State regulators on Tuesday approved a multi-million-dollar deal that could fund construction of hundreds of wind turbines in Maine and the Northeast, despite a staff recommendation to reject the proposal.
All three members of the Public Utilities Commission voted for a complex series of transactions among First Wind, Bangor Hydro and Maine Public Service and their parent, Nova Scotia-based Emera, Inc., and Ontario-based Algonquin Power and Utilities Corp.
The commissioners said the economic benefit of such investment was substantial, that any potential harm from the deal could be mitigated by PUC-imposed conditions and that the deal helped meet the ambitious goals of Maine's 2008 Wind Power Act. Maine currently has 205 commercial wind turbines that can produce 400 megawatts of electricity. Tuesday's deal could pave the way for construction of turbines producing an additional 1,200 megawatts.
"I'm not sure it would be sound policy for the commission to turn down a several hundred million dollar investment on the ground," said Commission Chairman Thomas Welch.
"The magnitude of this investment in Maine is seldom seen and even less so in renewable, clean development," said Commissioner David Littell.
"The Emera transactions meet a number of public policy goals which encourage the development of investment in wind energy projects," said Commissioner Vendean Vafiades.
The deal originally proposed that First Wind, Emera Inc. and Algonquin Power and Utilities Corp. would jointly build and operate wind energy projects in Maine and elsewhere in the Northeast. After a failed bid to go public in 2010, which left First Wind cash-hungry, the deal is a way for the Boston-based company to continue building wind towers across Maine and the region, as well as a way for Emera and Algonquin to reach new energy consumers in the U.S.
Legal filings estimate the worth of the deal at the "high end" as $880 million.
Algonquin subsequently pulled out of the portion of the deal to invest in First Wind's holdings, but remained a partner with Emera in related plans to expand into the Northeast energy markets.
Tuesday's decision runs against the January recommendation of PUC staff that commissioners reject the deal because "the risk of harm to ratepayers exceeds the benefits."
In a draft decision, staff wrote that the deal posed unacceptable potential for hikes in electricity prices "even if conditions intended to mitigate the risk of harm to ratepayers were imposed."
Several other parties also objected to the deal in filings with the commission over the past year.
Small electricity generators were joined in their objections by industrial energy users such as Verso, Huhtamaki and Madison Paper and the Maine Public Advocate, which represents the interests of utility customers. Some of them, like PUC staff, argued that electricity rates would rise; others said the plan would violate the state's Restructuring Act of 2000, which prohibits utilities from owning both transmission and generation on the premise that allowing them to do so would be anti-competitive and lead to higher electricity prices.
Anthony Buxton, attorney for the industrial energy users who protested the deal, said Tuesday that the commissioners had hurt Maine's energy consumers.
"The irony is that at a period when the competitive market is working very well, we have taken the risk of impairing the competitive market by allowing the vertical integration of utilities," said Buxton. "We did away with that in 2000 and got a very competitive market – and now it will be at risk."
"I agree that there are risks associated with the transactions," said Vafiades, "but have determined the benefits are significant."
Those risks, commissioners said, could be dealt with by imposing a number of conditions on the deal.
"There are a lot of them, probably 30, maybe more," said Welch, following the meeting.
One set of conditions, said Welch, would ensure that the companies did not favor their newly affiliated partners over lower-priced transmitters and distributors of power, thus costing customers more. Other conditions would limit employees of the affiliated companies from moving back and forth between companies, carrying information that they would normally be prevented from sharing.
Then, said Welch, "you want to have a healthy utility so they can do the things you rely on them to do." So the PUC will impose conditions "that insulate both Bangor Hydro and Maine Public Service from any financial problems that Emera might have as a result of this transaction."
Emera spokeswoman Sasha Irving said Tuesday, "We're very pleased the three commissioners agreed unanimously that this is a positive transaction for the state of Maine and we look forward to receiving the final written order and we'll review it at that time."
First Wind's CEO Paul Gaynor thanked the commissioners for their approval. "The partnership will drive further growth of well-sited and well-run wind energy projects in the Northeast," Gaynor said.
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