Electric light commissioners and New England Power officials have agreed to a settlement to finally end a decade-long dispute between them.
New England Power Co., now called National Grid, was seeking roughly $100 million in damages from a terminated power contract with the town. The settlement will put the final damages at $73 million, or roughly $20 million more than the town has already paid the power company.
The U.S. First Circuit Court of Appeals ruled in 2006 the town owed the power company $78 million for breaking a contract with the energy provider in 1998, but there was still a question of how much interest was owed and how the $78 million figure was calculated. The matter has been awaiting clarification from the Federal Energy Regulatory Commission.
The power company was seeking 18 percent compounded interest for a total of $99 million in damages, while the town was arguing the prime interest rate should be used, making the figure $68.9 million.
The two sides this week agreed on a figure of $20 million, pushing the total to $73 million.
Selectmen and Light Commission Chairman Bill Plasko said the final step in the process is to get approval of the settlement from the regulatory commission, but he doesn't believe that will be a problem.
"Both sides feel strongly that because this is a joint settlement it will be approved," Plasko said.
Once finalized, the town will pay off the lawsuit's outstanding balance and settlement agreement of $20 million through borrowing. Under terms of the agreement, Plasko said payment is due by Aug. 31.
In May 2007, Town Meeting authorized the borrowing of up to $80 million to pay damages to the company.
"This will not require any further action by Town Meeting," General Manager John Carroll said.
The town has already paid the power company $53 million from the 2006 ruling.
Electric Light Department Superintendent Malcolm McDonald said residents should not see an additional rate increase because a $300,000 per month disputed charge from the regional grid will be lifted later this summer.
"That should free up enough money to cover the settlement payments," said McDonald.
In 2007, the regional grid operators informed the light department that it was charging the department, and all regional systems, a fee. Called a "Reliability Must Run" charge, it was aimed at raising money to keep the Sandwich plant running, to be used as a backup supply for the region.
McDonald says the costs should not be borne by the town, but rather, by its wholesale energy provider. The dispute is pending in Norfolk Superior Court.
By contract, however, the town was required to pay the charges into an escrow account until the dispute is settled.
As a result, light commissioners increased rates at the time by 11.25 percent, or roughly $5 a month for the average household.
McDonald said several lawyers involved in the case have told him that the charge will be ended by August, freeing up money to pay off the $20 million settlement balance.
Brian Falla can be reached at 781-433-8339 or bfalla@cnc.com.
