HALLOWELL, Maine – The Maine Public Utilities Commission voted Wednesday to take a second look at the terms of two long-term wind purchasing deals the three-person commission approved in December.
The makeup of the commission has changed since the December approval, with Carlisle McLean joining the panel in place of former chairman Tom Welch, who retired early at the end of 2014.
Wind industry officials said reopening the process sends a bad message to investors and the developer of one project called the decision “troubling.”
But the two commissioners voting to review the contracts said the long-term contracts still are in play if developers stay at the table and reassert their case that the deals will save Maine electricity customers money in the long-run.
Mark Vannoy, chairman of the commission, and Commissioner David Littell remained split on the contracts Wednesday, leaving McLean to cast a deciding vote on reopening the contracts, which became political when Democrats accused Republican Gov. Paul LePage of meddling in the issue because of a letter his office sent to PUC commissioners in December.
McLean commented on the political dimensions of the case, saying her votes are not influenced by media reports on the issue or politicians, including LePage, who appointed her to the commission in January.
“Nobody has an influence over my vote,” McLean said, stating the commission by law is allowed to use its discretion to reopen such a case if commissioners believe it is in the interest of electric ratepayers.
Harry Lanphear, spokesman for the PUC, said earlier this week that LePage’s letter did not prompt the commission’s reconsideration of the case.
Assistant Senate Democratic Leader Dawn Hill, who serves on the Legislature’s Energy Committee, said in a prepared statement the decision stands to bruise the state’s reputation for investors.
“Broken promises like these do nothing to reassure business that their capital is welcome here,” Hill said. “In fact, decisions like these tarnish our reputation and scare off future opportunities.”
Vannoy said during Wednesday’s commission deliberations that the move was “a very unusual step” but that he saw potential harm to Maine electricity ratepayers in moving ahead with the contracts as crafted.
By the approved terms, the Weaver Wind project would sell power at about 5.3 cents per kilowatt-hour for 25 years and the Highland project would sell its power for 4.7 cents per kilowatt-hour for 20 years. Those are wholesale prices.
While “not the proper analysis for a contract,” Vannoy said those wholesale prices are about 30 percent higher on an end user’s bill, bringing both contracts roughly in line with the standard offer price of 6.5 cents for Emera Maine and Central Maine Power Co. customers.
“(Maine ratepayers) should be rewarded with a contract that’s significantly lower than the market,” Vannoy said.
Jeremy Payne, executive director at the Maine Renewable Energy Association, said that reviewing the 20- and 25-year contract terms in response to recent changes in natural gas and oil prices is “short-sighted” and that wind power, which has no fuel costs, offers value in providing stable prices.
The PUC previously approved contract terms with SunEdison and NextEra for wind projects in Hancock County and Somerset County, respectively. That approval allowed the parties to begin negotiating final contracts with Central Maine Power Co. and Emera Maine.
SunEdison reached a final contract agreement on those terms Feb. 13, though the contract did not come before the commission for approval.
The commission requested comments Feb. 18 on whether it should reopen the case.
“It would be a very different situation if a contract is signed, and I would not contemplate reopening such a signed contract,” Vannoy said.
Gordon Handelsman, a spokesman for SunEdison, which in January bought developer First Wind, wrote in an email the company is evaluating its response.
“The decision to abandon the process now sends a troubling signal to current and future RFP participants and the many businesses they partner with to develop these projects,” Handelsman wrote. “We’ll review the decision and evaluate next steps.”
The Weaver Wind project Saturday received local approval from the town of Osborn in a deal that would deliver about $2 million in payments to the town over 20 years, according to the Ellsworth American.
The companies have said they expect both projects will be completed by 2017.
Vannoy and McLean agreed that steep declines in natural gas and oil prices offered just cause for reconsidering the previously agreed-upon contract terms, as they were evaluated against higher projections for oil and gas prices in a study by London Economics International.
“If we can be so dramatically off on the near-term, how can we say that the current terms offer a severe discount on prevailing prices?” Vannoy said during deliberations Wednesday.
Vannoy directed the commission to delay a decision on the contracts until the London Economics International study can be updated, expected in late March, and can be considered alongside final contracts.
That timeline could add another wrench into the process as the term of commissioner Littell, appointed by LePage’s Democratic predecessor John Baldacci, expires in March.
He expressed concern Wednesday about further delaying the contract review and approval process.
“This proceeding has already had a lot of delay, and I think we should proceed with all due speed,” Littell said.
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