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State Court Deals Blow To PSNH, Upholds Anti-CWIP

January 27, 1988

CONCORD, N.H. (AP) _ The lead owner of the Seabrook nuclear power plant has been denied an emergency rate increase, a critical setback in its efforts to avoid becoming the first major investor-owned utility since the Great Depression to seek bankruptcy protection.

In a strongly worded ruling Tuesday, the state Supreme Court unanimously upheld a law that bars Public Service Company of New Hampshire from charging ratepayers for its $2.1 billion Seabrook investment - more than two-thirds of its assets - before the contested reactor operates.

The law ″makes no exceptions for emergencies,″ the court added in squelching a key part of the utility’s survival plan - a request for a 15 percent emergency rate increase. The company also has been trying to restructure its debt.

The utility had been borrowing heavily to help cover its costs, but lenders last year balked at further credit, precipitating a financial crisis.

Public Service had argued that given its dire circumstances, the ″anti- CWIP″ law, against charging for construction work in progress, unconstitutionally prevents it from recovering just and reasonable rates.

But the court said investors must continue to bear the risks they took in continuing to support Seabrook after the Legislature approved anti-CWIP in 1979. The $5.1 billion plant is completed but has been unable to overcome evacuation-planning obstacles to a commercial license.

″Essentially, the company seeks a bailout,″ the court said in a 17-page opinion. ″PSNH seeks ... nothing less than allocation of risk back to ratepayers now that the risk of inoperative investment has materialized.″

Earlier Tuesday, the New Hampshire House killed the third attempt in four years to repeal the anti-CWIP law. The key vote was 177-104.

Spokesman Nicholas Ashooh said Public Service was ″very disappointed″ by the court ruling. ″We just have to review our remaining options.″

A Wall Street analyst, Amil Schiaffino of McCarthy, Crisanti & Maffei Inc., said today, ″I think there’s a slim chance that they can still avoid a Chapter 11 but it’s obviously much slimmer than it was yesterday.″

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