In re Public Service Co.

MEMORANDUM AND ORDER DISALLOWING INDEPENDENT POWER PRODUCER CLAIMS

JAMES E. YACOS, Bankruptcy Judge.

Various independent power producers (IPPs) filed proofs of claims in this chapter 11 case. Most of the claims were either fixed claims for power sold to the debtor before the commencement of the case or contingent claims for rejection or anticipatory breach of the arrangements under which the IPPs sell power to the debtor. These arrangements are either rate orders of the New Hampshire Public Utilities *805Commission (the “NHPUC”) or contracts between the debtor and the IPP. Public Service Company of New Hampshire filed objections to the claims of the IPPs. A hearing was held on the objections on April 13, 1990, at which numerous claimants were represented.

The Third Amended Joint Plan of Reorganization of Northeast Utilities Service Company et al., which has been the subject of confirmation hearings for six days during the weeks of April 2 and April 9, 1990, provides for assumption of all of these arrangements. Neither the Plan nor Public Service takes a position on whether the NHPUC rate orders constitute executory contracts within the meaning of section 365 of the Bankruptcy Code.

The Plan contemplates that after reorganization, the reorganized debtor may seek, either through NHPUC procedures and under and consistent with New Hampshire law or through voluntary renegotiation with the IPPs, to modify the prices and other terms of the arrangements under which the reorganized debtor would continue to buy power from these IPPs. Neither the Plan nor its feasibility is dependent on success in this effort. Under the Plan, most of the benefits of a reduction in the price paid under the IPP arrangements would inure to the benefit of the reorganized debtor’s customers. Only 10% of the benefits of reductions in the prices paid to only thirteen IPPs listed in the Rate Agreement on which the Plan is based would inure to the benefit of the reorganized debtor.

The IPPs argue that they are entitled to the allowance in this chapter 11 case of unsecured claims in the aggregate amount of over $600 million on account of any damage they may suffer as a result of any modification ordered by the NHPUC in, or agreed to by themselves through renegotiation of, their power sale arrangements with the reorganized debtor after the Effective Date of the Plan. They do not argue that the reorganized debtor will be unable to perform the arrangements according to their terms, nor did they file any objection to assumption of the arrangements or to confirmation of the Plan on that ground. Rather, they argue that the Plan provision that evidences the reorganized debtor’s intent to seek modification of the arrangements under State law fails the test of “adequate assurance of future performance” of the existing arrangements, as required by section 365(b) of the Bankruptcy Code, because, if the reorganized debtor is successful in obtaining modification of the arrangements, the reorganized debtor will not be performing the arrangements as they currently exist.

Public Service objected to the allowance of any such claims. Public Service also objected to the allowance under the Plan as Class 10 (general unsecured) claims of any claims for power sold to the debtor before the commencement of this case for which the debtor had not yet paid, contending that any such claim would be paid as a cure of defaults under the power purchase arrangement, as required by section 365(b) of the Bankruptcy Code.

It is clear from the terms of the Plan, and the IPPs do not dispute, that the Plan provides for assumption of the power sale arrangements, subject to the reorganized debtor’s intent to seek modification of the arrangements under State law after the Effective Date of the Plan. It is also clear from the record in this case, and the IPPs do not dispute, that the reorganized debtor is fully capable of performing the power sale arrangements according to their terms as they currently exist.

The only real question is whether contingent claims for over $600 million should be allowed on the theory that the Plan includes a Rate Agreement under which the reorganized debtor will seek modification, with the support of the State of New Hampshire, of the arrangements by the NHPUC, or will seek to renegotiate the arrangements with the IPPs. The issue is whether there is any present claim against this debtor based on these facts.

This Court finds that there is no anticipatory breach theory available to the IPPs based on these facts. The Plan and the Rate Agreement do not indicate breach. All that is contemplated is renegotiation or *806a petition to the NHPUC, which may or may not have the power to order modification. If it does not have any such power, or if there is no right in the arrangement to modify, then the modification will not happen and the IPPs will suffer no damage. If the NHPUC does have such a power, and if there is a right to modify, as determined by the NHPUC in the proceeding that the reorganized debtor might commence, then the modification will not constitute a breach of the arrangement, and the IPP will not be entitled to any damages against the debtor or the reorganized debt- or for a breach. The NHPUC might attach various terms and conditions to any modification which could include changed obligations on the part of the reorganized debt- or, but this possibility does not create a present claim, contingent or noncontingent, against either the debtor or the reorganized debtor.

For the foregoing reasons, all objections to the claims of the IPP for contingent breach or rejection of the power sale arrangements should be sustained, and it is

ORDERED:

1. The objections of Public Service to the claims of the IPPs listed in paragraph 6 of this Order on the grounds that the claims constitute contingent claims for damages arising from rejection under the Plan of executory power sale arrangements are sustained.

2. The objections of Public Service to the allowance as general unsecured claims in Class 10 under the Plan of the claims of the IPPs listed in paragraph 6 of this Order on the grounds that the claims are for power sold to the debtor before the commencement of this chapter 11 case, which will be paid on the Effective Date of the Plan, are sustained, except that—

(a) this Order is without prejudice to the determination of the actual amount owing for power sold and not yet paid for; and
(b) the payment under the Plan on the Effective Date of the amounts actually allowed for power sold shall be with interest at the legal rate from the date on which such payments would have been due but for the commencement of the chapter 11 case to the date of payment.

3. Paragraphs 1 and 2 of this Order shall become void if confirmation of the Third Amended Joint Plan of Reorganization of Northeast Utilities Service Company et al. is denied or if the order of confirmation is vacated for any reason, including the failure of the Effective Date of the Plan to occur, as provided in the Plan.

4. Based on the stipulation of Public Service and the claimant on the record at the hearing, the objection of Public Service to Claim No. 8829900008 of American Hydro, Inc. — Peterborough, in the amount of $1700.00 for a prepetition prepayment for an interconnect study is sustained, and the claim is disallowed, without prejudice to any dispute between Public Service and the claimant over Public Service’s performance of the interconnect study after the commencement of this case.

5. The objection of Public Service to Claim No. 8827700010 of Hillsboro Mills in the amount of $13,296.00 is sustained, and the claim is disallowed.

6. The claims to which paragraph 1 and 2 of this Order apply are listed on the Appendix to this Order.

DONE and ORDERED.

APPENDIX

_CLAIMANT_CLAIM NO. CLAIM AMOUNT

Alden Engineering Company Greenville Road, RR # 1 Box 213 Mason, NH 03048 8806400253 2,771.40

*807CLAIMANT_CLAIM NO. CLAIM AMOUNT

Alexandria Power Assoc. Ltd. Ptn. c/o Legeis Resources, Inc. 1200 Crown Colony Drive Quincy, MA 02169 8931000003 8829800029 43,435,917.00 348,935.00

Ashuelot/HDI Associates, Inc. 10394 W. Chatfield Ave., Suite 108 Littleton, CO 80127 8930000007 3,091,427.30

Avery Hydroelectric Assoc. Box 240, 36 Bay Street Manchester, NH 03105 8830200219 8930000001 24,509.89 1,358,294.89

Beech River Mill Company Old Route 16 Center Ossippee, NH 03814 8807100189 8807400663 2,099.61 2,099.61

Bethlehem Hydro Electric Co. 86 Lafayette Road, Box 947 North Hampton, NH 03862 8806700424 1,700.00

Bio Energy Corporation Route 127 Hopkinton, NH 03301 8830100060 8931000004 923,522.60 59,830,443.90

Boston Felt Company on the Salmon Falls River P.O. Box 6258 E. Rochester, NH 03867 8806000369 8930000002 8829800304 4,125.60 278,494.60 4,125.60

Briar Hydro Associates 114 State Street Boston, MA 02109 8830100242 8930000003 167,092.59 8,566,683.59

Bridgewater Power Company LP c/o Comm. Energy Alternatives 1200 East Ridgewood Avenue Ridgewood, NJ 07450 8817200005 8828400015 8830100026 8931000002 1,518,382.68 1,518,382.68 1,518,382.68 81,508,705.60

Steven V. and Holly M. Brown P.O. Box 1371 Dover, NH 03820 8827700076 11.11

Chamberlain Falls Hydro Station Greenville Road, RR # 1 Box 213 Mason, NH 03048 8806400018 963.19

Charwill Realty Badger Bond Hydro P.O. Box 689 Meredith, NH 03253 8829800302 7,317.28

*808_CLAIMANT CLAIM NO. CLAIM AMOUNT

Chrysler Capital Corp. Greenwich Office Park I Attn: Corporate Finance Group Greenwich, CT 06836 8830600049 8830600050 8,000,000.00 12,000,000.00

Clement Dam Development, Inc P.O. Box 1011 Portsmouth, NH 03801 8809800017 8930000004 113,004.00 3,770,266.87

Cocheco Falls Associates P.O. Box 1073 Dover, NH 03820 8830100237 8930000005 41,229.10 1,147,467.30

Concord Steam Corporation P.O. Box 1377 Concord, NH 03302-1377 8808400057 86,697.90

Consolidated Hydro Maine, Inc. c/o Consolidated Hydro, Inc. 2 Greenwich Plaza Greenwich, CT 06830 8930000010 8830500035 3,298,973.69 12,312.69

Consolidated Hydro New Hampshire, Inc. c/o Consolidated Hydro, Inc. 2 Greenwich Plaza Greenwich, CT 06830 8930000008 8930000009 8930000006 0000100008 8830500034 756,557.00 1,426,269.29 1,533,996.25 53,320.25 74,661.29

Paul Crane 172 Main Street Lancaster, NH 03584 8806300156 331.21

Errol Hydroelectric Limited Partnership c/o Swift River/Hafslund Company 100 Commercial Street Portland, Maine 04101 8930000011 8829800303 10,438,651.40 274,111.40

Exeter River Hydro c/o Paul T. Phillips Main Street Freemont, NH 03044 8930000012 8829400142 45,299.98 689.98

Fisk Hydro, Inc. P.O. Box 2520 So. Hamilton, MA 01982 8809800020 16,603.57

Franklin Falls P.O. Box 216 Franklin, NH 03235 8807400748 73,415.12

Franklin Industrial Complex Smith & Canal Streets Franklin, NH 03235 8827800006 59,885.79

*809CLAIMANT_CLAIM NO. CLAIM AMOUNT

Garland Mill RD1 Garland Road Lancaster, NH 03584 8806400117 268.11

Goodrich Falls Hydro Electric P.0. Box 152 Lowell, MA 01853 8807100173 8807400747 25,086.69 25,086.69

Golden Pond Hydropower Associates c/o Mainstreet Associates George K. Lagassa 110 Lafayette Road, P.O. Box 947 North Hampton, NH 03862 8829800305 8930000013 9,734.26 342,744.26

Gregg Falls Hydroelectric Associates c/o Schooner Capital Corporation 99 Bedford Street Boston, MA 02111 8930000014 8830200215 6,508,083.97 80,872.97

Hadley Falls Assoc. Box 240, 36 Bay Street Manchester, NH 03105 8930000015 8830200217 143,327.33 8,236.33

Hemphill Power & Light Company c/o Thermo Electron of N.H. Inc. Attn: Parimel Patel 101A First Avenue Waltham, MA 02254-9047 8931000005 8831900006 8827700680 68,643,692.20 1,375,390.20 1,375,390.20

Hopkinton/HDI Associates I 10394 W. Chatfield Ave., Suite 108 Littleton, Colorado 80127 8930000016 523,117.00

Hydroelectric Dev. Inc. Assoc. Bay Bank of Boston, NA 175 Federal Street Boston, MA 02110 8830300007 8830300008 29,538.00 10,962.00

Hydroelectric Dev., Inc. Michael P. Demos, Pres. 10394 W. Chatfield Ave., Suite 108 Littleton, CO 80127 8830300005 8830300006 25,260.12 29,913.30

Hydro-Op One Associates c/o Schooner Capital Corporation 99 Bedford Street, 2nd Floor Boston, MA 02111 8930000017 8830200216 2,224,003.00 64,953.00

James River New Hampshire Electric Inc. 650 Main Street Berlin, NH 03570 8806400191 5,941.16

*810_CLAIMANT_CLAIM NO. CLAIM AMOUNT

Lakeport Hydroelectric Corp. Box 240, 36 Bay Street Manchester, NH 03105 8930000018 8830200218 1,550,661.15 25,004.15

Lochmere/HDI Associates I 10394 W. Chatfield Ave., Suite 108 Littleton, CO 80127 8930000019 2,024,039.00

Lower Robertson Dam/HDI Associates III 10394 W. Chatfield Ave., Suite 108 Littleton, CO 80127 8930000020 3,332,193.12

Mad River Power Associates c/o Ransmeier & Spellman P.O. Box 1378 Concord, NH 03302-1378 8930000021 8829500148 1,035,931.41 5,722.41

Marlow Power 44 Hanover Street Keene, NH 03431 8805700238 8828500183 8,586.00 8,586.00

Micon Wind Turbines, Inc. 1435 Frazee Rd, 305 San Diego, CA 92108-1336 8806800218 8811600006 6,423.74 4,869.35

Mine Falls Hydroelectric Limited Partnership c/o Paul F. Avery, Jr. 178 Drinkwater Road Kensington, NH 03833 8930000022 8829900045 148,569.96 148,569.96

Minnewawa Hydro Company, Inc. c/o Consolidated Hydro, Inc. 2 Greenwich Plaza Greenwich, CT 06830 8930000023 8830500032 2,754,340.00 10,940.00

Monadnock Paper Mills, Inc. Attn RC Van Horn Antrim Road Bennington, NH 03442 8805700123 4,950.00

Mount Washington Attn Howard M Wemyss P.O. Box 278 Gorham, NH 03581 8806000740 53.82

Nashua Hydro Associates c/o Essex Hydro Associates 114 State Street Boston, MA 02109 8930000024 8830100241 3,111,077.08 82,015.08

*811CLAIMANT_CLAIM NO. CLAIM AMOUNT

Neaf/Manchester PO Box 7, 124 Sills Road Energy Tactics, Inc. Yaphank, NY 11980 8829400005 1,702.29

New Hampshire Hydro Associates c/o Essex Hydro Associates 114 State Street Boston, MA 02109 8930000025 8830100239 5,819,386.00 315,650.00

Newfound Hydroelectric Company 4 Midland Street Concord, NH 03301 8930000026 8805600385 4,664,547.20 35,620.11

Pembroke Hydro Associates c/o Schooner Capital Corporation 99 Bedford Street Boston, MA 02111 8930000027 8830200220 5,941,183.02 106,999.02

Penacook Hydro Associates c/o Essex Hydro Associates 114 State Street Boston, MA 02109 8930000028 8830100240 9,370,416.84 267,346.84

Pinetree Power, Inc. Westinghouse Building Gateway Center Pittsburgh, PA 15222 8830500055 1,570,067.15

Pittsfield Hydropower Co. P.O. Box 149-A Hamilton, MA 01936 8829900046 17,586.09

River Street Associates River Street Peterborough, NH 03458 8930000030 8930000029 8830200222 286,252.05 181,591.98 14,311.03

Bruce P. Sloat P.O. Box 424 Lost Nation Road Lancaster, NH 03584 8828400029 227.39

Somersworth Hydro Company, Inc. c/o Consolidated Hydro, Inc. 2 Greenwich Plaza Greenwich, CT 06830 8930000031 8830500033 1,278,402.36 35,286.36

Steels Pond Hydro, Inc. PO Box 2520 S. Hamilton, MA 01982 8830100226 33,352.42

Sugar River Hydroelectric Power PO Box 293 Newport, NH 03773 8830500085 8,343.11

*812_CLAIMANT CLAIM NO. CLAIM AMOUNT

Sunnybrook Hydro # 1 RFD # 2 Box 40 Lancaster, NH 03584 8810900019 8827700080 231.46 231.46

Swans Falls Corporation PO Box 40 South Windham, ME 04082 8817900029 22,127.02

Thomas Hodgson & Sons Inc. Canal Street Suncook, NH 03275 8827000072 37,735.24

Timco Inc. Depot Street Ctr. Barnstead, NH 03225 8803500041 8829800024 8931000001 264,082.20 264,082.20 15,182,095.90

Town of Sunapee, a NH Municipality Main Street, P.O. Box 717 Sunapee, NH 03782 8930000032 8829800306 849,583.00 15,519.19

Watson Associates P.O. Box 1073 Dover, NH 03820 8930000033 8830100238 867,081.79 14,064.79

W.M. Lord Excelsior Division of Siemon Company Carl N. Siemon, President 60 Echo Lake Rd., Box 400 Watertown, CT 06795 8826300082 2,094.10

Whitefield Biomass Energy Corp. c/o Chrysler Capital Corp. Greenwich Office Park I Attn: Corporate Financing Grp. Greenwich, CT 06836 8830100211 8830200188 35,000,000.00 35,000,000.00

Whitefield Power & Light Co 101 First Avenue Waltham, MA 02254 8830600048 8931000006 35,000,000.00 68,466,197.00

Woodsville/Rochester P.O. Box 689 Meredith, NH 03253 8826600213 2,293.92