AUGUSTA – The Maine Public Utilities Commission has joined the Massachusetts Attorney General’s Office in a probe of whether the New England electricity market is working – or if prices have been inflated by anti-competitive actions of power generators.

“We have been concerned about this possibility for awhile,” said Maine PUC chairman Tom Welch. “This commission was in the process of actually trying to hire a consultant to do a study when we found the Massachusetts attorney general wanted to hire the same person to do essentially the same study we wanted to do.”

The expert is James Bushnell, co-director of the University of California Energy Institute.

Last summer, Bushnell was one of the authors of a study of California generators and wholesalers that stopped short of accusing them of price fixing, but concluded that they had reaped windfall profits that exceeded what they should have received in a competitive market.

“This is important research that will help us protect consumers and ensure that they are receiving the benefits of competitive pricing for electricity,” said Massachusetts Attorney General Thomas Reilly in a statement. “This study will provide critical information to determine whether we will need to take steps to either improve the structure of the market or pursue enforcement actions.”

Reilly said the intent of the study is to determine the existence and extent, if any, of “market power” within the region’s wholesale energy market. Market power is considered the undue or unfair influence of any market participant over others in a competitive marketplace.

The study also is supported by ISO New England Inc., the group established in 1999 to operate the region’s power grid and transmission reservation system and administer the restructured wholesale electricity marketplace for the region.

Maine’s PUC won’t have to pay for the consultant – Massachusetts will. But Maine’s PUC may provide some expertise.

“We would hope to use the results of that study in influencing the decisions ISO New England and [the Federal Energy Regulatory Commission] make in protecting consumers and enforcing the antitrust and competition rules,” said Maine Public Advocate Stephen Ward. “This could be very significant to consumers.”

Welch said Bushnell’s study, with a preliminary report due in three months and a final report due two months later, may answer some key questions as Maine continues the process of establishing a deregulated market for the sale of electricity that was authorized four years ago.

He said in addition to “market power” questions, the study should determine if any “gaming” has been going on in New England.

“It’s called gaming,” Welch said, “when generators manipulate which facilities are on line, or taken off line, in order to boost profits.”

Generators deny either has been going on in the region. The Competitive Power Coalition, a trade group representing many generators in New England, is critical of the study. The group fears it is being used as the scapegoat when there are many factors that determine power prices. The group argues that higher fuel costs are why electricity prices have increased.

“I think this study will be broad and not just look at the generators,” Welch said, “and it will be fair.”

Ward said Maine needs to be particularly worried about both issues.

He said all of the generating facilities that used to be owned by Central Maine Power Co. were acquired by one company, FPL Group.

“A lot of the power generation in Maine is in the hands of a few companies,” he said, “more so than in some other areas.”

Although his office is not directly participating in the study, Maine Attorney General Steven Rowe said it is important to look at whether the market for electricity is truly competitive. He said he agrees with Reilly that without a true competitive market, consumers are the losers.

“We will be closely looking at this report when it is completed,” he said. “This could be very important to consumers in Maine, as well as the rest of New England.”

Deputy Attorney General Francis Ackerman, chief of the antitrust division, said his office will review the study to see if it points to any illegal activity by generators. He said Maine consumers spend millions of dollars a year for power to heat and light their homes and that across New England the cost is in the billions of dollars.

“This study could be very significant and we will carefully review it,” he said, “and if it reveals something, we will deal with it.”

Earlier this month, a Massachusetts-based energy marketer Alternate Power Source released a report charging that what it described as “market manipulations” cost electric customers across New England about $2.1 billion last year. That figures out to more than $150 for every homeowner in the region.