[Federal Register Volume 68, Number 100 (Friday, May 23, 2003)]
[Notices]
[Pages 28207-28208]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-12998]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. EL03-123-000]


Richard Blumenthal, Attorney General of the State of Connecticut 
and The Connecticut Department of Public Utility Control v. NRG Power 
Marketing, Inc.; Order Requiring Compliance With Contract

Issued May 16, 2003.
    Before Commissioners: Pat Wood, III, Chairman; William L. Massey, 
and Nora Mead Brownell.
    1. This order addresses the Complaint and Emergency Request for 
Order Staying Contested Termination of Wholesale Power Contract filed 
by Richard Blumenthal, Attorney General for the State of Connecticut 
(CTAG) and the Connecticut Department of Public Utility Control 
(CDPUC). The Federal Energy Regulatory Commission (Commission) directs 
the seller under this contract to continue to provide service to 
Connecticut Light and Power Company (CL&P) pursuant to the rates, terms 
and conditions under the contract until the Commission has an adequate 
opportunity to evaluate its proposed termination of the contract and 
the opposition to such action.

Background

    2. Under Connecticut retail choice law and CDPUC rules, CL&P was 
required to divest its generation and competitively procure wholesale 
power supply to serve the Standard Offer Service \1\ (SOS) load. On 
October 29, 1999, CL&P and NRG Power Marketing, Inc. (NRG-PMI) entered 
into a Standard Offer Service Wholesale Sales Agreement (SOS 
Agreement). The SOS Agreement requires NRG-PMI to provide power supply 
for a specified percentage of CL&P's SOS load during the term of the 
contract.\2\ The SOS Agreement is for a four-year term that ends on 
December 31, 2003. The price set forth in the SOS Agreement is the same 
price that NRG-PMI voluntarily bid in the competitive procurement 
process. CL&P states that because NRG-PMI did not own generation 
assets, then-applicable Commission rules did not require NRG-PMI to 
make a section 205 filing for the SOS Agreement.\3\ NRG-PMI was instead 
required to reflect its wholesale sales to CL&P in its quarterly 
marketing reports to the Commission.
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    \1\ According to Connecticut's electric industry restructuring 
law, Standard Offer Service refers to the electric service provided 
to retail customers who do not actively choose an alternate electric 
generation services supplier or are unable to choose one.
    \2\ See Section 3.5 of the SOS Agreement: 35% in 2000, 40% in 
2001 and 2002, and 45% in 2003.
    \3\ Federal Power Act, 16 U.S.C. Sec.  824d (2000).
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    3. CL&P asserts that NRG-PMI paid CL&P the congestion costs imposed 
by New England Power Pool for the first two months of the SOS Agreement 
but subsequently claimed that it was not responsible for such charges 
under the contract. CL&P filed a breach of contract complaint against 
NRG-PMI in Connecticut Superior Court seeking recovery for unpaid 
congestion charges from NRG-PMI as well as a declaration that NRG-PMI 
would be responsible for future congestion charges. The case was 
removed to and is pending before the U.S. District Court for the 
District of Connecticut, Civil Action No. 01-CV2373. In August 2002, 
CL&P, pursuant to Section 5.4 of the SOS Agreement, began to withhold 
the contested amounts until the dispute was resolved.
    4. On August 13, 2002, NRG-PMI informed CL&P that its failure to 
pay constituted a default under the SOS Agreement. On May 1, 2003, the 
CDPUC issued an order stating that it believed that strong arguments 
existed that NRG-PMI and other SOS sellers were responsible for all 
congestion costs and losses under the Standard Market Design market 
rules.\4\
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    \4\ Interim Decision in Application of the Connecticut Light and 
Power Company Concerning Recovery of SMD-Related Costs for March 1, 
2003 through December 31, 2003--Petition of the Attorney General for 
a Declaratory Ruling Regarding the Legality and Prudency of CL&P's 
Application, Docket No. 03-04-017 (May 1, 2003).
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    5. On May 14, 2003, NRG-PMI notified CL&P that it considered CL&P 
in default of the SOS Agreement because (1) CL&P continued to withhold 
payments due for congestion costs beginning in August 2002; and (2) 
CL&P decided to withhold congestion costs and losses after the 
implementation of Standard Market Design. NRG-PMI stated that, pursuant 
to section 5.5 of the SOS Agreement, it intended to terminate service 
at midnight five days after the receipt of the letter unless CL&P cured 
the defaults. On the same date, NRG-PMI filed for bankruptcy court 
protection under Chapter 11 of the U.S. Bankruptcy Code.

Instant Pleading

    6. On May 15, 2003, CTAG and CDPUC submitted a filing asking the 
Commission to issue an order staying the termination of the contract 
entered into by CL&P and NRG-PMI. CL&P claims that NRG-PMI is obligated 
to provide the power supply for 45 percent of CL&P's retail electrical 
load at the fixed prices under the SOS Agreement. CL&P argues that NRG-
PMI may not terminate the SOS Agreement before the end of the contract 
term absent the CL&P's consent without first filing a notice with the 
Commission, pursuant to 18 CFR Sec.  35.15 (2003). CL&P also argues 
that NRG-PMI is responsible for the congestion costs and losses and 
that NRG-PMI has failed to comply with the dispute resolution provision 
under section 16 of the SOS Agreement. CL&P further argues the 
Commission should exercise its jurisdiction under FPA section 205 to 
protect the public from exorbitant wholesale power rates and from 
contracts and practices that are unjust and unreasonable. CL&P contends 
that the Commission has jurisdiction over this matter notwithstanding 
NRG-PMI's filing for bankruptcy protection.
    7. CTAG and CDPUC ask the Commission to issue an order prior to May 
20, 2003 taking jurisdiction over NRG-PMI's termination of service 
under the SOS Agreement. They request that the Commission state that 
NRG-PMI may not unilaterally terminate its wholesale contract before 
December 31, 2003 without prior Commission review. CTAG and CDPUC also 
ask the Commission to initiate a proceeding under FPA sections 205 and 
206 to determine: (a) Whether NRG-PMI has the contractual right to 
terminate service in these circumstances, and (b) if it does, whether 
termination of service under the SOS Agreement is consistent with the 
public interest.

[[Page 28208]]

Discussion

    8. NRG-PMI proposes to terminate its contract on May 19, 2003, a 
deadline which leaves the Commission with insufficient time to evaluate 
its proposed action. Accordingly, the Commission directs NRG-PMI, until 
further notice, to continue to provide service to CL&P pursuant to the 
rates, terms and conditions of the SOS Agreement. NRG-PMI shall file 
its answer to the complaint, and interested persons may file 
interventions and protests, within ten (10) days from the date of this 
order. The Commission intends to act as expeditiously as possible in 
this proceeding.
    9. Any person desiring to be heard or to protest this filing should 
file with the Commission, 888 First Street, NE., Washington, DC 20426, 
in accordance with Rules 211 and 214 of the Commission's Rules of 
Practice and Procedure (18 CFR 385.211 and 385.214). Protests will be 
considered by the Commission in determining the appropriate action to 
be taken, but will not serve to make protestants parties to the 
proceeding. The answer to the complaint and all comments, interventions 
or protests must be filed on or before ten (10) days from the date of 
this order. This filing is available for review at the Commission in 
the Public Reference Room or may be viewed on the Commission's Web site 
at http://www.ferc.gov using the ``FERRIS'' link. Enter the docket 
number excluding the last three digits in the docket number field to 
access the document. For assistance, please contact FERC Online Support 
at [email protected] or toll-free at (866) 208-3676, or for 
TTY, contact (202) 502-8659. The answer to the complaint, comments, 
protests and interventions may be filed electronically via the Internet 
in lieu of paper; see 18 CFR Sec.  385.2001(a)(1)(iii) and the 
instructions on the Commission's Web site under the ``e-Filing'' link. 
The Commission strongly encourages electronic filings.
    The Commission orders:
    (A) Until further notice, NRG-PMI is directed to continue to 
provide service to CL&P pursuant to the rates, terms and conditions of 
the SOS Agreement.
    (B) NRG-PMI shall file its answer to the complaint, and interested 
persons may file interventions and protests, within ten (10) days from 
the date of this order.
    (C) The Secretary is directed to publish this order in the Federal 
Register.

    By the Commission.
Magalie R. Salas,
Secretary.
[FR Doc. 03-12998 Filed 5-22-03; 8:45 am]
BILLING CODE 6717-01-P