December 10, 2013 05:11PM
By Andrew Ragali
WALLINGFORD — An ongoing dispute between the Electric Division and a statewide municipal energy co-op revolves around the ownership of transmission assets needed to send reliability information to operators of the electrical grid.
The Town Council tonight will consider a request from the Public Utilities Commission for $255,000 to pay legal fees related to the dispute. A Dec. 5 letter from Public Utilities Director George Adair to Drew Rankin, chief executive officer of the Connecticut Municipal Electric Energy Cooperative, indicates Wallingford’s need to continue using equipment owned by the co-op after the town’s municipal utility moves to a new model for purchasing electricity through a new provider.
The co-op will only allow the town to continue using its transmission equipment if Wallingford makes “other commercial concessions,” Adair wrote in the letter, obtained by the Record-Journal Monday.
The co-op has provided power to the town since 1994. Under a deal made by the town in May, Energy New England will replace the cooperative as of Jan. 1. The town’s transition to Energy New England has been complicated, however, by the cooperative’s ownership of key assets in Wallingford.
The co-op, CMEEC, owns equipment that allows the town to transmit data to the Connecticut Valley Electric Exchange locations in Berlin and Windsor. This is referred to as the “Frame Relay Service,” by Adair in his letter. Adair writes that the data transferred is used by the exchange to “support transmission system reliability” in Connecticut and western Massachusetts. These transmission locations qualify as “Pool Transmission Facilities” under ISO New England’s transmission tariff, making the Electric Division eligible for “Regional Network Service” payments of about $800,000 annually. But “CMEEC intends to interrupt the flow of this essential data unless Wallingford agrees to CMEEC’s terms in connection with the resolution of entirely unrelated commercial issues,” Adair wrote.
Adair wrote in his letter that CMEEC has made clear it will only continue the “essential service” if it “acquiesces to CMEEC’s demands regarding a broad range of entirely unrelated commercial relationships.”
CMEEC offered continued transmission service to the town on the condition that the two parties “shall enter into a full and satisfactory and constructive resolution of all Electric Division claims against CMEEC, whether asserted or unasserted ...,” according to the letter.
Rankin said Monday he wants to resolve issues between the cooperative and the town to “get to a more reasonable place.”
“It’s not unreasonable that we have asked them to put together a list of grievances,” Rankin said. “What I wanted to do was say ‘this is ridiculous, if you have grievances, let’s sit down and get them resolved.’”
Since the town initiated a bid process last year and decided to enter into a new power procurement deal with Energy New England in May, Rankin said, there have been questions. CMEEC also bid on the same “agency” model put forth by Energy New England, and said the cooperative’s offer was less expensive. But there was never any explanation as to why the town chose to switch providers, he said. A July request for more information on the decision wasn’t accommodated, Rankin said. The cooperative has never offered the “agency” model before, which allows the town to directly enter into energy agreements through counter-parties instead of relying on the cooperative to enter into agreements on the town’s behalf.
“We wanted to have insight as to how we performed against others,” Rankin said regarding why he wanted more information on the bid selection process.
Adair has said the town will hold a public information meeting on the decision-making process in January. Rankin said he has no ill-will toward the town, and just wants to get an explanation of grievances. In fact, Rankin said, CMEEC actually first informed the town that the transmission assets would be lost in the transition. If the cooperative hadn’t told CMEEC about this change, he said, the town would be in much bigger trouble right now. Ongoing disputes can be blamed on the Electric Division’s “lack of preparation” in transitioning to a new provider, he said.
On June 25, CMEEC and Electric Division officials met to discuss transition issues. One of the issues identified by CMEEC, according to Adair’s letter, was the “Frame Relay Service.” In September, the town began the process of transferring the service from CMEEC to Wallingford. But CMEEC halted the transfer because it owned the equipment, Adair said. A CMEEC representative directed the town in September to purchase new equipment from AT&T and to install the equipment in required locations.
The town investigated purchasing new hardware, “but learned that a change in the type of technology used to transfer the data is on the near-term horizon, but has not been finalized,” Adair writes. Therefore, the technology would soon be obsolete, Adair said. CMEEC wouldn’t need this technology anymore, he said, so on Oct. 9 he sent a letter requesting that CMEEC continue providing the transmission service. CMEEC agreed to continue the service, and sent a draft agreement to the town on Nov. 19. The draft stipulated other commercial concessions, Adair said, so it was edited and returned on Nov. 22, limiting the scope of the agreement to just the service provided. On Dec. 3, Adair said, Rankin replied to the edited draft via email and “confirmed that CMEEC fully intends to subordinate regional electric system reliability to its commercial interests.”
“Wallingford cannot tolerate and will not accept the possibility that CMEEC would discontinue transmission of reliability related to CONVEX (Connecticut Valley Electric Exchange),” Adair wrote, adding that the town has a responsibility to regulatory bodies to assure that there is no interruption in the transmission of data.
Adair also said that, unless the town received a response from CMEEC by Dec. 9 indicating that the cooperative had changed its stance, the town would “initiate such legal and regulatory actions as it deems appropriate to prevent CMEEC from jeopardizing transmission reliability.”
Asked if he had responded to Adair’s request by Monday, Rankin said, “No and I’m not going to respond today.
“The tone of that statement is threatening,” Rankin said. “They should not be threatening and dictating to other entities what their responsibilities are. What we are looking for is not unreasonable, but our responsibility is not to enter into new agreements with entities that are writing threatening letters.”
The fact remains, CMEEC owns the transmission equipment, Rankin said.
“It’s their obligation to provide that transmission data, not ours,” Rankin said. The assertion by Adair that CMEEC created the situation is “misplaced,” he said. “It’s their lack of preparation.”
Rankin said his goal is to avoid courts and dispute resolution. “I’m going to remain optimistic that we get this resolved.”
Adair wrote in his letter that he finds CMEEC’s position “particularly disturbing given CMEEC’s previous assurances that it would work with Wallingford in a professional manner” on all matters related to the transition.
“Drew, I urge you to reconsider your position,” Adair wrote. “It reflects poorly on both CMEEC and its Members and is the antithesisi of ‘good utility practice.’”