Larry Morgenstein’s July 5 letter listed some “very important numbers” people aren’t talking about. His first item was “18-20 million dollars in alleged overcharges from the CMEEC litigation … Wallingford recovers 800 thousand dollars for ratepayers when the administration expected $18-20 million.” That didn’t seem right; less than 20 minutes researching Record-Journal archives revealed the facts.
Even if what Mr. Morgenstein wrote were true — which it is NOT — is Mr. Morgtenstein suggesting that the town should NOT have pursued CMEEC to recoup that $800,000? If the town had known it was being overcharged and had done nothing, I can just imagine the uproar that would have ensued.
But Mr. Morgenstein is very wrong. Nobody ever claimed Wallingford would get a REFUND of $18-20 million. R-J 2/16/17: “Wallingford is seeking total damages of $18 million, the amount it claims CMEEC is overcharging the town through 2027….”
R-J 5/4/19: “Through arbitration, the town received monetary damages of $3,670,000… CMEEC was also ordered to correct billing procedures and prior practices….” “Since 2013, the town has appropriated $2.85 million for legal expenses….” OK, so there’s Mr. Morgenstein’s $800,000.
But that’s only part of the story. According to that 5/4/19 R-J article, the arbitrator disallowed claims prior to May 2014; CMEEC reduced its 2019 costs assigned to Wallingford for the Pierce project from $565,116 to $136,219; and CMEEC reduced fees related to a NYPA hydropower project, resulting in estimated savings of $210,000 for 2019. “Richard Hendershot, Public Utilities Department director, said… that awarded damages and expected savings to the town total between $9,518,147 and $11,018,147 if projected over a minimum of 10 years.”
Since Mr. Morgenstein was so terribly wrong about just this one issue, I would question his reliability on the others mentioned in his letter. But, alas, I have already reached my 300-word limit
Alexandria Johnson, WallingfordDelineate the facts
Writing as a Wallingford Electric Division (WED) ratepayer, and as chairman of the Public Utilities Commission in response to Jaime Hine’s letter of July 3 concerning the Connecticut Municipal Electric Energy Cooperative (CMEEC) settlement with Wallingford, it is important to delineate the facts. In May 2013, WED notified CMEEC that we were terminating our power supply agreement, effective 12-31-2013. Rather than a clean, business-like separation, WED soon discovered it was being overcharged in multiple areas by the same CMEEC personnel, who are currently under federal indictment. Per our contracts with CMEEC, we first had informal negotiations, then lengthy mediation, and, finally, arbitration, starting in 2015.
Our first concern: April 2013, CMEEC started charging WED a non-cost-based $1/MWH. Our attorneys pushed back: cost avoidance of $1.35 million through 2017.
The more we analyzed the numbers available to us, the more we found we were being overcharged.
Our early estimate was $18 million, mostly in future charges over 10 years.
An impact of arbitration decisions: reduction of future administrative expenses on the Pierce Project of $4 million over 10 years.
Arbitration-related savings: cost avoidance of CMEEC charges for New York Power Authority energy of nearly $2 million over 10 years.
In addition to the $3.67 million cash payment for pre-arbitration overcharges, there are future savings of $7.35 million, thus totaling $11.02 million. This total compares favorably with the $11-$12 million our outside experts believed we should receive after the arbitrator ruled against recovery of certain overcharges, and CMEEC finally released all the records required by the arbitrator in early 2018.
Spending $2.8 million in attorney’s/arbitration fees to save $11.02 million, a no-brainer,in my book.
I believe the settlement is fair to you, the WED ratepayers, and, results in lower electric bills for you.
Robert N. Beaumont, Wallingford