National Grid 2005 Annual Report Download - page 43

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
State Collection Action: NEP filed a collection action in Massachusetts Superior Court (Worcester
County) to collect the CTC, which Norwood has refused to pay, apart from the initial payment in
2004. In March 2001, the Superior Court ruled that Norwood has breached the agreement by not
paying the CTC charge, and ordered Norwood to make regular and substantial payments to an
escrow account. Following unsuccessful appeals by Norwood, the Superior Court entered judg-
ment for NEP on June 9, 2004 in the amount of approximately $43.3 million, based on amounts
owed through January 31, 2001. Norwood continues to contest the judgment in the Superior
Court and in the Massachusetts Appeals Court.
FERC 206 Proceeding: In December 2002, Norwood challenged the CTC rate with the FERC
under Section 206 of the Federal Power Act, which permits the FERC to make prospective adjust-
ments to filed rates. On June 9, 2004, the FERC administrative law judge issued an initial decision
recommending that FERC revise the CTC formula to reduce the CTC amount that NEP previously
calculated under the formula that FERC accepted and approved in 1998. NEP challenged this ini-
tial decision, arguing that no reduction is appropriate. Norwood and the FERC staff challenged the
initial decision, arguing that the reduction is insufficient.
On July 22, 2005, the FERC issued an order agreeing with NEP’s calculation of the CTC, but dis-
agreeing with NEP’s calculation of interest due on unpaid bills. NEP intends to seek rehearing on
the interest determination, but will readjust its billing in accordance with FERC’s order pending
rehearing. As of July 2005, Norwood owes NEP approximately $50 million, as calculated under
FERC’s recent order.
43
National Grid USA / Annual Report