Attorney General Kelly A. Ayotte and Thomas S. Burack, Commissioner of the Department of Environmental Services (“DES”) and Chair of the New Hampshire Water Resources Council, announce that, on July 2, 2007, the State of New Hampshire (“State”) and Pontook Operating Limited Partnership (“POLP”) signed an agreement requiring POLP to pay the State 1.2 million dollars. The agreement settles a dispute between POLP and the State regarding lease payments due to the State from the Pontook Hydroelectric plant located in Dummer, New Hampshire. The money received from the settlement will be placed into the State’s Dam Maintenance Fund and will be used to operate, maintain, and repair state-owned dams throughout New Hampshire.

The Pontook Hydroelectric plant is located on the Androscoggin River on land owned by the State. Under the terms of a long-term lease, the owner of the Pontook Hydroelectric plant must pay the State rent based on a percentage of the money received from the sale of electricity. For many years, POLP and its predecessors had been selling all of its electricity to USGen for a fixed price. When USGen went bankrupt in 2003, it cancelled its contract to purchase electricity from POLP. POLP soon found a new buyer for its electricity but for a substantially lower price. The State began questioning POLP’s transaction when it learned that a Canadian power company, Brookfield Asset Management Inc. (“Brookfield”), was the parent company of both POLP, which it had recently acquired, and the new buyer of POLP’s electricity - a company called Brookfield Energy Marketing Inc. (“BEMI”). The State claimed that Brookfield was selling electricity to itself for an artificially low price. POLP disputed the State’s claim, stating that BEMI and POLP were legally and practically separate companies and that the new purchase price was fair.

POLP also received several million dollars from USGen to settle claims in bankruptcy court. The State told POLP to pay the State a percentage of this settlement under the lease. POLP refused, stating that this money was unrelated to the sale of electricity.

In the settlement announced today, the State and POLP agreed to settle the dispute for a lump-sum payment of 1.2 million dollars. This money will be deposited in the New Hampshire Dam Maintenance Fund. The fund is used to operate, maintain and repair the 273 dams owned by the State of New Hampshire. As recently reported, 33 of these dams are in need of repair. The settlement also resolves how POLP will pay rent going forward.

“This settlement will have an immediate impact on our ability to maintain and repair State-owned dams,” said DES Commissioner Thomas Burack. “I am pleased that, in the end, we were able to work together to reach a timely solution.”

“Our position has been that the operator of the hydroelectric facility must honor its agreement with the State. If settlement could not be reached, the State was fully committed to pursuing this case to its conclusion, ” said Attorney General Ayotte. “Fortunately, the parties were able to work through numerous complicated issues and reach a reasonable agreement.”

For additional information, please contact Assistant Attorney General K. Allen Brooks at (603) 271-3679.