EXHIBIT D.2
STATE OF CONNECTICUT
DEPARTMENT OF PUBLIC UTILITY CONTROL
TEN FRANKLIN SQUARE
NEW BRITAIN, CT 06051
DOCKET NO. 99-06-27
APPLICATION OF THE CONNECTICUT RESOURCES RECOVERY AUTHORITY FOR APPROVAL
CONDEMNATION OF PROPERTY OF THE CONNECTICUT LIGHT AND POWER COMPANY
September 1, 1999
By the following Commissioners:
Linda Kelly Arnold
Jack R. Goldberg
Donald W. Downes
DECISION
DECISION
I. INTRODUCTION
A. Summary
In this Decision the Department of Public Utility Control approves the
request of the Connecticut Resources Recovery Authority to acquire by
condemnation The Connecticut Light and Power Company's South Meadows
generation facility in Hartford, Connecticut and approximately 79.9 acres of
land. CRRA's Mid-Connecticut resource recovery facility is also located on
this land. The acquisition of CL&P's generation plant will allow CRRA to
continue its waste processing services to over 60 Connecticut municipalities.
CL&P will receive compensation of $10 million in cash and CRRA will assume
substantial environmental remediation costs for this property. CL&P will
retain and continue to operate all its electric substation, transmission,
distribution and associated facilities at the South Meadows site.
B. Petition
By application filed with the Department of Public Utility Control
(Department) on June 25, 1999 (Application), pursuant to the General Statutes
of Connecticut (Conn. Gen. Stat.) Section 16-43, the Connecticut Resources
Recovery Authority (CRRA) requests approval of the acquisition by eminent
domain, pursuant to its powers under Conn. Gen. Stat. Sections 22a-266(a)(7)
and 22a-276, of certain real and personal property of The Connecticut Light
and Power Company (CL&P) in Hartford, Connecticut. The property in question
contains approximately 79.9 acres of land and improvements thereon east of
Reserve Road, north of Maxim Road and west of the Connecticut River and land
of the City of Hartford (Property). The land to be acquired is shown as Lot
2 and more particularly bounded and described on a map attached as Exhibit A
to the Application, which survey map is entitled: "NORTHEAST UTILITIES
SERVICE CO. FOR THE CONNECTICUT LIGHT & POWER COMPANY, BERLIN, CONNECTICUT,
COMPILATION PLAN - SOUTH MEADOW GENERATING STATION SEPARATION PLAN SHOWING
LAND TO BE CONVEYED AND EASEMENT TO BE RESERVED, HARTFORD, CONNECTICUT, SCALE
1"=100, DATE 3/2/99, REVISED EASEMENT AREA DATE 6/8/99, DWG. NO. 21872-1,
ELLIOT F. FULLER, JR. PELS #12328." Applicant proposes to pay CL&P the sum
of $10 million as just compensation for the Property, subject to approval of
the Superior Court as the assessment of damages for the taking. CRRA will
also accept liability for, hold CL&P harmless against, and indemnify CL&P
against environmental liabilities with respect to the Property, except that
CL&P shall contribute one-half of the expense, but no more $2,000,000,
towards remediation work necessary to comply with federal or Connecticut law.
C. Conduct of the Proceeding
The Property is not subject to the requirements of Conn. Gen. Stat.
Sections 16-50c, 16-50d and 16-50e. No public hearing is required and none
was held.
D. Parties to the Proceeding
The Department recognized the following as Parties to this proceeding:
The Connecticut Light and Power Company, P.O. Box 270, Hartford, CT 06141-
0270; Office of Consumer Counsel, Ten Franklin Square, New Britain, CT,
06051; and Connecticut Resources Recovery Authority, 179 Allyn Street,
Hartford, CT 06103.
II. EVIDENCE OF THE PARTIES
The Property to be taken by eminent domain consists of approximately
79.9 acres and is improved with buildings, structures, electric generation,
transmission, and distribution facilities, and other utilities and
appurtenances. CRRA's Mid-Connecitcut resource recovery facility is also
located on this acreage, on a parcel leased from CL&P. Application,
Exhibit A. The Property is located adjacent to the Connecticut River,
providing barge access. The Charter Oak Bridge over the Connecticut River
crosses the northwest portion of the Property. The intersection of major
interstate highways provides highway access for the truck traffic to the
waste processing facility.
The resource recovery facility was built at this site because it
provides fuel for the steam generators at the generation plant. CRRA intends
to acquire the land and facilities comprising the generating facilities and
associated real property. CRRA would thus secure a market for the steam
produced from the burning of the processed refuse. CL&P would retain
ownership of the substation, transmission, and distribution assets at the
South Meadows station (Retained Facilities). CL&P has designed permanent
easements it will retain for those facilities. The permanent easement areas
designed for this transfer are shown as "Easement to Be Reserved" on
Exhibit A of the Application. CRRA will have the right to relocate the
Retained Facilities elsewhere on its site, if practicable, at its cost
subject to approval by CL&P. According to the Application, "Prior to the
transfer of title, parties will execute a definitive agreement on the
specific terms of the transfer." Application, pp. 2 and 5.
CRRA owns the boiler and attendant facilities related to burning refuse
at the site, making it the most interested possible purchaser of CL&P's
Property. CL&P is required by Conn. Gen. Statute Section 16-244e to divest
its non-nuclear electric generating assets by January 1, 2000. The
generating assets, including the turbine, condenser, generator, and
associated piping, and associated real property assets at South Meadow are
among the assets that will be sold by CL&P and would likely be acquired by a
third party unless this application is approved. CRRA states that it has
invested approximately $300 million at this site and seeks to secure its
interest by acquiring the generating assets. CRRA states that acquisition of
the site is in the public interest since it will enable CRRA to continue to
provide environmentally sound refuse disposal and recycling for over 60
municipalities in accordance with the Solid Waste Management Services Act.
Application, p. 4; Conn. Gen. Stat. Sections 22a-257 et seq.
CRRA will pay CL&P $10 million for the Property. The net book basis of
the property is ($3,217,591). Response to Interrogatory EL-27 in Docket No.
99-02-05, Application of The Connecticut Light and Power Company for
Calculation of Stranded Costs, of which the Department hereby takes
administrative notice. CRRA also will accept environmental liabilities at
the site; however, CL&P will be responsible for up to one half of the expense
of any remediation work necessary to comply with federal or state law or
regulation, up to a maximum of $2 million. The Company believes remediation
costs will substantially exceed that amount, therefore resulting in savings
to ratepayers by avoiding these costs. Tr. 6/7/99 in Docket No. 85-05-13
REO1, The Connecticut Light and Power Company's Petition for Approval of
Certain Contracts and Transactions Associated With the Mid-Connecticut Refuse
to Energy Project Buyout, p. 10, of which the Department hereby takes
administrative notice. CRRA shall also reimburse CL&P for certain
maintenance performed in the generating assets in 1999, including work on the
Unit 6 condenser at an approximate cost of $310,000. Application, p. 8.
III. DEPARTMENT ANALYSIS
CL&P is a public service company as defined by Conn. Gen. Stat. Section
16-1(a)(4), and, therefore, a condemnation of its property is subject to
Department approval pursuant to Conn. Gen. Stat. Section 16-43. Section 6 of
Public Act 98-28 (Conn. Gen. Stat. Section 16-244e), An Act Concerning
Electric Restructuring, requires CL&P to divest its non-nuclear electric
generating assets by January 1, 2000, in accordance with the divestiture plan
approved by the Department in the Decision dated January 8, 1999, in Docket
No. 98-10-08, DPUC Review of The Connecticut Light and Power Company's
Divestiture Plan. The electric generation assets and real property at South
Meadow are among the assets that must be sold by CL&P pursuant to the
restructuring act. Unless this application is approved, the Property could be
acquired by a third party with whom CRRA has no contractual relationship.
Since CRRA has invested approximately $300 million in its Mid-
Connecticut resource recovery project at the South Meadows site, it seeks to
secure the Property including the generation facilities. Application, p. 4.
The processed refuse from the recycling plant will continue to produce steam
for electric generation at the facility. The condemnation of the Property
will allow CRRA to continue refuse disposal and resource recycling in
accordance with the Solid Waste Management Services Act. Conn. Gen. Stat.
Sections 22a-257 to 22a-285k.
THE CONNECTICUT RESOURCES RECOVERY AUTHORITY, ESTABLISHED BY CONNECTICUT
LAW IN 1973, IS "A BODY POLITIC AND CORPORATE, CONSTITUTING A PUBLIC
INSTRUMENTALITY AND POLITICAL SUBDIVISION OF THE STATE OF CONNECTICUT
ESTABLISHED AND CREATED FOR THE PERFORMANCE OF AN ESSENTIAL PUBLIC
AND GOVERNMENTAL FUNCTION." CONN. GEN. STAT. SECTIONS 22A-261. CRRA'S
POWERS, AUTHORITY AND DUTIES ARE DESCRIBED IN THE CONNECTICUT SOLID WASTE
MANAGEMENT SERVICES ACT, CONN. GEN.STAT. SECTIONS 22A-257 TO 22A-285K. CRRA
HAS THE POWER TO ACQUIRE PROPERTY INTERESTS BY EMINENT DOMAIN. CONN. GEN.
STAT. SECTIONS 22A-266(A)(7) AND 22A-276.
PURSUANT TO CONN. GEN. STAT. SECTIONS 22A-276 AND 48-12, CRRA PLANS TO
FILE A CONDEMNATION ACTION WITH THE HARTFORD DISTRICT OF THE SUPERIOR COURT
TO TAKE THE PROPERTY. DAMAGES TO AN OWNER OF CONDEMNED PROPERTY ARE ASSESSED
AT FAIR MARKET VALUE PURSUANT TO THE PROCEDURES ESTABLISHED BY CONN. GEN.
STAT. SECTIONS 8-132 ET SEQ. THE PARTIES HAVE AGREED UPON THE FAIR MARKET
VALUE OF THE PROPERTY AND CRRA WILL FILE THE ACTION WITH THE SUPERIOR
COURT FOR THE AGREED UPON COMPENSATION. APPLICATION, PP. 4, 7. CRRA IS THE
PARTY MOST LIKELY TO PAY FAIR MARKET VALUE FOR THE PROPERTY, GIVEN ITS
FACILITY OPERATES AT THIS LOCATION.
CRRA is a quasi-public agency with clear legislative mandates.
Additionally, the facility meets the qualifications of Public Act 98-28 for
Class II renewable generation, and its continued operation promotes state
energy policy. A sale of CL&P's South Meadows generating facilities to a
third party could adversely affect CRRA's recycling facility. Acquisition by
an entity that did not properly operate and maintain the equipment could
curtail the use of steam from the recycling plant. Acquisition of the CL&P
generating facilities will promote the public interest by preserving CRRA's
ability to burn refuse and sell the end product, which in this case will
become electricity instead of steam.
Public Act 98-28 Sections 8(h)(3) and (4) require that all gains from
sales of property occurring after July 1, 1998, be used to reduce the total
amount of nuclear stranded costs. Therefore, CL&P must record the gain in a
contra plant account and have the gain act as an offset to rate base. CL&P
shall make entries to this account readily identifiable for review and audit
so that CL&P and the Department can track the amount available to offset
nuclear stranded costs. The Department intends to apply the gain from the
sale of this facility to offset stranded cost in Docket No. 99-03-36, DPUC
Determination of The Connecticut Light and Power Company's Standard Offer.
Since CL&P's access to transmission and distribution facilities at the
site will not be impeded by the condemnation, the ability of CL&P to provide
electric service to the public will not be harmed by the transaction.
Provision of the designated easement rights over the Property will enable
CL&P to continue to provide electric service, consistent with its duties as
an electric distribution company. Conn. Gen. Stat. Section 16-1(a)(29).
Review of the evidence submitted shows that the taking of the Property
by CRRA will not adversely affect CL&P's ability to continue to provide
service to its customers. There is no reason to believe that ratepayers or
shareholders will be adversely affected by the taking of the Property and
retention of necessary easement rights by CL&P.
IV. FINDINGS OF FACT
1. CRRA is a quasi-public agency of the State of Connecticut and has the
power of _______ eminent domain.
2. CRRA requires the Property of CL&P to control the land for its waste
processing facility and secure a market for the steam it produces from the
burning of refuse.
3. CL&P must divest itself of the South Meadows generation facility.
4. CRRA WILL REIMBURSE CL&P THE SUM OF $10 MILLION, PLUS CONSIDERATION
FOR MAINTENANCE PERFORMED IN 1999.
5. CRRA will assume the major responsibility for environmental remediation
costs at the Property.
6. CL&P is exposed to a maximum of $2 million in environmental remediation
costs at the site.
7. The parties agreed that cash consideration of $10 million, $310,000 for
1999 repairs, and assumption of environmental remediation costs is a
reasonable estimation of the fair market value of the Property to be
condemned, and the compensation will be submitted to the Superior Court for
approval.
8. The CRRA facility will produce electricity as a Category II renewable
energy source.
9. CL&P will retain ownership of the substation, transmission, and
distribution assets at the South Meadows station and of permanent easements
for access to and operation of these facilities.
V. CONCLUSION AND ORDERS
A. Conclusion
Based on the record in this proceeding, the Department hereby approves
the condemnation and taking by CRRA of the Property owned by CL&P at the
South Meadows facility, with the retention by CL&P of all substation,
transmission, distribution, other facilities and permanent easements to
operate such facilities necessary to provide services as an electric
distribution company. Prior to the transfer of title CL&P and CRRA will
execute a definitive agreement on the specific terms of the transfer. The
Department approves of the $10 million cash compensation and allocation of
site remediation costs as a reasonable fair market value of the Property as
agreed to by CRRA and CL&P and to be submitted to the Superior Court for
approval.
B. Orders
1. CL&P shall submit to the Department copies of the Easement agreements
necessary to the operation of the Retained Facilities at the South Meadows,
within 60 days of this Decision.
2. CL&P shall submit to the Department copies of the executed agreement
detailing the specific terms of the transfer within 30 days of its execution.
3. CL&P shall submit to the Department no later than 30 days after it is
issued the approval by the Superior Court of the statement of compensation
filed by CRRA pursuant to Conn. Gen. Stat. Section 8-129. CL&P shall also
submit at that time a copy of the statement of compensation, and a statement
by CL&P that it is not appealing the statement of compensation because it is
not aggrieved by the amount of compensation by CRRA.
4. CL&P shall submit the journal entries, reflecting the value of the
Property taken no later than 30 days after payment is entered.
Linda Kelly Arnold
Jack R. Goldberg
Donald W. Downes
CERTIFICATE OF SERVICE
The foregoing is a true and correct copy of the Decision issued by the
Department of Public Utility Control, State of Connecticut, and was forwarded
by Certified Mail to all parties of record in this proceeding on the date
indicated.
____________________________ 9/8/99
Louise E. Rickard Date
Acting Executive Secretary
Department of Public
Utility Control
