114 B.R. 804 (1990)

In re PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE, Debtor.

Bankruptcy No. 88-00043.

United States Bankruptcy Court, D. New Hampshire.

April 20, 1990.

Richard Levin, for Public Service Co.

Geoffrey B. Kalmus, J. Michael Deasy, for Unsecured Creditors Committee.

Howard J. Berman, for Equity Committee.

Mark W. Vaughn, for Frederick J. Coolbroth, Manchester, N.H., for the State of N.H.

Susan N. Kenneally, for U.S. Trustee.

Barbara Gould Overend, for Citicorp and Consol. Utilities & Communications, Inc. (CUC).

Paul R. Gioia, Examiner, George A. Hahn, for the Examiner.

John B. Nolan, Jeffrey G. Grody, Janice B. Grubin, Janet V. Lanigan, for Northeast Utilities Service Co.

Ted A. Berkowitz, New York City, for First Fidelity, Nat. Ass'n, New Jersey, Indenture Trustee.

Bradford Paul Anderson, Newton, Mass., for New England Power Service.

Robert C. Richards, for Martin Rochman, Edward Kaufman, and Robert Richards.

MEMORANDUM AND ORDER DISALLOWING INDEPENDENT POWER PRODUCER CLAIMS

JAMES E. YACOS, Bankruptcy Judge.

Various independent power producers (IPPs) filed proofs of claims in this chapter 11 case. Most of the claims were either fixed claims for power sold to the debtor before the commencement of the case or contingent claims for rejection or anticipatory breach of the arrangements under which the IPPs sell power to the debtor. These arrangements are either rate orders of the New Hampshire Public Utilities *805 Commission (the "NHPUC") or contracts between the debtor and the IPP. Public Service Company of New Hampshire filed objections to the claims of the IPPs. A hearing was held on the objections on April 13, 1990, at which numerous claimants were represented.

The Third Amended Joint Plan of Reorganization of Northeast Utilities Service Company et al., which has been the subject of confirmation hearings for six days during the weeks of April 2 and April 9, 1990, provides for assumption of all of these arrangements. Neither the Plan nor Public Service takes a position on whether the NHPUC rate orders constitute executory contracts within the meaning of section 365 of the Bankruptcy Code.

The Plan contemplates that after reorganization, the reorganized debtor may seek, either through NHPUC procedures and under and consistent with New Hampshire law or through voluntary renegotiation with the IPPs, to modify the prices and other terms of the arrangements under which the reorganized debtor would continue to buy power from these IPPs. Neither the Plan nor its feasibility is dependent on success in this effort. Under the Plan, most of the benefits of a reduction in the price paid under the IPP arrangements would inure to the benefit of the reorganized debtor's customers. Only 10% of the benefits of reductions in the prices paid to only thirteen IPPs listed in the Rate Agreement on which the Plan is based would inure to the benefit of the reorganized debtor.

The IPPs argue that they are entitled to the allowance in this chapter 11 case of unsecured claims in the aggregate amount of over $600 million on account of any damage they may suffer as a result of any modification ordered by the NHPUC in, or agreed to by themselves through renegotiation of, their power sale arrangements with the reorganized debtor after the Effective Date of the Plan. They do not argue that the reorganized debtor will be unable to perform the arrangements according to their terms, nor did they file any objection to assumption of the arrangements or to confirmation of the Plan on that ground. Rather, they argue that the Plan provision that evidences the reorganized debtor's intent to seek modification of the arrangements under State law fails the test of "adequate assurance of future performance" of the existing arrangements, as required by section 365(b) of the Bankruptcy Code, because, if the reorganized debtor is successful in obtaining modification of the arrangements, the reorganized debtor will not be performing the arrangements as they currently exist.

Public Service objected to the allowance of any such claims. Public Service also objected to the allowance under the Plan as Class 10 (general unsecured) claims of any claims for power sold to the debtor before the commencement of this case for which the debtor had not yet paid, contending that any such claim would be paid as a cure of defaults under the power purchase arrangement, as required by section 365(b) of the Bankruptcy Code.

It is clear from the terms of the Plan, and the IPPs do not dispute, that the Plan provides for assumption of the power sale arrangements, subject to the reorganized debtor's intent to seek modification of the arrangements under State law after the Effective Date of the Plan. It is also clear from the record in this case, and the IPPs do not dispute, that the reorganized debtor is fully capable of performing the power sale arrangements according to their terms as they currently exist.

The only real question is whether contingent claims for over $600 million should be allowed on the theory that the Plan includes a Rate Agreement under which the reorganized debtor will seek modification, with the support of the State of New Hampshire, of the arrangements by the NHPUC, or will seek to renegotiate the arrangements with the IPPs. The issue is whether there is any present claim against this debtor based on these facts.

This Court finds that there is no anticipatory breach theory available to the IPPs based on these facts. The Plan and the Rate Agreement do not indicate breach. All that is contemplated is renegotiation or *806 a petition to the NHPUC, which may or may not have the power to order modification. If it does not have any such power, or if there is no right in the arrangement to modify, then the modification will not happen and the IPPs will suffer no damage. If the NHPUC does have such a power, and if there is a right to modify, as determined by the NHPUC in the proceeding that the reorganized debtor might commence, then the modification will not constitute a breach of the arrangement, and the IPP will not be entitled to any damages against the debtor or the reorganized debtor for a breach. The NHPUC might attach various terms and conditions to any modification which could include changed obligations on the part of the reorganized debtor, but this possibility does not create a present claim, contingent or noncontingent, against either the debtor or the reorganized debtor.

For the foregoing reasons, all objections to the claims of the IPP for contingent breach or rejection of the power sale arrangements should be sustained, and it is

ORDERED:

1. The objections of Public Service to the claims of the IPPs listed in paragraph 6 of this Order on the grounds that the claims constitute contingent claims for damages arising from rejection under the Plan of executory power sale arrangements are sustained.

2. The objections of Public Service to the allowance as general unsecured claims in Class 10 under the Plan of the claims of the IPPs listed in paragraph 6 of this Order on the grounds that the claims are for power sold to the debtor before the commencement of this chapter 11 case, which will be paid on the Effective Date of the Plan, are sustained, except that

(a) this Order is without prejudice to the determination of the actual amount owing for power sold and not yet paid for; and

(b) the payment under the Plan on the Effective Date of the amounts actually allowed for power sold shall be with interest at the legal rate from the date on which such payments would have been due but for the commencement of the chapter 11 case to the date of payment.

3. Paragraphs 1 and 2 of this Order shall become void if confirmation of the Third Amended Joint Plan of Reorganization of Northeast Utilities Service Company et al. is denied or if the order of confirmation is vacated for any reason, including the failure of the Effective Date of the Plan to occur, as provided in the Plan.

4. Based on the stipulation of Public Service and the claimant on the record at the hearing, the objection of Public Service to Claim No. 8829900008 of American Hydro, Inc. Peterborough, in the amount of $1700.00 for a prepetition prepayment for an interconnect study is sustained, and the claim is disallowed, without prejudice to any dispute between Public Service and the claimant over Public Service's performance of the interconnect study after the commencement of this case.

5. The objection of Public Service to Claim No. 8827700010 of Hillsboro Mills in the amount of $13,296.00 is sustained, and the claim is disallowed.

6. The claims to which paragraph 1 and 2 of this Order apply are listed on the Appendix to this Order.

DONE and ORDERED.

APPENDIX

               CLAIMANT                        CLAIM NO.    CLAIM AMOUNT
------------------------------------------------------------------------------
  Alden Engineering Company
  Greenville Road, RR # 1
  Box 213
  Mason, NH 03048
                                               XXXXXXXXXX        2,771.40
*807
            CLAIMANT                   CLAIM NO.      CLAIM AMOUNT
---------------------------------------------------------------------
  Alexandria Power Assoc. Ltd. Ptn.
  c/o Legeis Resources, Inc.
  1200 Crown Colony Drive
  Quincy, MA 02169
                                       XXXXXXXXXX     43,435,917.00
                                       XXXXXXXXXX        348,935.00
  Ashuelot/HDI Associates, Inc.
  10394 W. Chatfield Ave., Suite 108
  Littleton, CO 80127
                                       XXXXXXXXXX      3,091,427.30
  Avery Hydroelectric Assoc.
  Box 240, 36 Bay Street
  Manchester, NH 03105
                                       XXXXXXXXXX         24,509.89
                                       XXXXXXXXXX      1,358,294.89
  Beech River Mill Company
  Old Route 16
  Center Ossippee, NH 03814
                                       XXXXXXXXXX          2,099.61
                                       XXXXXXXXXX          2,099.61
  Bethlehem Hydro Electric Co.
  86 Lafayette Road, Box 947
  North Hampton, NH 03862
                                       XXXXXXXXXX          1,700.00
  Bio Energy Corporation
  Route 127
  Hopkinton, NH 03301
                                       XXXXXXXXXX        923,522.60
                                       XXXXXXXXXX     59,830,443.90
  Boston Felt Company
  on the Salmon Falls River
  P.O. Box 6258
  E. Rochester, NH 03867
                                       XXXXXXXXXX         4,125.60
                                       XXXXXXXXXX       278,494.60
                                       XXXXXXXXXX         4,125.60
  Briar Hydro Associates
  114 State Street
  Boston, MA 02109
                                       XXXXXXXXXX       167,092.59
                                       XXXXXXXXXX     8,566,683.59
  Bridgewater Power Company LP
  c/o Comm. Energy Alternatives
  1200 East Ridgewood Avenue
  Ridgewood, NJ 07450
                                       XXXXXXXXXX     1,518,382.68
                                       XXXXXXXXXX     1,518,382.68
                                       XXXXXXXXXX     1,518,382.68
                                       XXXXXXXXXX    81,508,705.60
  Steven V. and Holly M. Brown
  P.O. Box 1371
  Dover, NH 03820
                                       XXXXXXXXXX            11.11
  Chamberlain Falls Hydro Station
  Greenville Road, RR # 1
  Box 213
  Mason, NH 03048
                                       XXXXXXXXXX           963.19
  Charwill Realty
  Badger Bond Hydro
  P.O. Box 689
  Meredith, NH 03253
                                       XXXXXXXXXX        7,317.28
*808
            CLAIMANT                    CLAIM NO.      CLAIM AMOUNT
-----------------------------------------------------------------------
  Chrysler Capital Corp.
  Greenwich Office Park I
  Attn: Corporate Finance Group
  Greenwich, CT 06836
                                        XXXXXXXXXX      8,000,000.00
                                        XXXXXXXXXX     12,000,000.00
  Clement Dam Development, Inc
  P.O. Box 1011
  Portsmouth, NH 03801
                                        XXXXXXXXXX        113,004.00
                                        XXXXXXXXXX      3,770,266.87
  Cocheco Falls Associates
  P.O. Box 1073
  Dover, NH 03820
                                        XXXXXXXXXX         41,229.10
                                        XXXXXXXXXX      1,147,467.30
  Concord Steam Corporation
  P.O. Box 1377
  Concord, NH XXXXX-XXXX
                                        XXXXXXXXXX         86,697.90
  Consolidated Hydro Maine, Inc.
  c/o Consolidated Hydro, Inc.
  2 Greenwich Plaza
  Greenwich, CT 06830
                                        XXXXXXXXXX      3,298,973.69
                                        XXXXXXXXXX         12,312.69
  Consolidated Hydro New Hampshire, Inc.
  c/o Consolidated Hydro, Inc.
  2 Greenwich Plaza
  Greenwich, CT 06830
                                        XXXXXXXXXX        756,557.00
                                        XXXXXXXXXX      1,426,269.29
                                        XXXXXXXXXX      1,533,996.25
                                        XXXXXXXXXX         53,320.25
                                        XXXXXXXXXX         74,661.29
  Paul Crane
  172 Main Street
  Lancaster, NH 03584
                                        XXXXXXXXXX            331.21
  Errol Hydroelectric Limited Partnership
  c/o Swift River/Hafslund Company
  100 Commercial Street
  Portland, Maine 04101
                                        XXXXXXXXXX     10,438,651.40
                                        XXXXXXXXXX        274,111.40
  Exeter River Hydro
  c/o Paul T. Phillips
  Main Street
  Freemont, NH 03044
                                        XXXXXXXXXX         45,299.98
                                        XXXXXXXXXX            689.98
  Fisk Hydro, Inc.
  P.O. Box 2520
  So. Hamilton, MA 01982
                                        XXXXXXXXXX         16,603.57
  Franklin Falls
  P.O. Box 216
  Franklin, NH 03235
                                        XXXXXXXXXX         73,415.12
  Franklin Industrial Complex
  Smith & Canal Streets
  Franklin, NH 03235
                                        XXXXXXXXXX         59,885.79
*809
            CLAIMANT                    CLAIM NO.      CLAIM AMOUNT
--------------------------------------------------------------------------
  Garland Mill
  RD1 Garland Road
  Lancaster, NH 03584
                                        XXXXXXXXXX            268.11
  Goodrich Falls Hydro Electric
  P.O. Box 152
  Lowell, MA 01853
                                        XXXXXXXXXX         25,086.69
                                        XXXXXXXXXX         25,086.69
  Golden Pond Hydropower Associates
  c/o Mainstreet Associates
  George K. Lagassa
  110 Lafayette Road, P.O. Box 947
  North Hampton, NH 03862
                                        XXXXXXXXXX          9,734.26
                                        XXXXXXXXXX        342,744.26
  Gregg Falls Hydroelectric Associates
  c/o Schooner Capital Corporation
  99 Bedford Street
  Boston, MA 02111
                                        XXXXXXXXXX      6,508,083.97
                                        XXXXXXXXXX         80,872.97
  Hadley Falls Assoc.
  Box 240, 36 Bay Street
  Manchester, NH 03105
                                        XXXXXXXXXX        143,327.33
                                        XXXXXXXXXX          8,236.33
  Hemphill Power & Light Company
  c/o Thermo Electron of N.H. Inc.
  Attn: Parimel Patel
  101A First Avenue
  Waltham, MA 02254-9047
                                        XXXXXXXXXX     68,643,692.20
                                        XXXXXXXXXX      1,375,390.20
                                        XXXXXXXXXX      1,375,390.20
  Hopkinton/HDI Associates I
  10394 W. Chatfield Ave., Suite 108
  Littleton, Colorado 80127
                                        XXXXXXXXXX        523,117.00
  Hydroelectric Dev. Inc. Assoc.
  Bay Bank of Boston, NA
  175 Federal Street
  Boston, MA 02110
                                        XXXXXXXXXX         29,538.00
                                        XXXXXXXXXX         10,962.00
  Hydroelectric Dev., Inc.
  Michael P. Demos, Pres.
  10394 W. Chatfield Ave., Suite 108
  Littleton, CO 80127
                                        XXXXXXXXXX         25,260.12
                                        XXXXXXXXXX         29,913.30
  Hydro-Op One Associates
  c/o Schooner Capital Corporation
  99 Bedford Street, 2nd Floor
  Boston, MA 02111
                                        XXXXXXXXXX      2,224,003.00
                                        XXXXXXXXXX         64,953.00
  James River
  New Hampshire Electric Inc.
  650 Main Street
  Berlin, NH 03570
                                        XXXXXXXXXX          5,941.16
*810
              CLAIMANT              CLAIM NO.             CLAIM AMOUNT
---------------------------------------------------------------------------
 Lakeport Hydroelectric Corp.
 Box 240, 36 Bay Street
 Manchester, NH 03105
                                    XXXXXXXXXX            1,550,661.15
                                    XXXXXXXXXX               25,004.15
 Lochmere/HDI Associates I
 10394 W. Chatfield Ave., Suite 108
 Littleton, CO 80127
                                    XXXXXXXXXX            2,024,039.00
 Lower Robertson Dam/HDI Associates III
 10394 W. Chatfield Ave., Suite 108
 Littleton, CO 80127
                                    XXXXXXXXXX            3,332,193.12
 Mad River Power Associates
 c/o Ransmeier & Spellman
 P.O. Box 1378
 Concord, NH XXXXX-XXXX
                                    XXXXXXXXXX            1,035,931.41
                                    XXXXXXXXXX                5,722.41
 Marlow Power
 44 Hanover Street
 Keene, NH 03431
                                    XXXXXXXXXX                8,586.00
                                    XXXXXXXXXX                8,586.00
 Micon Wind Turbines, Inc.
 1435 Frazee Rd, 305
 San Diego, CA 92108-1336
                                    XXXXXXXXXX                6,423.74
                                    XXXXXXXXXX                4,869.35
 Mine Falls Hydroelectric Limited Partnership
 c/o Paul F. Avery, Jr.
 178 Drinkwater Road
 Kensington, NH 03833
                                    XXXXXXXXXX              148,569.96
                                    XXXXXXXXXX              148,569.96
 Minnewawa Hydro Company, Inc.
 c/o Consolidated Hydro, Inc.
 2 Greenwich Plaza
 Greenwich, CT 06830
                                    XXXXXXXXXX            2,754,340.00
                                    XXXXXXXXXX               10,940.00
 Monadnock Paper Mills, Inc.
 Attn RC Van Horn
 Antrim Road
 Bennington, NH 03442
                                    XXXXXXXXXX                4,950.00
 Mount Washington
 Attn Howard M Wemyss
 P.O. Box 278
 Gorham, NH 03581
                                    XXXXXXXXXX                   53.82
 Nashua Hydro Associates
 c/o Essex Hydro Associates
 114 State Street
 Boston, MA 02109
                                    XXXXXXXXXX            3,111,077.08
                                    XXXXXXXXXX               82,015.08
*811
              CLAIMANT              CLAIM NO.             CLAIM AMOUNT
---------------------------------------------------------------------------
 Neaf/Manchester
 PO Box 7, 124 Sills Road
 Energy Tactics, Inc.
 Yaphank, NY 11980
                                    XXXXXXXXXX                1,702.29
 New Hampshire Hydro Associates
 c/o Essex Hydro Associates
 114 State Street
 Boston, MA 02109
                                    XXXXXXXXXX            5,819,386.00
                                    XXXXXXXXXX              315,650.00
 Newfound Hydroelectric Company
 4 Midland Street
 Concord, NH 03301
                                    XXXXXXXXXX            4,664,547.20
                                    XXXXXXXXXX               35,620.11
 Pembroke Hydro Associates
 c/o Schooner Capital Corporation
 99 Bedford Street
 Boston, MA 02111
                                    XXXXXXXXXX            5,941,183.02
                                    XXXXXXXXXX              106,999.02
 Penacook Hydro Associates
 c/o Essex Hydro Associates
 114 State Street
 Boston, MA 02109
                                    XXXXXXXXXX            9,370,416.84
                                    XXXXXXXXXX              267,346.84
 Pinetree Power, Inc.
 Westinghouse Building
 Gateway Center
 Pittsburgh, PA 15222
                                    XXXXXXXXXX            1,570,067.15
 Pittsfield Hydropower Co.
 P.O. Box 149-A
 Hamilton, MA 01936
                                    XXXXXXXXXX               17,586.09
 River Street Associates
 River Street
 Peterborough, NH 03458
                                    XXXXXXXXXX              286,252.05
                                    XXXXXXXXXX              181,591.98
                                    XXXXXXXXXX               14,311.03
 Bruce P. Sloat
 P.O. Box 424
 Lost Nation Road
 Lancaster, NH 03584
                                    XXXXXXXXXX                  227.39
 Somersworth Hydro Company, Inc.
 c/o Consolidated Hydro, Inc.
 2 Greenwich Plaza
 Greenwich, CT 06830
                                    XXXXXXXXXX            1,278,402.36
                                    XXXXXXXXXX               35,286.36
 Steels Pond Hydro, Inc.
 PO Box 2520
 S. Hamilton, MA 01982
                                    XXXXXXXXXX               33,352.42
 Sugar River Hydroelectric Power
 PO Box 293
 Newport, NH 03773
                                    XXXXXXXXXX                8,343.11
*812
              CLAIMANT              CLAIM NO.             CLAIM AMOUNT
---------------------------------------------------------------------------
 Sunnybrook Hydro # 1
 RFD # 2 Box 40
 Lancaster, NH 03584
                                    XXXXXXXXXX                  231.46
                                    XXXXXXXXXX                  231.46
 Swans Falls Corporation
 PO Box 40
 South Windham, ME 04082
                                    XXXXXXXXXX               22,127.02
 Thomas Hodgson & Sons Inc.
 Canal Street
 Suncook, NH 03275
                                    XXXXXXXXXX              37,735.24
 Timco Inc.
 Depot Street
 Ctr. Barnstead, NH 03225
                                    XXXXXXXXXX              264,082.20
                                    XXXXXXXXXX              264,082.20
                                    XXXXXXXXXX           15,182,095.90
 Town of Sunapee, a NH Municipality
 Main Street, P.O. Box 717
 Sunapee, NH 03782
                                    XXXXXXXXXX              849,583.00
                                    XXXXXXXXXX               15,519.19
 Watson Associates
 P.O. Box 1073
 Dover, NH 03820
                                    XXXXXXXXXX              867,081.79
                                    XXXXXXXXXX               14,064.79
 W.M. Lord Excelsior
 Division of Siemon Company
 Carl N. Siemon, President
 60 Echo Lake Rd., Box 400
 Watertown, CT 06795
                                    XXXXXXXXXX                2,094.10
 Whitefield Biomass Energy Corp.
 c/o Chrysler Capital Corp.
 Greenwich Office Park I
 Attn: Corporate Financing Grp.
 Greenwich, CT 06836
                                    XXXXXXXXXX           35,000,000.00
                                    XXXXXXXXXX           35,000,000.00
 Whitefield Power & Light Co
 101 First Avenue
 Waltham, MA 02254
                                    XXXXXXXXXX           35,000,000.00
                                    XXXXXXXXXX           68,466,197.00
 Woodsville/Rochester
 P.O. Box 689
 Meredith, NH 03253
                                    XXXXXXXXXX                2,293.92