NEW ENGLAND POWER COMPANY
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Primary Service for Resale
AMENDMENT TO SERVICE AGREEMENT
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Effective Date Commencing on the later of July 1, 1996 or the date that all
and Term: required regulatory approvals necessary to implement the
Massachusetts Electric Company Pilot Programs are granted by
the Federal Energy Regulatory Commission ("FERC") (on this
amendment and in Docket No ER96-1309-000), the Securities
and Exchange Commission and continuing through December 31,
1997 for the Residential and Small Commercial Pilot Program
or until retail access is generally available for the MHTC
Pilot Program (the "Term").
Parties: NEW ENGLAND POWER COMPANY
A Massachusetts Corporation ("NEP" or the "Company")
25 Research Drive
Westborough, Massachusetts 01582
and
MASSACHUSETTS ELECTRIC COMPANY
A Massachusetts Corporation ("Mass. Electric")
25 Research Drive
Westborough, Massachusetts 01582
WHEREAS, Mass. Electric is an all-requirements customer under NEP's FERC
Electric Tariff, Original Volume 1 ("Tariff No. 1");
WHEREAS, Mass. Electric wishes to implement two retail electric pilot
programs (the "Pilot Programs"), the first for residential and small
commercial and industrial customers located in the cities of Lawrence, Lynn,
Northampton, and Worcester for up to 100 million kilowatthours per year (the
"Residential and Small Commercial Pilot Program"), and the second for members
of the Massachusetts High Technology Council ("MHTC") served under Mass.
Electric's G-3 Rate for up to 200 million kilowatthours per year (the "MHTC
Pilot Program");
WHEREAS, the implementation of the Pilot Programs requires Mass.
Electric to allow the kilowatthour sales in the Pilot Programs to be served by
suppliers other than Mass. Electric for the Term of the Pilot Programs; and
WHEREAS, the Pilot Programs have been approved by the Massachusetts
Department of Public Utilities;
THEREFORE, NEP and Mass. Electric agree to amend Mass. Electric's Tariff
No. 1 Service Agreement as follows:
1. NEP agrees to waive during the Term those requirements of Tariff
No. 1 that obligate Mass. Electric to buy all of its electricity
requirements under Tariff No. 1 only to the extent necessary to
implement the Pilot Programs. This waiver is conditioned on Mass.
Electric's payment of the access charges set forth in Paragraph 4.
At the end of the Term, the foregoing waiver shall expire, and
Mass. Electric shall again be bound by all of the requirements
under its Tariff No. 1 Service Agreement;
2. NEP also agrees during the Term to credit its purchased power and
fuel billings to assure that the implementation of the Pilot
Programs is revenue neutral to NEP's other customers and that the
NEP's fuel adjustment factor does not change for NEP's Tariff No.
1 sales despite the reduction in purchases by Mass. Electric
during the Term. The calculation of this credit is shown on
Attachment 1 to this amendment. In addition, NEP agrees during
the Term to credit Mass. Electric's fixed payments to NEP to
assure that the average cost of purchased power expense to Mass.
Electric's customers who do not participate in the Pilot Programs
remains unchanged as a result of the Pilot Programs. The
calculation of this credit on Mass. Electric's bill is shown on
Attachment 2 to this amendment.
3. NEP agrees to execute all appropriate waivers and consents
necessary to allow its affiliate, NEES Transmission Company (NEES
Trans), to provide access during the Term to the retail customers
participating in the Pilot Programs through service agreements
under NEES Trans network service tariff with Mass. Electric.
Continuation of these consents and waivers shall be conditioned
upon continued payment of the access charges listed below.
4. As consideration for NEP's waiver, as set forth in Paragraph 1,
above, Mass. Electric agrees to pay NEP access charges equal to
three cents per kilowatthour for all electricity transmitted or
distributed under Mass. Electric's unbundled tariffs, or by any
other party, to customers participating in the Pilot Programs who
are located within Mass. Electric's service territory.
IN WITNESS WHEREOF, Mass. Electric and NEP hereby, as of the date
written below, execute this Amendment to Mass. Electric's Tariff No. 1 Service
Agreement.
NEW ENGLAND POWER COMPANY
By ___________________________________
Title ___________________________________
Date ___________________________________
MASSACHUSETTS ELECTRIC COMPANY
By ___________________________________
Title ___________________________________
Date ___________________________________
NEW ENGLAND POWER COMPANY
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PRIMARY SERVICE FOR RESALE
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AMENDMENT TO SERVICE AGREEMENT
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Dated as of: February 1, 1997
Parties: NEW ENGLAND POWER COMPANY,
a Massachusetts corporation (the "Company")
and
MASSACHUSETTS ELECTRIC COMPANY and
NANTUCKET ELECTRIC COMPANY,
Massachusetts corporations (the "Customer"),
WHEREAS, the Customer is currently an all-requirements electric customer
of the Company under the Company's FERC Tariff, Original Volume No. 1 (the
"Tariff"), and a Service Agreement as amended (the "Service Agreement"); and
WHEREAS, under the Service Agreement, the Customer purchases from the
Company for resale all of the electric requirements of the ultimate customers
in the Customer's service territory; and
WHEREAS, the Customer desires to terminate the requirement that it
purchase all of the electric requirements of the customers in its service
territory from the Company under the Tariff before the term of the Service
Agreement has expired, and to retain the flexibility to terminate such
purchase requirement on or after January 1, 1998, upon the introduction of
retail choice for all customers of investor-owned utilities in Massachusetts
or upon another such date designated by the Customer; and
WHEREAS, the Customer desires to continue to receive transmission
service over the transmission facilities owned or operated by the Company
after the termination of its purchases under the Tariff; and
WHEREAS, the Customer desires to retain the option, but not the
obligation, to purchase electricity from the Company after the termination of
its purchases under the Tariff or the option for the ultimate customers in the
Customer's service territory to do so; and
WHEREAS, the Company is willing to permit the Customer to terminate its
purchase requirement before the Term has expired and to provide the options
desired by the Company, but only upon the terms and conditions set forth in
this Amendment to Service Agreement ("Amendment");
NOW, THEREFORE, the Company and the Customer, in consideration of their
mutual commitments set forth herein, agree as follows:
1. The Parties agree that, notwithstanding anything to the contrary
in the Service Agreement or in the Tariff, the Customer's obligation to
purchase electricity under the Service Agreement and the Company's obligation
to provide electricity under the Service Agreement shall terminate as of the
Contract Termination Date, which shall be determined pursuant to section 2 of
this Amendment. Except as provided in Section 7, below, or in a separate
contract for power supply, the Company shall have no further obligation to
meet the electricity demands of the ultimate customers in the service
territory of the Customer on or after the Contract Termination Date, or to
make any plan, investment, purchase, or commitment to maintain sufficient
generating capacity to provide adequate, continuous, or reliable electricity
supplies to the Customer or its ultimate customers on or after such date.
2. The Contract Termination Date shall be defined as the first to
occur of the Retail Access Date, determined in accordance with sub-paragraph
(a) or the Wholesale Access Date, determined in accordance with sub-paragraph
(b).
(a) The Retail Access Date shall be the later of (i) January 1,
1998; or (ii) the date when retail access is made available to all
ultimate customers of the investor-owned electric utilities in
Massachusetts; provided, however, that in the event the condition stated
in clause (ii) is not satisfied by January 1, 1998, the Customer in its
sole discretion shall have the option to accelerate the Retail Access
Date and implement retail access for its ultimate customers in its
service territory by providing the Company at least 90 days advance
written notice of the date such access shall be made available.
(b) The Wholesale Access Date shall be the date upon which the
Customer in its sole discretion decides to terminate purchases under
Tariff 1 and the Service Agreement, provided that such date shall not be
earlier than January 1, 1998 and provided further that the Customer
shall give the Company at least 90 days advance written notice of its
declaration of the Wholesale Access Date.
3. After the Contract Termination Date, the Customer shall pay to the
Company the Contract Termination Charges determined in accordance with
Appendix 1 and the Schedules attached to this Amendment, which set forth Base
Contract Termination Charges and formulae for the adjustment of the Base
Contract Termination Charges.
4. For service under the Tariff prior to the Contract Termination
Date, the Company shall charge and the Customer shall pay the Demand and
Energy Charges shown on Fifty-third Revised Page No. 1 of Schedule II-A, which
sets forth the W-95(S) rates, and, except as provided in footnote 1 below,
such charges shall not be subject to change during such period for service to
the Customer/1/; provided, however, nothing in this agreement shall preclude
the Company from requesting an increase in rates that may become effective
after suspension on January 1, 2001, if the Contract Termination Date has not
occurred by that time.
______________________
/1/ By April 1 of each year after 1998 during which the Retail Access Date or
the Contract Termination Date pursuant to footnote 4 of the Agreement has not
occurred, the Company shall file a report with the Commission calculating its
return on equity for the prior calendar year using the earnings available for
common equity as reported to the Securities and Exchange Commission in the
Company's annual report divided by the average of the thirteen monthly common
equity balances on the Company's books for the same period. The Company's
earnings available for common equity and common equity balances shall be
adjusted to eliminate the effects of any writedown and to restore expenses
associated with any such writedown that may result from the implementation of
industry restructuring or this Agreement. If the Company's return so
calculated is above 11.75 percent, it shall calculate the revenue requirement
associated with 72.6 percent of the excess above 11.75 percent and shall: (1)
refund to the Customer revenues sufficient to cause the Customer's return on
equity for the prior calendar year to reach 11.75 percent; and (2) accrue the
balance to the Reconciliation Account established under Section 3.4 of this
Agreement. The obligation in this footnote shall cease as of the Retail
Access Date or the Contract Termination Date pursuant to footnote 4 of the
Agreement.
5. Notwithstanding anything to the contrary in the Tariff or the
Service Agreement, the Contract Termination Charges specified in Appendix 1
and attached Schedules to this Amendment shall remain in effect until the
Company has collected all amounts subject to collection thereunder and neither
the Customer's obligation to pay the Contract Termination Charges in full nor
the formulae for the calculation of the Contract Termination Charges set forth
in Appendix 1 and the attached Schedules to this Amendment shall be subject to
change through application to the Federal Energy Regulatory Commission
pursuant to the provisions of Section 205 or Section 206 of the Federal Power
Act, absent the agreement of the Company or its successors or assigns.
6. Commencing on the Contract Termination Date, the Company
(including any successor or assign of the Company that succeeds to the
Company's obligations with respect to the operation of its transmission
facilities) shall, upon request of the Customer, provide network integration
transmission service to the Customer in accordance with the Service Agreement
for Network Integration Transmission Service between the Customer and the
Company of even date, and with the terms and conditions of the tariff
maintained in effect by the Company for such service, or in accordance with
the policy of the Federal Energy Regulatory Commission as in effect from time
to time. Such service shall be provided to the Customer after the Wholesale
Access Date to enable the Customer to integrate its loads and resources and
shall be provided to the Customer after the Retail Access Date to enable the
ultimate customers in the Customer's service territory to integrate their
loads and resources.
7. For the period commencing on the Contract Termination Date and
extending through December 31, 2004 (the "Standard Offer Period"), the Company
shall provide service to the Customer in accordance with this section 7, such
service being referred to as "Standard Offer Service."
(a) Standard Offer Service shall be made available at the prices
set forth in the Stipulation and Agreement, adjusted for a fuel index.
The prices for Standard Offer Service do not include charges for
transmission services provided in accordance with section 6 of this
Amendment, or charges for distribution services under the Customer's
rates for distribution services, but otherwise reflect the price of
electricity delivered to the meters of the ultimate customers of the
Customer.
(b) Standard Offer Service shall be made available by the
Company to the Customer after the Wholesale Access Date for the purposes
set forth in paragraph D of Schedule I of the Tariff or to the Company
for resale to those ultimate customers in the Customer's service
territory who elect to purchase Standard Offer Service after the Retail
Access Date and have not terminated Standard Offer Service to purchase
electricity from another supplier, provided that, neither the Customer
nor the ultimate customers shall be required to purchase Standard Offer
Service from the Company. For the first year after the Retail Access
Date, the Company shall make Standard Offer Service available to all
residential or G-1 customers of the Customer, who have previously taken
service from an alternative supplier, if such residential or G-1
customer elects to return to Standard Offer Service within 120 days of
taking service from the alternative supplier.
(c) In the event the Contract Termination Date is determined by
the Wholesale Access Date, the Customer shall be free, either in its
notice pursuant to section 2(b), or thereafter by giving the Company at
least 90 days advance written notice directed to the first day of a
calendar month, to terminate or reduce its purchases of Standard Offer
Service from the Company in order to obtain electricity from other
suppliers in the market. Once the Customer has reduced or terminated
its purchases of Standard Offer Service from the Company, the Company
shall have no obligation to supply Standard Offer Service to the
Customer with respect to the terminated or reduced purchases.
(d) No less than 90 days before the Retail Access Date, the
Customer shall notify the Company in writing of the quantity of energy
it shall purchase under Standard Offer Service for resale to ultimate
customers in its service territory. The Customer shall provide the
Company with at least 30 days prior advance written notice, directed to
the first day of a calendar month, of reductions in the quantity of
energy so purchased due to decisions by customers initially electing
Standard Offer Service to purchase electricity from other suppliers
after the Retail Access Date. Nothing in this Amendment shall restrict
the right of any ultimate customer to purchase electricity from other
suppliers after the Retail Access Date, provided that, except as set
forth in section 7(b), above, once any such ultimate customer has
purchased electricity from another supplier, the Company shall have no
obligation to supply Standard Offer Service to the Customer for resale
to such ultimate customer.
(e) The Company acknowledges that the Customer will offer
alternative power suppliers the opportunity in an auction to supply
electricity to enable the Customer to provide Standard Offer Service to
ultimate customers in its service territory after the Retail Access
Date. The Company shall be free to bid in the auction, provided that
the Company's bid shall not exceed the prices set forth in the
Stipulation and Agreement, adjusted for the fuel index set forth in that
Agreement.
8. This Amendment shall take effect as of the date it is permitted to
become effective by the Federal Energy Regulatory Commission, which date shall
be referred to as the "Effective Date." This Amendment, together with all
provisions of the Tariff and the Service Agreement necessary to effectuate all
provisions of this Amendment, shall remain in effect until all obligations of
the parties under this Amendment, including, without limitation, the
obligation of the Customer to pay to the Company the Contract Termination
Charges, have been discharged in full. Upon the discharge in full of all such
obligations, this Amendment and the Service Agreement shall terminate.
9. The provisions of this Amendment shall override any inconsistent
provisions of the Service Agreement and, with respect to the Customer, all
inconsistent provisions of the Tariff, but all provisions of the Tariff and
the Service Agreement that are not inconsistent with this Amendment shall
remain in full force and effect.
10. The rights conferred and obligations imposed on the Customer and
Company under this Amendment shall be binding on or inure to the benefit of
their successors in interest or assignees as if such successor or assignee was
itself a signatory hereto.
IN WITNESS WHEREOF, the parties have executed this Amendment of Service
Agreement as of the date first written above.
NEW ENGLAND POWER COMPANY
By
Its
MASSACHUSETTS ELECTRIC COMPANY
By
Its
NANTUCKET ELECTRIC COMPANY
By
Its