Cohocton Wind Watch: Energy firms announced wind deal despite risk posed by legal appeal
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Monday, July 02, 2012

Energy firms announced wind deal despite risk posed by legal appeal

Less than two weeks ago, a Canadian energy company and a major wind power developer with turbines in Maine announced they had closed a deal worth hundreds of millions of dollars to expand wind power projects across the Northeast.

But the announcement left out one important fact that could jeopardize the deal: Legal appeals had been filed just days before by the state’s Office of the Public Advocate and a Maine utility company challenging a ruling by a state agency that cleared the way for the joint venture.

“I was somewhat surprised” to see the announcement that the deal had closed, said Eric Bryant, the attorney in the public advocate’s office who filed one of the appeals.

“It’s unusual for a company to make a decision when there’s risk involved that it may have to undo it because of a legal matter.”

The partnership is between Emera, a Canadian energy company that owns electric utilities — including Bangor Hydro Electric Co. — in the Northeastern U.S., Atlantic Canada and elsewhere, and First Wind, which develops, constructs, operates and owns utility-scale wind projects across the United States and in Hawaii. First Wind is the Northeast’s largest wind power developer and has four major wind projects in Maine, with a fifth, Bull Hill, under construction.

“The completion of the joint venture could lead to up to $3 billion in future economic investment in the region in the coming years,” stated the June 15 announcement.

The deal meant First Wind was getting the cash from Emera that it needed to build more wind turbines after a failed attempt to go public in 2010. Maine currently has 205 commercial wind turbines that can produce 400 megawatts of electricity. The Emera-First Wind venture could pave the way for construction of turbines producing an additional 1,200 megawatts.

The appeals by the Public Advocate and Houlton Water Company argue that the state Public Utilities Commission, or PUC, should not have allowed Emera and First Wind to go ahead with the joint venture. Those appeals were joined by a third, similar appeal on June 20 that was filed by the Industrial Energy Consumers’ Group, which represents large energy users and advocates for lower electricity prices.

The PUC approved the joint venture in April, which cleared the way for the two companies to complete the process that led to the June 15 announcement.

The applicants to the PUC were actually Bangor Hydro and Maine Public Service, the regulated utilities in Maine that are owned by Emera. Commissioners gave their approval despite the PUCstaff’s recommendation to reject the deal because it posed a risk of higher prices to ratepayers.

The arguments made by the Public Advocate and the other appellants in the case, filed with the Maine Supreme Judicial Court, are similar to their objections when the issue was debated before the PUC.

They said the proposal would violate the state’s landmark electricity restructuring act that barred transmission companies such as Bangor Hydro from owning electricity generation. That law prohibits utilities from owning both transmission and generation because it was seen as anticompetitive and contributing to high electricity prices.

“The commission committed an error of law, abused its discretion, and failed to follow the mandate of the Legislature … in concluding that the ownership of generation assets in Maine by an affiliate of a transmission and distribution utility is not prohibited by the electric industry restructuring statutes,” wrote Bryant in his notice of appeal.

But the appeals go further and claim that the PUC acted outside of its legal authority when commissioners imposed a long list of conditions on Emera and First Wind designed to mitigate any potential harms from the deal.

The problem with imposing those conditions was that technically, Emera, First Wind and one other party to the deal, Canadian company Algonquin Power & Utilities Corporation, aren’t regulated by the PUC. So the companies filed letters with the PUC saying they would submit to the commission’s jurisdiction.

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