Town hopes to take $78m electricity fight to Supreme Court
In a case officials say could carry broad ramifications for municipalities' dealings with the power industry, the town of Norwood has decided to appeal to the nation's highest court, hoping to reverse a $78 million judgment in its protracted fight against its former electricity supplier.
For a high-stakes legal tug-of-war that has gone on for nearly a decade, it is perhaps fitting that the final battle may be fought in the Supreme Court.
A federal appeals court ruled last month that Norwood owed the money to
"It's devastating that an agency could award that kind of money against the town," said Malcolm McDonald , superintendent of the Norwood Light Department. "It's $7,500 for every resident. And they really don't deserve it."
The Federal Energy Regulatory Commission , which handed down the $78 million ruling in 2005, is now deciding how much interest New England Power is due, officials said. In its February decision, the First Circuit Court of Appeals remanded the question of interest payments to the commission, a move town officials supported.
McDonald contends that New England Power was able to sell the power it had earmarked for Norwood to other customers at a higher rate, and calls additional revenue from Norwood "double dipping" on the company's part.
"Simply, we believe they made too much money," he said.
The town had purchased wholesale electric power from New England Power since 1983, and in 1989 extended its contract through 2008. Unhappy with the company's rates, town officials began buying cheaper energy from
New England Power sued the town later that year, contending it was entitled to the full amount of the contract. In 2004, an FERC administrative judge ruled that Norwood owed New England Power $17 million plus interest, which the power company appealed. The following year, the full commission ruled New England Power was entitled to $78 million "for the consequences of Norwood's early termination of the contract."
A National Grid spokesman said the company's position has been consistently upheld by FERC and the courts, making the town's persistence baffling.
"It's unclear at this point why they would continue" to pursue the case, said spokesman David Graves, adding that National Grid officials have made numerous attempts to settle the case but were rebuffed.
Robert Jablon, a Washington, D.C., lawyer handling the town's appeal, criticized the judgment against Norwood as a "horrendous wrong" against ratepayers.
New England Power suffered "minimal or no losses" from losing Norwood as a customer, he said.
Jablon said if the Supreme Court agrees to hear the case, its interpretation of what constitutes "just and reasonable" electricity rates under federal law could set a pivotal precedent.
"The consequences are very broad," he said.
Selectwoman Helen Donohue said the town's lawyer has agreed to handle the appeal on a contingency basis, meaning the town will pay legal fees only if it prevails.
"It won't cost the town a dime unless it's successful," she said. "What have we got to lose?"
Donohue said she and other town officials believe the judgment is exorbitant and should be overturned or sharply reduced. The town, which has been setting money aside in anticipation of a ruling, has already paid New England Power more than $35 million, including a $15 million payment sent this month. The town has also been paying approximately $600,000 a month since last August to reduce interest penalties.
McDonald said the town "at worst broke even" by leaving New England Power, because of far lower rates it paid to other suppliers. He estimated that the town saved $93 million in rate payments, factoring in interest and inflation.
Meanwhile, even though the town's appeal is outstanding, Town Meeting in May will ask the Legislature for permission to borrow up to $116 million to pay the judgment. The town would recoup the money from ratepayers through as much as $9 a month in rate hikes.
Peter Schworm can be reached at schworm@globe.com. 
