AUGUSTA (AP) – A federal appeals court has upheld a temporary payment system for regional electric power generators, a ruling that Maine regulators say will cost the state’s consumers $300 million by 2010.

The Public Utilities Commission had asked the U.S. Circuit Court of Appeals in Washington to block the capacity payments, which are administered by grid operator ISO-New England to promote generation in parts of the region that lack enough power plants.

The PUC and Maine’s Public Advocate had argued that there was no justification for the payments, which by 2010 will amount to a 10 percent increase in electricity rates paid by business customers and a 7 percent increase in residential rates.

The state also said the new capacity rate, which took effect in December 2006, exceeded the actual costs of existing generation investments in the region. It also claimed that the payment structure failed to take into account Maine’s surplus of generation capacity.