Plan requires Maine to pay for power lines in other states

BANGOR – Maine is fighting an uphill battle to ensure that electricity ratepayers here are not forced to pay too much for the construction of new transmission lines elsewhere in New England.

About 80 percent of the membership of the New England Power Pool, an organization that includes about 200 power generators, transmission companies and others, wants to spread the cost of new construction evenly throughout the region. Under the plan, Mainers could be asked to pay up to $20 million a year for the next 30 years for power lines they wouldn’t even use.

For the typical Maine household, the price tag is at least $7 a year to cover projects planned in southwest Connecticut, Vermont and Massachusetts.

Initially, the Maine Public Utilities Commission was opposed to Mainers paying anything at all towards building costs for lines they would not be using. But on Thursday afternoon, the PUC changed its stance slightly and provided the Federal Energy Regulatory Commission with a compromise to the proposed NEPOOL formula, which was presented to FERC on July 31.

Under the compromise, ratepayers throughout New England that do not have primary access and use of the lines, such as those in Maine, Rhode Island and New Hampshire, would pay 25 percent of the total cost. The beneficiaries of the lines would pick up the remaining 75 percent.

The NEPOOL plan has Maine alone paying about 10 percent of the total costs. Projects on the drawing board have a price tag nearing $900 million. Discussions on who will pay for the lines are in the early stages at FERC.

PUC Commissioner Stephen Diamond said Thursday it was going to be difficult for Maine to stand up to the rest of New England and demand a change to NEPOOL’s plan.

NEPOOL’s proposed formula is predicated on a historical ideal called the “socialization of costs,” where all energy users throughout New England, connected to one interconnected power grid, should pay the same amount per kilowatt-hour to cover the costs of new lines on that grid.

Diamond said the “socialization of costs” formula is outdated and unfair in a deregulated electricity market. When new power plants are built these days, the people who use the electricity from the new plants typically pay for them, he said, and the same thing is true for conservation programs: Ratepayers affected by them pick up the costs of implementing them.

“It’s only transmission where you spread out the costs,” Diamond said. “… we don’t want to be paying for other people’s upgrades. It’s a tough issue, but we think we have fairness on our side.”

The rest of New England may not agree. ISO-New England, a nonprofit organization that monitors the region’s power grid, supports NEPOOL’s plan. Spokeswoman Erin O’Brien said Thursday her organization is sticking to NEPOOL’s payment plan because the new lines provide a benefit to all of New England. Power flows throughout the region to meet the demands of the areas that need it the most at any given time, she said, creating a New England-wide need for the lines even though they only would be constructed in three other states.

Not much power flows into Maine from the rest of New England because Maine generates more power than it needs, said Stephen Ward, the state’s public advocate. Maine imports power from the Maritimes, but in most cases that electricity is sent to the rest of the region.

Ward supports the PUC’s compromise plan as an issue of fairness. However, he acknowledges that the commission will have a tough time convincing FERC that ratepayers not using the lines on a regular basis should not pay so much for them. He said the issue has become a little-guys-versus-big-guys battle.

“It has to do with folks who have much less control in New England,” said Ward. Nevertheless these “folks” in small states such as Maine have an “outside chance” of convincing FERC that NEPOOL’s plan is unfair.

“It’s not such a price shock that it will be a burden in rates,” Ward said. “It’s just bad policy.”

At Bangor Hydro-Electric Co., which has resurrected for a third time plans to construct a second high-voltage transmission line between New Brunswick and Orrington, President Ray Robinson said Thursday other parts of New England may question whether they should pay for the utility’s new transmission line.

Robinson said that the costs should be shared based on a formula of who benefits most from the line. That in all likelihood would not be Maine even though the proposed line is located within the state. The power would be transmitted through the state and out to the rest of New England, where demand for it is greater, he said. Mainers could end up paying a small percentage of the construction costs even though they wouldn’t be the true beneficiaries of the line.

“We, in some way, need to come to some sort of decision,” he said about the cost issue before FERC. “Sometimes Mainers may get the short end of the stick.”

At the PUC, Diamond said the commission would support the same sort of proposal it submitted to FERC on Thursday if a new transmission line were to be built in Maine to serve the entire region.

“We would be consistent,” Diamond said. “If we were to be the beneficiaries, then we should be included.”