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FERC Rules $4.5M Charge Is Justified

By Fenny Lin

The Federal Energy Regulatory Commission voted last Wednesday against MIT's petition that a $4.5 million customer transition charge assessed to the school violated the Public Utility Regulatory Policies Act.

MIT is in the process of appealing to the state Supreme Judicial Court to reassess the validity of the customer transition charge, according to Victoria V. Sirianni, director of Physical Plant.

The charge - incurred when MIT's newly built cogeneration plant became operational on Sept. 16, 1995 - amounts to $1.3 million a year for 5 years.

The Department of Public Utilities imposed the transition charge as a result of a petition filed by Cambridge Electric last March.

MITis currently paying the transition charge with the understanding that the money will be returned if a judgement is made in MIT's favor.

Cambridge Electric claimed $6 million in stranded costs that were incurred as a result of investments made to supply MIT with power on a long-term basis. MIT initially considered generating its own power in 1985 in response to Cambridge Electric's rate hikes.

MIT and Cambridge Electric did not reach a consensus on the proposals to keep MIT as an all-requirements customer, but MIT began plans for a cogen plant that would supply 75 percent of the power the Institute needed.

The energy industry as a whole is in the process of restructuring and MIT was caught in the midst of it.

"We shouldn't be punished for pursuing energy conservation," Sirianni said. "Cogeneration makes sense. We are using less to make more."