PUC staff: No go for energy firms’ wind deal

First Wind, Maine’s largest wind-energy developer, last April trumpeted a multimillion-dollar deal that would pay for the company’s ambitious plans to erect more wind turbines throughout Maine and the Northeast.

But in just the past week, the Maine Public Utilities Commission dealt a potentially fatal blow to the deal.

Faced with what opponents have called the first serious challenge to the state’s landmark electricity deregulation law, which went into effect in 2000, PUC staff on Jan. 13 recommended that the agency give a thumbs-down to the deal.

“We deny approval of the ‘proposed Transactions’ as we find that the risk of harm to ratepayers exceeds the benefits,” the draft decision reads, “even if conditions intended to mitigate the risk of harm to ratepayers were imposed.”

The recommendation, which will be considered and voted on by the three PUC commissioners Jan. 31, caps a nine-month struggle over a deal that’s described in legal filings as being worth, “at the high end,” $880 million. The capital infusion to First Wind alone would amount to $333 million.

First Wind, Emera Inc. (the Nova Scotia-based parent company of Bangor Hydro and Maine Public Service) and Ontario-based Algonquin Power and Utilities Corp. propose to 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.

At last count, there were 312 legal filings in the case, a brigade of lawyers from Maine’s top law firms and state agencies, briefs, motions and documents that referenced Hemingway, Shakespeare and Lady Gaga and a subpoena served on an Emera official by a retired Canadian Mountie.

The case centered on two legal issues: Was the proposal in the interest of ratepayers, and would the deal violate the state’s “Electric Restructuring Act?” That act, which took effect on March 1, 2000, prohibits utilities from owning both transmission and generation, which forced the state’s utilities to sell off their dams and power plants. After what came to be called “restructuring,” utilities were responsible only for delivering power, while other companies produced it — all in the hopes that it would lead to more competition and lower electricity rates.

Parties to the deal asserted in filings that it would benefit ratepayers by providing “a substantial benefit in achieving the State's aggressive wind energy targets,” lowering the price of electricity in the regional market and strengthening the finances of both Bangor Hydro and Maine Public Service. And they said that the Restructuring Act would not be violated because Bangor Hydro and Maine Public Utility, the two regulated Maine utilities in the deal, would not actually “own” or “have any measure of control” over generation assets or hold a “financial interest” in them.

But Eric Bryant, an attorney for the Maine Public Advocate’s office, which represents the interest of utility customers, said last week that his office opposed the deal because it could result in “higher utility prices,” thus violating the law that required a deal to do no harm to the interests of ratepayers.

Bryant said the plan would violate the Restructuring Act, too. Its complex corporate structure, he said, would amount to just what the law forbids — a utility controlling a power generator.

“It’s a virtual vertical utility,” Bryant said. “If we’re going to actually honor the Restructuring Act, you can’t allow this restructuring to happen.”

Anthony Buxton, the lead attorney for industrial energy users such as Verso, Huhtamaki and Madison Paper, who are opposed to the deal, said, “Maine is being asked to change its energy policy, dramatically. The interpretation of this part of the statute is incredibly important in keeping a competitive market for electricity prices in Maine.

“The question is whether the Restructuring Act will be kept whole,” he said, “or whether someone will drive a big hole in it.”

The PUC staff draft decision rejected the opponents’ arguments that the Restructuring Act would be violated, because it would be a utility affiliate that owned generation, not the utility itself.

The staff concluded, “The utilities will not have any equity interest or voting securities that will allow them to exercise any direct or indirect management control over the development or operation of generation assets within the meaning of the statute.”

Nevertheless, staff wrote that the proposed affiliation of Bangor Hydro and Maine Public Service with companies that will “develop, own and operate generation assets” raises “substantial concerns regarding the possible exercise of preferential treatment by a utility to its competitive affiliates.” That, in turn, could produce higher transmission rates and higher electricity prices.

First Wind spokesman John Lamontagne said Thursday, “We firmly believe that the joint venture with Northeast Wind will bring significant benefits to Maine ratepayers and will lead to as much as $3 billion in investment in the Maine economy and its communities. That will create hundreds of related jobs and generate more competitively priced clean, renewable energy for Maine homes and businesses.”

Emera spokeswoman Sasha Irving declined to comment.

The Maine Center for Public Interest Reporting is a nonprofit, nonpartisan news service based in Hallowell. Email: mainecenter@gmail.com. Web: pinetreewatcdog.org.

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Gary Steinberg's picture

Enron's Bastard Son, First Wind, Caught!

Docket 2011-170, feb 2, 2012 (see it all at http://www.windtaskforce.org)

"By filing their coordinated “exceptions” and letter, First Wind and APUC attempted to subvert the intention and effect of this rule. Therefore, the Examiners correctly excluded APUC’s and First Wind’s filings.

The Petitioners’ actions give rise to particular and very serious concerns.

Petitioners have deliberately attempted to inject new evidence into the record “through the back door,” long after the record closed on December 9, 2011 and at that point in the proceeding where other parties are not afforded a chance to respond, test the evidence through cross examination, engage in discovery, present witnesses, or otherwise have the benefit of the procedural safeguards of an evidentiary record Their Exceptions, containing these new facts, were filed in blatant disregard of at least two of the Commission’s rules and in direct violation of the Examiners’ January 19 Scheduling Order, and in an obvious attempt to influence the outcome. The rules violated are rules of integrity, fundamental fairness and substance, not mere housekeeping rules designed to advance administrative efficiency"

GET THEM OUT OF MAINE!

Petitioners violated Chapter 110 section 760-A(a) and (d~ of the Commission’s Rules. The filing of “exceptions” by APUC and First Wind violated the Ex Parte rule under Section 760-A(a) Petitioners’ subornation of these filings, as evidenced by the references to the filings in Petitioners Exceptions, also violates Section 760-A(d) which reads

No party in a proceeding shall request, encourage, suggest, or provide any assistance to any other person to make a communication that would violate subsection (a) of this section.

8Petitioners chose to engage in coordinated, concerted action with First Wind and APUC to assist them in an improper attempt to have a non-party influence the Commission after the date for filing exceptions, and to inject non-record information into evidence, and to couple this with a direct violation by commingling the prejudicial material into Petitioners own Exceptions. Petitioners deliberately cited to, quoted from, and indeed made such filings a part of their own January 23, 2012 Exceptions. Their awareness of procedural issues is revealed by the first footnote in their Exceptions. Petitioners’ actions were willful, ~vith the expectation that opposing parties would have no opportunity to respond,7 and for the primary purpose of influencing this Commission’s decision.

Gary Steinberg's picture

Enrons's Bastard Son Caught!

see Feb 2 , 2012 docket 2011-170!!!

ELECTRONICALLY FILED ON FEBRUARY 2,2012

STATE OF MAINE
PUBLIC UTILITIES COMMISSION

BANGOR HYDRO ELECTRIC & )
MAINE PUBLIC SERVICE COS. )

Re: Request for Exemptions and for )
Reorganization Approvals )

Docket No. 2011-170
MOTION FOR DISMISSAL
AND SANCTIONS WITH
INCORPORATED MEMORANDUM

February 2, 2012

Now come the Office of the Public Advocate, Houlton Water Company, the Industrial Energy Consumer Group (“I7ECG”), and Boralex, Inc. (“Boralex”)(collectively, the “intervenors”) by and through their respective attorneys and move to dismiss these proceedings or to enter judgment against Bangor Hydro Electric Company and Maine Public Service Company (“Petitioners”) based upon the recommended findings of the Examiners~ Report.

I. INTRODUCTION

Petitioners have intentionally and recklessly violated the Commission’s Rules of Practice and the Examiners’ January 19, 2011 Scheduling Order by filing Exceptions tainted by prejudicial non-record information and by assisting and/or encouraging First Wind Holdings, LLC (“First Wind”) and Algonquin Power & Utilities Corp. (“APUC”) to file unauthorized comments doing the same. According to the Examiners, these exceptions have been reviewed by the Commissioners. As described herein, further consideration of the case at this point would violate fundamental principles of due process and would be unduly prejudicial to the intervenors in this case. Of equal importance is the fact that the actions of the Petitioners, First Wind and Algonquin Power have damaged the integrity of the adjudicatory process by intentionally exposing the Commissioners and their advisors to information outside of the record that, even if the Commission can ignore, undermines public confidence in the process. Dismissal with prejudice orjudgment against Petitioners are the appropriate remedies and sanctions for Petitioners’ violations of the Commission’s Rules and the January 19 Schedul

No Loss to Maine with the Loss of First Wind Investment

If First Wind does not have money to invest in development in Maine, then why are they still building projects that are costing tax payers and electric costs to go up in Maine? Why isn't telling this business that they should stop doing business in Maine, so non-negotiable? First Wind was investigated in New York State by the Attorney General and would suggest that it is time for our Attorney General to check out the wind industries moving into Maine.I was raised to have ethics, morals and to follow the rules. Who in Maine is enforcing and following the business practices of these large companies? Why is there so much difference in enforcing the rules between the citizens and large companies?
Wind power at 25% capacity is only destroying Maine's tourism,multiple cottage hideaways and our wilderness.It's time to tell the companies from outside of Maine to get out and stop carpetbagging in Maine. Maine needs to concentrate on what will best benefit the residents of Maine. Higher electric drives industries away, our hydro is not considered renewable energy and it would make more sense to add hydro to our renewable and to save our mountains for recreation and to have the Ahhh of seeing the world without the inefficient industrial wind turbines across 300 miles of our mountains.
Thank you for telling the truth on this issue and making the industry and politics responsible for creating the rules. Rules are in place to follow, not ask to be overlooked for "special cases". Where is the justice?

Karen  Pease's picture

First Wind's Bubble

This story is important for so many reasons, one of which is that DEP (just this week!) approved First Wind's Oakfield wind project--if built, it will be the biggest in Maine, thus far.

One of the criteria a wind developer is supposed to meet before receiving a permit is proof of financial capacity. And yet, in the BDN article about DEP's permit approval, First Wind's Alec Jarvis said, "The project's financing is not yet assembled."

Huh?

It appears this company has a bit of a cash flow problem, and yet Maine regulatory agencies are approving their projects. I guess I'll go read the Oakfield permit and see what kind of decommissioning fund DEP required. It would be too bad to have the townspeople of Oakfield on the hook for a multi-million dollar bill if FW (or its Oakfield-specific subsidiary, Evergreen Wind LLC)goes belly up.

The wind energy plan needs some serious scrutiny. This recommendation from PUC staff is a great start and bringing common sense back to the table--and ethics, too. Unfortunately, the cynical side of me wonders what 'incentives' and 'tangible benefits' and 'mitigation' tactics will be put on the table for PUC's commissioners, prior to that Jan. 31st vote.

Thank goodness Ms. Schalit and Mr. Christie aren't afraid to ask some pointed questions and do some honest reporting.

Respectfully,
Karen Pease
Lexington Twp., Maine

Alice Barnett's picture

Kudos PUC

hope jan 30 vote remains the same.
save the rate payer. No more SCAMS..

Brad Blake's picture

More scrutiny needed

Thank goodness the only investigative journalists left in Maine developed this story and LSJ published it. The media in this state have been complicit with the wind industry as it continues it's relentless destruction of the uplands of Maine to reap in the subsidies while they last.

The PUC staff and the Public Advocate need to scrutinize this industry. What now thrives on subsidies will end up gouging ratepayers. When mandates for the most costly and least effective source of electricty force us to include wind in our electricty bills and the subsidies are gone, there will be a huge impact on ratepayers. We have been hit by stranded costs before and the wind scam will make the others seem dwarfed by comparison. We need to get out of RGGI and defeat the proposal gathering signatures now to mandate 20% new renewables being forced into our electricity generation mix.

Lastly, notice that First Wind spokesman is using the tired old line of the temporary construction jobs and the investment figures to respond. He will never comment on the criticism of First Wind finances nor will you ever see them touting the output of these useless turbines which never reach 25% capacity factor (output). It is pathetic that we are allowing the destruction of miles of ridgelines and setting ourselves up for economic disadvantage by foolishly embracing the folly of wind.

Alan Woods's picture

LONG OVERDUE!

Thanks to everyone who opposed this scam-deal.

Penny Gray's picture

Thank you, Sun Journal, for

Thank you, Sun Journal, for running this story, and thanks to both Naomi Schalit and John Christie for their excellent investigative journalism. Mainers need to be privvy to what's going on behind closed doors in the wind industry here in Maine. Thank you, PUC, for protecting Maine's business and residential rate payers.

Gary Steinberg's picture

DE Shaw is Upset Today, Well Done PUC!

Ken Fletcher, Governor LaPage and now the Maine PUC are absolutely right.

Renewable mandate manipulation , and the attempted subversion of Maine Energy Law which demands separation of generation from transmission authority for the concept of competition in the energy arena for Mainers,has been under attack for years now.

It is under attack by DE Shaw's scoundrel, well attached First Wind , (also known as Enron's bastard son) who would do nothing but make electricity more expensive for Maine's ratepayers.

Wind toys only reward Maine's power elite , who subsidy suck on the teat of Obama's failed subsidization of renewable energy scams, such as Solyndra.

Well done Maine PUC!

Well done Maine businesses involved, if nothing else so that your energy and financial survival may be preserved in this electrically high cost state..

To Kurt Adams et al , Angus King and son, and other subsidy suckers, “if you can't make it there, you can't it make it anywhere”. Your failed IPO on Wall Street, of the scoundrel First Wind LLC shell game by DE Shaw ,can only scam so far.

They may have been able to shove LD-2283 down a naive legislatures throat in 2008 with a dim bulb governor lighting the way named Baldacci, but this attempted underhanded energy coup is a bit too far for even some in power positions in Maine.

Finally , an agency of Maine, the PUC, (the “P” standing for public), does its job.

KUDOS to you, Maine PUC.

The reality is the Baldacci administration was either incompetent, naive, drunk on green Koo-aid or heavily involved in cronyism to get involved with First Wind-- and because of this, this lunacy has pervaded our state.

We elected a new administration and a new legislature to stop this wastefulness and to put the people first.

I hope the LePage administration really helps to start to control Maine's high ELECTRICAL RATES!

Now let us hope the rest of the legislature does their job concerning the reigning- in of this and other scoundrel , subsidy sucking wind companies , such as First Wind , (Enron's Bastard Son).

Rob Pforzheimer's picture

It's about time!

Finally, a regulatory body doing it's job and protecting rate payers from these subsidy sucking, environmentally destructive First Wind parasites.

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