EMMC power project appealed Bangor Hydro claims hospital will lose money

BANGOR – Bangor Hydro-Electric Co. is considering charging Eastern Maine Medical Center up to $1.2 million annually if the hospital goes ahead with plans to build its own power plant while staying connected to the utility’s transmission lines for backup electricity.

The amount would cover the money that Bangor Hydro says it expects to lose if EMMC stops becoming one of its biggest customers – an amount that otherwise would have to be passed on to the utility’s smaller customers.

But before that happens, Bangor Hydro first wants the state Department of Health and Human Services to reconsider its approval of EMMC’s plans to build a $7.5 million on-site power plant. The utility filed a petition for reconsideration late Friday afternoon with the state agency, putting a wrench into the hospital’s plans to start construction later this month.

Last month, DHHS granted EMMC a certificate of need, which is a go-ahead required by the state whenever health care facilities plan to make major investments in hopes of lowering expenses and passing on savings to customers in the form of better health care.

EMMC estimates it can save up to $1 million a year by generating its own electricity.

In the petition, Bangor Hydro and 15 of its current and former employees stated that EMMC will lose money annually by generating its own electricity. In addition, Bangor Hydro and the others claim that they will be financially harmed if the hospital produces its own power. The loss of revenue will mean increased transmission rates at employees’ homes and higher health care costs for the utility.

EMMC and Bangor Hydro each claim that their numbers are correct, and they each contend that the others’ numbers are wrong. Left in the middle to sort it all out is DHHS, which so far has sided with the hospital and, according to the state’s public advocate, actually should ask for help from the experts at the Public Utilities Commission.

“Somebody needs to say that DHHS needs to ask for more of the PUC’s help than it has asked for,” Public Advocate Stephen Ward said Friday evening. “If it’s an important choice, the PUC should be used to go over the financials.”

EMMC spokeswoman Jill McDonald was unavailable for comment Friday evening. Jeff Mylen, who would oversee the power-plant project at EMMC, said he could not comment on the utility’s petition for reconsideration.

In its petition, Bangor Hydro included “new information” or estimates for what it plans to charge EMMC for staying connected to the utility’s transmission lines. Up to $1.2 million would be assessed in what are called “standby rates,” a combination of hook-up fees as well as the price per kilowatt-hour for purchasing electricity from the grid during emergencies or when the power plant is down for maintenance. The hospital had estimated the standby rates would only cost $400,000.

Because utilities have fixed costs to maintain their lines, standby rates “protect regular ratepayers from the full impact” of having to pay a greater portion of those costs just because a big customer only wants to use the lines as backup, Ward said.

The Public Utilities Commission would have to approve any standby rate, a process that could take months and possibly further complicate EMMC’s power-plant construction plans.

Other major industrial customers in Bangor Hydro’s service territory that now generate their own electricity – yet stay connected to the transmission lines for backup power – pay standby rates, Ward said.

“Bangor Hydro is well within its rights” to pursue standby rates for EMMC, Ward said.

Currently EMMC is under a discounted-rate transmission contract with Bangor Hydro. Under the standby rate process, Bangor Hydro can petition the PUC to allow it to charge a peak-use rate, such as the higher cost associated with transmitting power in January. Plus the utility could ask for a demand charge over and above the normal transmission rate. EMMC is banking on paying the actual price for the power at the time it is consumed, thus its lower estimate.

Before the standby rate evaluation process gets under way, Ward said DHHS and the Public Utilities Commission should review whether Eastern Maine Medical Center has done an accurate job in assessing how much it is going to save by building its own power plant. Or the state agency should make a determination that the hospital is better off staying connected to Bangor Hydro’s transmission lines.

Ward said it all comes down to the numbers.

“If there is an agreement on the numbers, that would help,” Ward said. “The really important question is does Eastern Maine have it right that the self-generation project is economical?”