8-KOther Events

EVERSOURCE ENERGY 8-K Report (May 15, 2003)

Filed May 15, 2003For Securities:ES

Summary

This 8-K filing from Northeast Utilities (parent of The Connecticut Light & Power Company - CL&P) reports a significant event on May 14, 2003, where NRG Energy, Inc. and its affiliates, including NRG Power Marketing, Inc. (NRG-PM), filed for Chapter 11 bankruptcy protection. A critical consequence for Northeast Utilities is NRG-PM's notification to CL&P of its intent to terminate a contract under which NRG-PM supplied 45% of CL&P's standard offer service load through the end of 2003 at a previously agreed-upon average cost of approximately $0.045 per kilowatt-hour (kWh). This contract termination, stemming from ongoing disputes over contract terms (including liabilities for congestion costs and station service charges) and NRG-PM's bankruptcy, could lead to CL&P needing to secure alternative power supply sources. These alternative sources are likely to be at higher market prices reflecting current energy costs. Northeast Utilities plans to vigorously oppose NRG-PM's actions, work with regulatory bodies, and seek recovery of any additional costs incurred from NRG-PM. If necessary, CL&P intends to seek regulatory approval to pass these increased costs on to its customers.

Key Highlights

  • 1NRG Energy, Inc. and affiliates filed for Chapter 11 bankruptcy on May 14, 2003.
  • 2NRG Power Marketing, Inc. (NRG-PM) notified CL&P of its intent to terminate a key power supply contract.
  • 3The terminated contract covered 45% of CL&P's standard offer service load through the end of 2003.
  • 4The contract price was approximately $0.045 per kWh, significantly lower than current market rates.
  • 5CL&P and NRG-PM have been involved in disputes regarding contract terms, including congestion and station service charges.
  • 6CL&P will seek alternative power sources, likely at higher costs, and will attempt to recover these additional costs from NRG-PM.
  • 7CL&P may seek DPUC approval to pass increased energy charges to customers pending recovery from NRG-PM.

Frequently Asked Questions

The primary impact is the notification from NRG Power Marketing, Inc. (NRG-PM) to CL&P (a Northeast Utilities subsidiary) of its intent to terminate a significant power supply contract. This contract was providing 45% of CL&P's standard offer service at a favorable price, and its termination could force CL&P to seek more expensive power in the open market.

It is possible. CL&P intends to secure alternative power sources, which are likely to be more expensive than the NRG-PM contract. CL&P plans to seek recovery of these additional costs from NRG-PM and will request permission from the Connecticut Department of Public Utility Control (DPUC) to pass these charges on to customers on an interim basis.

The disputes involve disagreements over the terms of the power supply contract, specifically concerning the parties' respective liabilities for congestion costs and station service charges. NRG-PM also alleges CL&P is in breach of contract due to actions taken following a DPUC decision on locational marginal pricing costs.

Northeast Utilities, through CL&P, intends to vigorously oppose NRG-PM's contract termination efforts and will seek enforcement of the contract. They will work closely with the DPUC and the Connecticut Attorney General. Furthermore, CL&P will pursue recovery of any additional costs incurred from NRG-PM and will seek regulatory approval to pass these costs to customers if necessary.