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Maine asked to change ISO tune

A proposed $2 billion upgrade to the state's electric transmission system is contingent, the utility companies say, on Maine not only staying in, but expanding its ties, with the organization that oversees the New England power grid - a relationship the Baldacci administration last year said was costing ratepayers hundreds of millions of dollars. This year the administration is being asked to change its tune, attracted by the thousands of jobs the transmission projects promise to bring and the connection that would be built to proposed wind projects - all potentially subsidized by other New England states. ...Closer to home, ratepayers in Aroostook County are worried that if Maine Public Service becomes part of the ISO, they will see their electricity costs skyrocket because they would be asked to pick up a share of transmission projects in other states. "I still feel this is a gold rush mentality and people aren't really looking at this," said Sen. Roger Sherman, R-Aroostook.

A proposed $2 billion upgrade to the state's electric transmission system is contingent, the utility companies say, on Maine not only staying in, but expanding its ties, with the organization that oversees the New England power grid - a relationship the Baldacci administration last year said was costing ratepayers hundreds of millions of dollars.

This year the administration is being asked to change its tune, attracted by the thousands of jobs the transmission projects promise to bring and the connection that would be built to proposed wind projects - all potentially subsidized by other New England states.

"What does that do to our previous thinking on this? I don't know what the answer would be," said Dick Davies, the Public Advocate, who weighs in on issues affecting Maine ratepayers.

"We believed that getting out," would save Mainers money, he said. "Something's come along to change that calculation. We're certainly going to pay attention to that."

By staying as a member in the organization that manages the regional transmission grid - ISO NE - Maine electricity users would pay 8.5 percent of the transmission projects approved by the ISO and the rest of the cost would be shared by the other... more [truncated due to possible copyright]  

A proposed $2 billion upgrade to the state's electric transmission system is contingent, the utility companies say, on Maine not only staying in, but expanding its ties, with the organization that oversees the New England power grid - a relationship the Baldacci administration last year said was costing ratepayers hundreds of millions of dollars.

This year the administration is being asked to change its tune, attracted by the thousands of jobs the transmission projects promise to bring and the connection that would be built to proposed wind projects - all potentially subsidized by other New England states.

"What does that do to our previous thinking on this? I don't know what the answer would be," said Dick Davies, the Public Advocate, who weighs in on issues affecting Maine ratepayers.

"We believed that getting out," would save Mainers money, he said. "Something's come along to change that calculation. We're certainly going to pay attention to that."

By staying as a member in the organization that manages the regional transmission grid - ISO NE - Maine electricity users would pay 8.5 percent of the transmission projects approved by the ISO and the rest of the cost would be shared by the other New England states, based on their electricity usage.

Central Maine Power, which is proposing a $1.4 billion upgrade of its transmission system and is partnering with Maine Public Service Company on a $625 million high-voltage line to connect the rest of the state with northern Maine and a proposed wind power project in Aroostook County, says staying in the ISO makes good financial sense.

Currently only Central Maine Power and Bangor Hydro Electric are ISO members. Maine Public Service Company wants to become a member, saying socializing the cost of its transmission line is the only way to make the project financially viable.

Electric cocaine

Tony Buxton, an attorney with Preti Flaherty, who represents large industrial clients, says it's a fool's bargain.

"We don't need $2 billion worth of transmission investment and what the ISO is doing is equivalent to selling cocaine. It's giving people something they don't need and is, in effect, harmful to them, so they will remain part of the system," Buxton said.

"Maine should get out of the ISO unless the ISO changes, because the ISO costs Maine ratepayers well over $100 million a year in increased utility costs to the benefit of consumers in other states," he said.

The options, now being considered by the Maine Public Utilities Commission, include staying with ISO-NE, having the state go out on its own, or partnering with Canada.

The reason belonging to the ISO, which stands for Independent System Operator, costs Mainers money is they have to pay 8.5 percent of all approved transmission projects in New England, including those that benefit high-volume electricity users like Massachusetts and Connecticut. If Maine Public Service becomes a part of the ISO, for example, rough estimates say it could cost ratepayers in northern Maine millions of dollars because they would then have to pick up their share of the cost of transmission projects in other states.

And there is an incentive for utilities to build transmission lines some argue far more than are needed to keep the lights on.

The Federal Energy Regulatory Commission guarantees a rate of return of at least 12.5 percent and as much as 14 percent to utilities for approved transmission projects, by allowing those returns to be included in rates paid by electricity customers.

That encourages utilities to overbuild to guarantee a high return to their stakeholders, critics say.

"The more expensive the project, the more it earns through its return on equity," said Richard Silkman, an expert in the regulation of public utilities and energy policy, in his testimony to the Maine Public Utilities Commission in favor of the state pulling out of the ISO.

These oversized-projects are then sold to Maine as a bargain, since under the ISO cost-sharing formula, most of the cost is paid by other states, he said, with every local dollar matched by $10 from away.

"The issue for Maine is whether Maine is better off to assume an obligation to pay about 8.5 percent of a total amount of transmission investment over which it has no control and which is being undertaken by utilities, whose stockholders earn extra-ordinary returns," he said, or "whether Maine is better off to pay 100 percent of the costs of transmission investments made by its utilities over which it has substantial control."

$2 billion wager

The Maine Public Utilities Commission not only is being asked to decide whether the state should pull out of the ISO, but also is reviewing the $2 billion in transmission projects proposed by utilities that say staying involved with the ISO is the way to go.

Central Maine Power's 350-mile $1.4 billion line upgrade - the largest project in the company's history - already has been approved by the ISO as being eligible for cost-sharing among the New England states because it enhances the reliability of the system. The Maine Public Utilities Commission is being asked to decide if the entire project is needed or if it can be scaled back.

The more contentious project at the ISO is the joint venture between Central Maine Power and the Maine Public Service Company that would build 200 miles of new high-voltage lines connecting northern Maine to the rest of the New England power grid. That project would cost $625 million and is being promoted as a means to connect an 800-megawatt wind project proposed for Aroostook County.

Massachusetts and Connecticut, two powerful ISO members because of the amount of electricity they use, are opposed to accepting the project for cost-sharing, saying it benefits the power generator Aroostook Wind Energy and is not about the reliability of the grid. They say Aroostook Wind should pay for the line, or at least part of it.

Aroostook Wind Energy is owned by Horizon Wind, which was purchased recently by the Portuguese power company Energias de Portugal or EDP. The Spanish company, Iberdrola, which is about to take over ownership of Central Maine Power, owns. 9.5 percent of the stock in EDP, according to the company's website. Both companies are major wind-power investors.

Central Maine Power and the Maine Public Service Company also have petitioned the Federal Energy Regulatory Commission to grant it a special incentive rate for the project to assure its rate of return is 12.5 percent or more.

Massachusetts and Connecticut also have weighed in against that rate request.

Closer to home, ratepayers in Aroostook County are worried that if Maine Public Service becomes part of the ISO, they will see their electricity costs skyrocket because they would be asked to pick up a share of transmission projects in other states.

"I still feel this is a gold rush mentality and people aren't really looking at this," said Sen. Roger Sherman, R-Aroostook. "You start looking how it would impact Aroostook County's 72,000 people and giving them the possibility of higher electric rates. It's a little bit scary for me as a senator."


Source: http://www.mainelincolncoun...

SEP 10 2008
https://www.windaction.org/posts/17035-maine-asked-to-change-iso-tune
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