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Maine finds no insurmountable obstacles to leaving regional grid

Jan 19, 2007 David Sharp, Associated Press

PORTLAND, Maine -- Maine ratepayers don't get enough in return for participating in the regional power grid and there are "no insurmountable legal, economic or technical barriers" to leaving it, according to a preliminary report by the Maine Public Utilities Commission.

The 39-page report delivered to the Maine Legislature this week says "reasonable alternatives" to participation in the grid include creating an independent transmission company and establishing power-swapping arrangements with neighboring Canadian provinces.

The cost to Maine ratepayers for staying in the grid managed by ISO New England will be as much as $616 million over the next five years, said PUC Chairman Kurt Adams.

"Our findings outline the current inequities that exist for Maine within the ISO-NE system as compared to the other New England states," Adams said.

Sen. Philip Bartlett, co-chairman of the Legislature's Utilities and Energy Committee, said the study suggests the state may be better off finding an alternative "instead of standing back and paying for mistakes that we feel were made in southern New England."

"It sends a strong message that we're serious about needing to protect Maine consumers, and there are options available to us," Bartlett, a Democrat from Gorham, said Friday.

The Maine Public Utilities Commission voted to explore alternatives last summer after the Federal Energy Regulatory Commission approved surcharges as part of an effort to increase the region's power supply by encouraging construction of new generating plants.

Maine officials protested that the decision aimed at reducing energy bottlenecks in southwestern Connecticut and northeastern Massachusetts will result in higher energy prices for Mainers at a time when the state has a surplus of power.

In addition to pursuing the option of leaving the regional power grid, the state also is fighting FERC's decision in court. Connecticut and Massachusetts also have gone to court to fight FERC's approval of the surcharges.

ISO New England said Friday it was not ready to address any of the specifics in the Maine report. But it took exception to the notion that Maine gets nothing in return for its participation in the regional grid.

"We believe that the current New England regional structure provides benefits to Maine ratepayers including both reliability and economic benefits," spokesman Ken McDonnell said from ISO New England's headquarters in Holyoke, Mass.

No other states have threatened to bail out of the grid, but New Hampshire regulators and lawmakers have been watching developments in Maine with great interest, said Meredith Hatfield, the state's consumer advocate on utility issues.

New Hampshire is another state where more power is generated than consumed. In October 2006, New Hampshire customers used 11.2 million megawatt hours of electricity, while power plants in the state generated 23.7 million megawatt hours, according to federal statistics.

Hatfield's office and New Hampshire utility regulators, like those in the other New England states, were involved in drawing up the so-called "Forward Capacity Market" to ensure the region's growing power needs will be met.

"There are so many issues with our generation future in terms of our needs," she said. "One of the challenges is, because you can't store electricity, we end up building to our peak needs ... and that peak just keeps growing and growing."

New sources of power are clearly needed close to where consumption is highest, but the incentives to build are insufficient, said Martin Murray, of Public Service Company of New Hampshire.

"In the past, regulators required regulated utilities to plan for the future and build new power plants," he said. "For the independent marketplace, the best situation is to have a tight energy market, so prices are higher."

As part of electric deregulation a decade ago, Public Service was supposed to divest itself of all its power plants, but later was allowed to keep some when the market price of power skyrocketed. Now the utility has the lowest power costs in the state and wants to build new, medium-sized renewable energy plants, but is forbidden to do so under deregulation.

In Maine, there are several factors driving the talk of a power-swapping arrangement betwen the state and the Maritime Provinces.

Both Maine and New Brunswick are net exporters of energy. Maine's demand peaks in the summer; New Brunswick's peaks in the winter. There's already a transmission line connecting Maine and New Brunswick.

One obstacle is that the state has no authority to force privately owned utilities Central Maine Power Co. and Bangor Hydro-Electric Co. to pull out of the grid, the report said. Bangor Hydro is owned by Emera, which is based in Nova Scotia. CMP is part of Energy East, which has operations in New York, Connecticut, Massachusetts, Maine and New Hampshire.

On the flip side, ISO New England has no authority to force CMP and Bangor Hydro to remain part of the regional power grid, the report said.

A final report by the Maine Public Utilities Commission is due next year.

In the meantime, the PUC will continue to negotiate with the Maritime Provinces, look into creating an independent transmission company and ask the New England Conference of Public Utilities Commissioners to review inequities in the current system.

"The commission intends to continue this inquiry and aggressively pursue alternatives to the ISO-NE status quo," the report said

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