Staff for Maine’s utilities regulators recommended that Central Maine Power Co.’s request to set up a land deal for its sister company that develops wind farms should be denied, stating such an arrangement opens the possibility of improperly favorable treatment for the affiliated power generator.
The recommendation dealt specifically with a request for CMP to negotiate and purchase a right-of-way owned by Brookfield Hydro to accommodate construction of a new line that would serve a proposed 100-megawatt, 50-turbine wind farm in Somerset County, referred to as Fletcher Wind.
Iberdrola Renewables, the parent company of project developer Atlantic Wind, has since changed the project name to West Range Wind, which would be located on property in Lexington, Concord and Pleasant Ridge plantations. It is Atlantic Wind’s first planned project in the state, though it also has leased thousands of acres in Washington County.
CMP has argued before PUC staff that the contract contains terms sufficient to shield it from any costs that would affect ratepayers.
Charles Cohen, the regulatory commission’s hearing examiner in the case, wrote in the recommendation issued late Friday that CMP stepping in to negotiate the land purchase creates “the possibility that CMP would be seen as providing preferential treatment to its affiliated generator.”
The utility has not provided similar services to another generator, the staff memo stated, but said it would be willing to do so.
The Office of the Public Advocate filed a statement in support of the transaction, stating that the commission should find the $75,000 agreement between Atlantic Wind and CMP “is not adverse to the public interest.”
The PUC staff’s written opinion comes as the Maine Supreme Judicial Court and the Maine Public Utilities Commission are considering broader questions about relationships between utilities that transmit and distribute power and companies that generate power for the grid.
Generators are subject to competitive bidding to supply power to the grid. Power supply and power delivery were separated in Maine law in 2000 with the goal of driving down electricity costs.
The staff recommendation issued Friday sets out a legal interpretation that CMP and Atlantic Wind will have to argue against – demonstrating the deal would not be harmful to ratepayers – before a final decision from the three-member commission.
The staff decision dealt narrowly with the question of the proposed real estate purchase and not the broader issue of when financial ties between a utility and power generation company might violate the state’s restructuring, or deregulation, of electricity markets, which occurred as a result of the law change in 2000.
“Although a close call, we find that CMP has failed to demonstrate that there would be no net harm from our approval of the proposed contract with its affiliate and, therefore, CMP has not met its burden of proof,” the staff opinion stated.
The staff memo also argues that there was no reason provided for why CMP was uniquely qualified to perform the service or why the work could not be done by a non-affiliated company.
That property is adjacent to a CMP right-of-way and if the property could not be procured, the company has said Atlantic Wind would make a request to use CMP’s utility corridor.
The PUC’s broader investigation of what kind of financial ties utilities can have to power generation companies is on hold pending a ruling by the Maine Supreme Judicial Court on a PUC decision from October 2014, related to Nova Scotia-based Emera’s investment in wind developer First Wind. Municipal utility Houlton Water Co. filed the appeal and has led challenges to such transactions between affiliated companies in the past.
The issues in that Emera-First Wind case have no bearing on those companies any longer, after SunEdison bought Massachusetts-based First Wind and Emera’s stake in the wind developer.
The questions at stake in that case do, however, stand to affect how and whether subsidiaries of investor-owned utilities like Emera and Iberdrola are allowed to invest in electricity generation that would use the power lines of its other subsidiaries to reach customers.
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