AUGUSTA – Mainers will have to pay $300 million more for electricity during the next four years under a decision of the Federal Energy Regulatory Commission announced Thursday. Gov. John Baldacci said the state will fight the “unbelievable” decision.
“They are talking about a 6 or 7 percent increase, and that is unacceptable,” Baldacci said in an interview. “We’re fighting this, and we are going to be utilizing our congressional delegation at the same time we are going to be looking at alternatives.”
Lawmakers approved legislation Baldacci submitted earlier this year that directs the Public Utilities Commission to study whether Maine should continue as a member of the New England Power Pool or ISO-New England, the Independent System Operator for the region.
PUC Chairman Kurt Adams said the study ordered by the Legislature is under way. He joined Baldacci is expressing concern about the FERC decision, which he said will broadly impact Mainers.
“The companies that are going to get these additional payments are already making record profits,” he said. “It’s incomprehensible.”
In a statement, FERC Chairman Joseph T. Kelliher defended the decision. He said investments need to be made in new generating and distribution facilities in New England, and that will not occur without some increased costs to ratepayers.
“Our decision today is not without controversy, and I am sure it will be criticized by some in the region,” he said. “In the end, I would prefer to be criticized for acting to prevent a crisis; a crisis that New England knows is coming, than be criticized for failing to act responsibly.”
The FERC ruling sets up a new system where power generators will be able to bid for the right to build power plants, transmission lines and supply electricity to companies that distribute power, such as Central Maine Power Co. and Bangor Hydro Electric Co.
Adams said the actual FERC order will not be available until next week, so he is not certain how the new auction system will work and what its full impact could be on Maine.
He did agree there are capacity needs in New England, but argued that the improvements should be paid for by those that will benefit from them. He said the FERC action is aimed at improving capacity in parts of Connecticut and Massachusetts.
“We’ve got plenty of capacity in Maine, “he said, “We are not part of the problem.”
According to ISO-New England, the FERC-approved plan would have a four-year transition period beginning Dec. 1. During that period, the most that would be paid by ratepayers in the region would be $4.8 billion to operate existing generating plants.
The auction program would start in 2008, but the first payments due from the bids would not be until 2010. Ratepayers across New England would pay for the transition period in higher rates.
The Maine PUC estimates that state residential customers will see increases of about 6 percent starting Dec. 1. The increase for medium and large commercial and industrial electric consumers will be about 10 percent.
When appeals may be filed and when there may be legislation to pull Maine from ISO-New England is unclear. Adams said he does not have authority on his own to appeal the FERC decision.
“The commission will have to meet in open session and deliberate on whether to appeal,” Adams said. “The governor is not as constrained as we are.”
Baldacci can order the state Public Advocate to challenge the FERC ruling, regardless of whether the PUC appeals.
As for replacing ISO-New England, Baldacci said he hopes to have legislation establishing an alternative group, possibly including one or more Canadian provinces, ready for lawmakers in January. Legislators reserved the right to decide whether to continue membership in ISO-New England in the study measure
“If we have an agreement sooner, yes, I would consider calling them (the Legislature) back,” Baldacci said.
Adams said reaching a deal will be time-consuming but said the PUC will “make every effort” to have a plan ready for lawmakers to consider in January.
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