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State Supreme Court to Consider Arguments in Cogen Plant Suit

By Marilyn Vogel

The state Supreme Judicial Court heard oral arguments last week in the latest phase of a protracted legal dispute between MITand the Cambridge Electric and Light Company.

MIT is trying to avoid paying a $4.5 million customer transition fine levied by the state Department of Public Utilities in 1995 when MIT opened its 21-megawatt cogeneration plant and decreased its reliance on Cambridge Electric's power grid. Cambridge Electric argues that MIT withdrew from its contract suddenly, leaving the utility stranded with excess capacity that it had originally built to serve MIT.

After an unsuccessful appeal to the Federal Energy Regulatory Commission, MIT appealed to the state's highest court in December.

In the appeal, MIT argues that the DPU order violated the 1978 Public Utilities Regulatory Policy Act which ensured that customers with facilities like the cogeneration plant would not be required to pay transitional fees.

The DPU is attempting to apply rules involving cogeneration plants that will not go into effect until electricity is deregulated in Massachusetts in 1998, said MITlawyer John de Torre.

No state electricity regulatory agency has ever levied a fine against a facility like the cogeneration plant, deTorre said. He added that the DPU wrongly retroactively applied laws to the cogeneration plant in reaching its decision.

The Court is expected to issue its ruling within 90 to 120 days.

Officials frustrated with decisions

MITofficials involved with the cogeneration plant have not only been surprised but have also been frustrated by the DPU and FERC decisions.

"It's ludicrous that we spent all this money to make this plant and now we get this charge," said cogeneration plant engineer Chris Russo.

A cogeneration plant produces both electricity and steam. The cogeneration plant produces emissions that are "almost an order of magnitude cleaner" in nitrous oxide emissions than Cambridge Electric, Russo said.

Cogen, using what Russo calls "cutting-edge technology," reduces emissions to 50 percent that of conventional generation. From Cogen's standpoint, the DPU has decided not only against MIT, but also against clean, efficient generation, Russo said.

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

Cogeneration has rocky history

The DPU ordered MIT in 1995 to reimburse $4.5 million of the $6 million in costs accrued by Cambridge Electric to meet MIT's long-term power needs. Under state law, utility companies are required to make advance purchases of power to meet future power needs.

However, MIT argues that these "stranded costs have nothing to do with MIT," de Torre said.

Even though planning for the cogeneration plant began in 1985, in response to Cambridge Electric's rate hikes, the DPU found that MIT had not officially informed Cambridge Electric of the existence of the cogeneration plant until a few years before the plant became fully operational. As a result, MIT was required to pay 75 percent of the costs that Cambridge Electric incurred in purchasing the power.

"We base our planning model on official notification," said Peter Diamond, a spokesperson for Cambridge Electric. "We were not notified that the project was a go until a couple of years ago."

Until the cogeneration plant became operational, MIT was Cambridge Electric's second largest customer, behind Harvard University.

The cost, being levied at the rate of $1.3 million per year is being paid by MIT while the lawsuits continue. Massachusetts is scheduled to deregulate electricity in 1998, at which point the charge will be scaled back.