was held with respect to the Joint 8110200271 ettoog' gDRADOCK 05000443 PDR
D.P.U.
518 Pago'Two on February 24 1981> after publication of appropriate notice by At that hearing appearances were filed by counsel the Department.
The for Petitioners and for the Attorney General as intervenor.
Attorney General filed several information requests to which the Petitioners responded.
Further, the Attorney General cross-examined the Petitioners' witness and has not subsequently expressed any opposition to the proposed transaction.
There were no other appearances filed nor any other expressions of opposition to the relief sought in the joint petition.
The Fetitioners jointly filed with the Department on February 17, 1981, prepared written testimony of one witness, together with supporting data, financial information and other documentary materials relative to the Petitioners and the proposed transactions 'Exh. CAN-1).
The witness, Mr. Earl G.
and Financial Vice President of both Canal Cheney, Director and Commonwealth Electric, alSC testified orally at the public At the request of the Attorney General, various additional hearing.
informational exhibits were prepared by the Petitioners and made The testimony and a part of the evidence of the proceedings.
so adduced provide sufficient grounds for making the findings exhibits necessary to the disposition of the joint petition as hereinafter set forth.
Both companies are wholly-owned subsidiaries of New England Gas and Electric Association ("NEGEA").
Canal owns and operates a 572 MW fossil fuel electric generating unit known as Canal Unit No.1 located at Sandwich, Massachusetts, and owns a 50 percent in'arest in,
D.P.U. 518 Page Three and operates, a 584 MW fossil fuel electric generating unit known as Canal Unit No. 2, located on the same sight.
Canal is a supplier of i
wholesale electric power to Commonwealth Electric and to Cambridge Electric Light Company (" Cambridge").
(Cambridge is likewise a subsidiary of NEGEA.)
The principal business of Canal is the i
generation and sale of electric power to other electric companies.
The principal business of Commonwealth Electric is the generation, purchase at wholesale, distribution and sale at retail of electric power to consumers in forty cities and towns in southeastern Massachusetts.
The subject property of this proceeding is the interest owned by Commonwealth Electric in two nuclear generating units l
l known as Seabrook Units Nos. 1 and 2 (the "Seabrook Units")
which are under construction in Seabrook, New Hampshire.
Under an Agreement for Joint Ownership, Construction and Operation of New Hampshire Nuclear Units, dated May 1, 1973, as amended (the "Seabrook Agreement") which relates to the ownership, construction and operation of the Seabrook Units, Commonwealth Electric currently owns a
)
1.3492 7 percent interest in the Seabrook Units, representir., generat.ino capacir.y of approximately 31 MW.
In addition, Commonwealth Electric has agreed, under the terms of the Seventh Amendment to the Seabrook Agreement, dated April 18, 1979 (the " Seventh Amendment"), to acquire an additional 2.1739 percent interest in the Seabrook Units from the lead participant, Public Service Company of New Hampshire ("PSIS".), representing generating capacity of approximately 50 MW.
The St.venth Amendment provides for the transfer of the additional ownership interest to Commonwealth
D.P.U.
518 Pago Four Electric (as well as additional transfers to other parties) over an " Adjustment Period", as defined therein.
The Seventh Amendment contemplates that Commonwealth Electric and other purchasing participants will assume the obligations of PSNH under the Seabrook Agreement during the Adjustment Period in proportion ratable to the respective t
interests being transferred.
The Department has previously reviewed the terms and proposed operation o f the Seventh Amendment in the course of the proceedings in D.P.U. 20055, and in the Order ef October 30, 1980, approved the acquisition of the additional 2.1739 Fw.md interest in the Seabrook Units by Commonwealth Electric; this approval, however, was conditioned, as follows:
subject, however, to the condition that (Commonwealth Electric Company) transfer said interest in the Seabrook project to Canal Electric Company at such time as (Commonwealth Electric) may aquire said interest. See D.P.U.
20055, p.
297.
The evidence in this proceeding reasonably demonstrates that the proposed transfer should be mutually beneficial to both Petitioners and the rate payers.
For example, the transfer will substantially reduce both the present amounts of Commonwealth Electric's short-term borrowings and the interim and long-tenn financing which would otherwise be required.
This lessening of capital requirements pressure should he favorably reflected in Commonwealth Electric's cost of capital and its revenue requirements.
Moreover, Canal has no significant current construction requirements, has substantial internally generated funds, has the ability to include AFUDC in its bondable asset and has greater flexibility than Commonwealth Electric with
- base,
D.P.U.
518 Pago Fivo respect to both the size and timing of its permanent financings.
e All of these f actors should allow Canal to realize a lower cost of capital in financing the NEGEA system interest in the Seabrook Units.
in The purchase and sale of Commonwealth Electric's interest the Seabrook Units are the subject of a formal written agreement between Commonwealth Electric and Canal (Exh. C AN-3 ).
This agree-ment sets forth the rights and obligations of each of the Petitioners and adequately addresses the requirements of G. L.
- c. 16% sg 97 and 101.
Evidence of requisite actions by the stockholders of the respective Petitioners was submitted and received into the record (E,:h. NS-1, C AN-2 ).
As described in the Joint Petition and the exhibits, the transaction will consist of a transfer by Commonwealth Electric to Canal of Commomsealth Electric's present 1.34927 pe_ ment interest in the Seabrook Units as well as its executbry rights,_ under the Seventh.
to aquire an additional 2.1739 percent interest in the thits.
Amendment, The consideration to be provided by Canal and to be received is as by Commonwealth Electric for such transfer and assignment follows: (i) in the case of the extsting 1.34927 percent owne_ W p interest, a lump sum cash payment in an amount equal to Commonwealth under the Seabrook Agreement as stated in Electric's investment Commonwealth Electric's books of account upon said transfer; (ii) the additional 2.1739 pucmL omWp interest, the assunption in the case of by Canal of Comn.cnwealth Electric's obligation under the Seventh Amendment during the Adjustment Period.
Said transfer to Canal will
g D. P,. U. 518 Pago Six include properry of a value exceeding S200,000 and exceeding 10 percent of the value of the net utility plant of each Petitioner.
After review and consideration of the evidence, the Department is of the opinion that the proposed transactions are consistent with the public interest.
We take note of the fact that, in compliance with our statutes and particularly G.L. c.164, j 99, the aggregate amount of the capital stock and the aggregate amount of the debt of the Petitioners respectively, shall not be increased, by reason of the sale and purchase and contemplated transaction.
Accordingly, after due notice, public hearing, investigation and consideration by the Department, it is DETERMINED:
That the proposed sale by Commonwealth Electric Company and the purchase by Canal Electric Company of the existing ownership interest and the executory interest of Commonwelath Electric Company in the Seabrook Units is consistent with the public interest; and it is ORDERED:
That the aforesaid purchase and sale on the terms, for the consideration and subject to the conditions set forth and described herein and in the Transfer Agreement between such Petitionert in the form or substantially the form submitted to the Department, are hereby approved; and it is FURTHER ORDERED: That Commonwealth Electric Company and Canal Electric Company are hereby authorized to take and implement such other actions as may be necessary or appropriate in accordance with the foregoing and not inconsistent herewith, for the purpose of making an orderly and expeditious consummation of the aforesaid
l Page'Seven purchase and sale; this authorization is conditioned, however,
'upon petitioners' subsequent notification of the Department in
,e' writing of such other actions as may be taken; and it is r
PURTHER ORDERED:
That at such time as the aforesaid purchase and sale are finally consummated, Petitioners shall file with the e
Department two copies of the documents representing the final purchase and sale amount together with the same number of copies of the final and adjusting entries of each account in Petitioners' books of account which are affected oy said purchase and sale.
By Order of the Department, e
1 Doris R.
Pote Chairman W
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John. Bonsall Commissioner l
,6W George,R. Sprague Commissioner l
A true co y-
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Ch istopher C.
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g App 2al en to matters of Icw from any finsi dccicicn, ordar or ruling of thn Cn-iscion may ba taken to the Supreme Judicial Court by an aggrieved party in interest by the filing of a written petition praying that the order of the Commission be modified or set aside in whole or in part.
Such petition for appeal shall be filed with the Secretary of the Cn-ission within twenty days after the date of service of the decision, order or ruling of the Commission, or within such further time as the Commission may allow upon request filed prior to the expiration of the twenty days after the date of service of said decision, exder or ruling.
(Sec.
5, Chapter 25, G.L.,
Ter.
Ed. as most recently amended by Chapter 485 of the Acts of 1971).
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