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 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 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, N.H. 03048 8806400253 2,771.40 Sunnybrook Hydro # 1 RFD # 2 Box 40 Lancaster, N.H. 03584 8810900019 231.46 8827700080 231.46 Swans Falls Corporation PO Box 40 South Windham, ME 04082 8817900029 22,127.02 Thomas Hodgson Sons Inc. Canal Street Suncook, N.H. 03275 8827000072 37,735.24 Timco Inc. Depot Street Ctr. Barnstead, N.H. 03225 8803500041 264,082.20 8829800024 264,082.20 8931000001 15,182,095.90 Town of Sunapee, a N.H. Municipality Main Street, P.O. Box 717 Sunapee, N.H. 03782 8930000032 849,583.00 8829800306 15,519.19 Watson Associates P.O. Box 1073 Dover, N.H. 03820 8930000033 867,081.79 8830100238 14,064.79 W.M. Lord Excelsior Division of Siemon Company Carl N. Siemon, President 60 Echo Lake Rd., Box 400 Watertown, CT 06795 8826300082 2,094.10 Whitefield Biomass Energy Corp. c/o Chrysler Capital Corp. Greenwich Office Park I Attn: Corporate Financing Grp. Greenwich, CT 06836 8830100211 35,000,000.00 8830200188 35,000,000.00 Whitefield Power Light Co 101 First Avenue Waltham, MA 02254 8830600048 35,000,000.00 8931000006 68,466,197.00 Woodsville/Rochester P.O. Box 689 Meredith, N.H. 03253 8826600213 2,293.92