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Municipal Utilities Look To Buy Power Lines

7 September 2009 1,022 views No Comment

Sep. 6–A coalition of the state’s municipally owned utilities is working on a plan that could bring savings to customers through the purchase of a share of the gigantic transmission lines that cross through Connecticut.

The Connecticut Municipal Electric Energy Cooperative is working with its six member utilities — including Norwich Public Utilities, Groton Utilities, Jewett City Public Utilities and Bozrah Light and Power, owned by Groton Utilities — to create a new entity called the Connecticut Transmission Municipal Electric Energy Cooperative.

So far, five entities have approved forming the new company, dubbed CT Transco, and the Norwich City Council is slated to consider a resolution Tuesday to approve the measure.

In anticipation of the approval, officials from CMEEC already are in negotiations with Northeast Utilities on a deal that would have CT Transco purchase a share of the high-power electricity transmission lines in Connecticut.

That would give CT Transco a piece of the transmission fees the owner of the lines is allowed to charge under federal regulations. That money would translate into lower rates for municipal utility customers, according to Norwich Public Utilities General Manager John Bilda.

CMEEC Chief Executive Officer Maurice Scully said NU and CMEEC officials agreed to keep current negotiations confidential, so he could not discuss details.

The basic premise for the talks, according to Bilda and Scully, is that CMEEC “owns” 6 percent of the electric load capacity in the state, yet does not own any of the large transmission lines.

The Federal Energy Regulatory Commission (FERC) allows owners of those lines to tack on a 13 percent return on investment in rates charged to customers who receive energy through the lines.

Those fees are seen in all customer rates, including those paid by CMEEC customers.

If the new company, CT Transco, owned a portion of the lines, it too would receive the 13 percent in revenue. CT Transco plans to borrow the money needed to purchase its share of the transmission lines.

Bilda said if the company borrows money at 5 or 6 percent interest, invests that money to purchase the lines and receives a profit of 13 percent, the difference would be poured back into the CMEEC member utilities as direct rate savings.

Municipal utility customers still would have to pay the transmission fees in their bills, but now they would get a portion of the money back through lower rates.

Bilda, who plans to explain the proposal to the City Council at its 7:30 p.m. meeting Tuesday, said there is no anticipated up-front cost to Norwich utility taxpayers. The NPU Board of Public Utilities Commissioners already has approved participation in the new company. Bilda and NPU board Chairman James Sullivan would serve as board members on CT Transco.

The Groton Public Utilities Commission has approved the resolution to form and join CT Transco and did not need Town Council consent. The commission appointed Director of Utilities Paul Yatcko and commission member Edward DeMuzzio to the CT Transco board.

Bilda said the large transmission lines involved in the negotiations are those that lead from major power plants — such as the Millstone nuclear complex in Waterford and other power plants across the state.

Norwich has three such lines running through the city.

Smaller electric power lines that run through the city are considered the power distribution system. These lines, as well as three “taps” into the large transmission lines, are owned by NPU.

Scully said CMEEC officials hope to do the legal work to establish CT Transco soon after Norwich’s approval. He hopes negotiations with NU can be completed by the end of 2009, “but that might be optimistic.”

Any future agreement with NU also would have to be approved by FERC and the state Department of Public Utility Control.

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Copyright (c) 2009, The Day, New London, Conn.

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