CL&P takes steps to secure electricity supply


BERLIN, Conn., July 19, 2002 -- The Connecticut Light & Power Co. (CL&P), announced it was taking steps to ensure the continued reliability of energy supply in southwest Connecticut for the last 18 months of its standard offer period.

CL&P filed an emergency petition with the Connecticut Department of Public Utility Control (DPUC) outlining commitments it has received from NRG Energy, the owner and operator of plants located within southwest Connecticut, that are intended to bolster the availability of power to CL&P customers.

Select Energy has also made commitments that will help alleviate the power situation in southwest Connecticut.

In addition, to ensure that customers are receiving the best available power prices and continued access to reliable supply, CL&P also advised state regulators of CL&P's intent to re-bid the remaining year of its Standard Offer Supply.

CL&P also requested the DPUC approve a shift of standard offer revenues that will reallocate 0.7 cents per kilowatt hour in the wholesale price for existing standard offer suppliers until the re-bid process is complete. The additional revenue for suppliers is in exchange for commitments aimed at strengthening the southwest Connecticut energy supply situation. There will be no increase in the retail price for CL&P customers.

NRG Power Marketing, Inc. has notified ISO New England that it plans to deactivate its Devon Station units from the grid August 1, 2002, and will exercise its option to be able to shut down the Norwalk Harbor and Cos Cob generating stations in 2003. NRG currently supplies 40 percent of CL&P's standard offer service requirements. Select Energy, an unregulated subsidiary of NU, supplies 50 percent of the requirements and Duke Energy Trading and Marketing supplies 10 percent. In 2003, NRG's obligation increases to 45 percent and Duke's declines to five percent.

"We want to ensure that our customers are protected with a reliable supply of electricity," said Lee Olivier, CL&P president and chief operating officer.

"The events during the week of the Fourth of July underscore how precarious the energy picture is in southwest Connecticut," he said. "Energy use in this part of the state continues to grow at a rate that exceeds that of the rest of the state. In fact, preliminary figures indicate southwest Connecticut set a new peak record for consumption during the Fourth of July week. If we lose any additional generation supply, and continue to rely on an inadequate transmission system, customers' access to their energy lifeline could be jeopardized," Olivier said.

CL&P filed an application late last year seeking approval to increase the generation charge of customers' bills by one cent per kilowatt hour to protect the company's ability to continue delivering energy to its customers and to stimulate retail competition. The DPUC denied the request and subsequently opened an investigation into the viability of power supply contracts for both CL&P and The United Illuminating Company (UI). The DPUC found that "recent testing of the wholesale market by UI revealed the market to be competitive and robust." It also found that "if any of the CL&P standard offer suppliers were to default on their respective contractual obligations, replacement power would be able to be secured on a reliable basis."

The DPUC also found in its recent decision on possible shortages of electricity in southwest Connecticut that "inadequate local generation and transmission congestion in southwest Connecticut make the region vulnerable to reliability problems."

"Generating units under construction are not situated in the critical Norwalk-Stamford sub-area and generally provide limited enhancement to the reliability of southwest Connecticut ... The Norwalk Harbor and Cos Cob stations are critical to southwest Connecticut reliability. Loss of the units would virtually guarantee that reliability within the area would be unsustainable," the DPUC wrote in its final decision.

NRG has notified NU and ISO New England of its intent to deactivate Devon Units 7, 8 and 10 on August 1st due to economic reasons and exercise its right to close Norwalk Harbor and Cos Cob next year.

CL&P's filing today is aimed at securing the continued availability of those units for its customers unless a more economical and secure supply source comes forward.

By re-bidding the standard offer contract, CL&P will test the market, Olivier said. If bids come in below the current standard offer price, customers will benefit from lower prices for the final year of standard offer service. If the prices are above the amended standard offer price, the existing suppliers will retain their supply obligations, he said. If prices come in between the current and amended prices, the existing suppliers have the option of taking the bid price for 2003 or terminating the agreements.

In proposing the reallocation, Olivier said customer money would be better spent assuring continued supply than accelerating stranded cost recovery. The CL&P proposal would apply excess revenues collected under three components of the standard offer rate to the proposed increase in the wholesale supplier price rather than accelerating the amortization of stranded costs.

Stranded cost recovery is far ahead of schedule because of the extremely successful sales of CL&P's fossil, hydro and nuclear plants.

The Connecticut Light and Power Company (CL&P) has been part of everyday life in Connecticut for more than 100 years, providing safe and reliable electric service to homes, neighborhoods and businesses.

With more than 1.1 million customers in 149 cities and towns, CL&P is an active member in the communities it serves, offering programs in energy conservation, economic development and environmental education. CL&P is part of the Northeast Utilities System. For more information, please visit http://www.cl-p.com/.

Sponsored by FLSmidth

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