WATERVILLE – Gov. John Baldacci and representatives from the Maine Public Utilities Commission, local school districts and paper mills announced Tuesday their plans to fight an exorbitant electricity fee imposed late last year by federal and regional officials.

“This charge is completely unfair and we will fight it as far as we can,” said PUC Chairman Kurt Adams at a press conference held at Huhtamaki paper mill. Huhtamaki, as well as all other commercial and industrial customers on the ISO-New England power grid, has seen a 6 percent increase in its electricity rate charges, an increase that has added $65,000 to its approximately $1 million monthly bill.

The 6 percent increase is called a Locational Installed Capacity, or LICAP, fee, which is administered by ISO-New England with the promise of creating new, competitive electricity generation sources. But there are no requirements for new generation and the fee is going directly into the pockets of New England power companies, Adams said.

Moreover, the fee, which appeared on bills in January, is set to rise to 10 percent by 2010 for all medium and large businesses. Residential customers, who have seen a 1 to 2 percent increase this year due to the fee, will see a 6 percent raise in their electricity bill by 2010.

Maine Public Utilities Commission officials estimate this federal mandate will cost Mainers an extra $300 million over the next four years.

On Monday the PUC filed legal briefs with the Federal Court of Appeals for the Washington, D.C., circuit, one step below the Federal Supreme Court, to challenge the Federal Regulatory Commission’s approval of ISO-New England’s fee. The PUC wants new hearings to set payment standards that are more tightly tied to the costs of maintaining generation capacity.

This fee is imposed across the ISO-New England grid, but Maine is being unfairly impacted because we deregulated, Adams said. Because they are no longer generating power, utility companies such as Central Maine Power and Bangor Hydro-Electric Co. are unable to offset the impact of the fee.

Keith Van Scotter, president of Lincoln Paper and Tissue, also spoke at the press conference to give a face to the issue.

“The dollars spent on electricity mean dollars not available for wages, benefits and plant improvements,” Van Scotter said.

He said ISO-New England’s fees add $50,000 a month in costs at the Lincoln mill, which was revived after it was set for closure in early 2004 and now employs about 400 people.

Ray McMullin, plant manager at Huhtamaki, said electricity rates at its Waterville mill are 21/2 times that of the rates at its facilities in Alabama, California and Indiana. As a result, the company shipped two of its production machines from Maine to Alabama, resulting in the loss of six jobs, McMullin said.

The added costs risk the loss of additional Maine jobs, McMullin said.

Van Scotter, McMullin and other members of the Industrial Energy Consumer Group have hired Augusta law firm Preti Flaherty to file for intervenor status in the case against the FERC ruling.

School districts around Maine also must pay the new charge. SAD 47 in Oakland reported it will pay an additional $22,443 in the current year to cover the fee, which is money that comes from the classroom if taxpayers cannot make it up. The Bangor School System paid an extra $1,500 in July to cover the fee.

“I’m going to work tirelessly … to make sure our citizens are not held hostage by energy costs,” Baldacci said. “My administration is exploring ways to decrease utility costs, including working with New Brunswick.”

ISO-New England defends its effort to see that the region’s electrical capacity keeps pace with demand, said spokeswoman Ellen Foley. To meet anticipated demand, the region needs the equivalent of one new power plant per year, she said Tuesday.

Foley said that while a large share of ratepayers’ bills covers the cost of fuel used by generating stations, only 5 percent goes toward ensuring a reliable supply of energy.

ISO’s pricing program will discourage energy price volatility by encouraging power generation through nonfossil fuels, said Foley, adding, “ISO-New England is just as concerned as Maine about energy costs.”

The Associated Press contributed to this report.