RETHINKING ELECTRICITY

Months after Maine utility regulators said a plan aimed at increasing the amount of electricity available in New England was flawed, the attorneys general of Connecticut and Massachusetts have sued the Federal Energy Regulatory Commission, which approved the plan last year. They say the arrangement, which was mainly crafted to benefit these two states, is unfair. This gives the states an opportunity to negotiate a better way to allocate electricity infrastructure costs.

That process began last week when the New England Conference of Public Utilities Commissioners, at the behest of Maine, unanimously agreed to examine the region’s current system for allocating the costs of transmission improvements. It is now based on each state’s share of the New England power market rather than who benefits from the new lines.

Because southern New England uses more electricity than it produces, federal regulators last year approved an agreement that required all the region’s electricity customers to pay higher prices to encourage companies to build more power plants. During a four-year transition period, power generators in New England would be paid a total of $2.8 billion to maintain or expand generation. Maine’s portion of that bill is estimated at $300 million.

Kurt Adams, chair of the Maine Public Utilities Commission, long argued that these payments were a handout to utility companies with no guarantee that they build new power plants. Further, he argued that paying the same whether a plant is built in Maine or Connecticut didn’t make sense. If companies do not receive more money to build facilities in states with high demand and limited supply, they are likely to build in Maine because the state is more welcoming to such infrastructure. Maine residents would then be required to help build new transmission lines needed to get the electricity from Maine to Connecticut. Worse, Maine residents won’t get lower power rates because the electricity is generated nearby.

Maine left settlement talks early last year and Massachusetts refused to sign the agreement, but it was approved by FERC in June. This prompted Maine lawmakers to ask the PUC to investigate the benefits and drawbacks of Maine leaving the New England power system.

The Maine PUC challenged the FERC order and accompanying surcharge in federal court on Dec. 12. On Dec. 28, the attorneys general of Massachusetts and Connecticut also filed suit.

The Connecticut Department of Public Utility Control approved the settlement and the price increases it triggered. Now, the state’s attorney general has sued to overturn the whole arrangement, saying Connecticut consumers would pay higher prices to companies that are already making large profits.

As the PUC notes in its interim report, released this week, on Maine’s continued participation in the New England system, reviewing, and revising, the system for allocating transmission improvement costs is a good step toward a better way of planning and paying for electricity system improvements. Moving toward a beneficiary pay system, first in transmission, could reduce the inequities while ensuring New England’s electricity needs are met.