The U.S. Supreme Court declined to hear an appeal regarding a $78 million ruling against the town in its dispute with former electricity provider New England Power Co.
With the exception of the interest amount owed, this decision effectively concludes the nine-year legal battle between the town and New England Power.
In February, the U.S. Court of Appeals upheld previous rulings that determined the town owes $78 million, plus interest, for breaching a contract with the energy provider in 1998. The town had hoped for a more favorable outcome from the Supreme Court but was unsuccessful.
General Manager John Carroll stated that the only remaining issue is New England Power’s appeal concerning the interest rate the town owes. The Federal Energy Regulatory Commission (FERC) has ruled that the town owes approximately 12 percent interest over the nine-year period. However, New England Power contends that the town should pay 18 percent and has appealed this decision. The appeals court referred the interest matter back to FERC in its February ruling.
According to the Electric Light Commission’s latest report to Town Meeting, if FERC’s ruling is upheld, the town could save about $30 million.
The town has already paid over $36 million in damages and has established a rate shock fund to alleviate the impact on ratepayers.
Additionally, the town is seeking legislative approval to borrow up to $80 million to cover the remaining debt, which could amount to $80 million at the 18 percent interest rate or $50 million at the rate determined by FERC.
“We still need to make that calculation,” Carroll said.
If the town ends up needing to pay the full $80 million, it would result in an increase of approximately $9 per month on the average household electric bill. Electric Light Commissioners noted that the average household uses 500 kilowatts, with the current average monthly bill at $50.97.
On a positive note, the town will not have to pay legal fees to its Washington D.C.-based lawyers who were handling the appeal. Commissioners agreed to pursue the Supreme Court case only if the lawyers waived their fees and agreed to be compensated only if the town won.
Carroll spoke with attorney Robert Jablon about this agreement, and Jablon expressed confidence in the town’s case.
The lawsuit dates back to 1998, when the town chose to terminate its contract with New England Power, which had been supplying wholesale electricity to Norwood’s Electric Light Department. The town claimed the power company failed to uphold its end of the contract after selling its generation plants, leading to the lawsuit.
In the short term, the town saved money; while with New England Power, it paid 6.5 cents per kilowatt-hour. After switching to Northeast Utilities, the rate dropped to 4 cents per kilowatt-hour, resulting in savings of about $7 million annually and a 12 to 15 percent reduction in rates.
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(All articles originally published in the Norwood Messenger)