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Maine Examiners' Report Would Auction Energy from Long-Term Contracts
October 3, 2011
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Two Maine hearing examiners have recommended recovering costs from new long-term contracts using the method used for stranded costs, with the contracts' output disposed of in a similar manner (2011-222).
Specifically, the examiners' report would provide that utility costs associated with long-term utility contracts entered into pursuant to 35-A M.R.S.A 3210-C and 3601-3609 shall be treated the same as other purchased power contract-related stranded costs, and addressed in utility stranded cost proceedings. This would recover such costs from all distribution customers.
The examiners' report would also offer the energy from the Rollins contract, and other contracts entered into pursuant to 35-A M.R.S.A 3210-C and 3601-3609, as part of the Chapter 307 auctions, "at least as an initial matter."
"We note that, because the Chapter 307 auctions are typically linked with procured standard offer service for the residential/small commercial class, we have achieved additional value for the Chapter 307 contracts."
To the extent the auctions under-value the at-issue wind projects, due to the intermittent nature of supply, "the Commission would retain the ability to reject the bids if it appears that bids for wind power energy are insufficient when compared to bids for energy from other types of resources."
"In such a case, we contemplate that the energy would be sold into the ISO-NE market for the hourly clearing prices."
The examiners' report would not, however, include RECs in the Chapter 307 auctions, noting that the amount of RECs available under the Verso contract would be about three times the amount required for the standard offer provider to satisfy the Class I requirement, "reducing the potential 'linking' value described above."
"The sale of RECs in New England occurs through bilateral transactions and it is difficult to determine how to best maximize the value of RECs." The hearing examiners would direct Central Maine Power to engage an experienced REC broker or consultant to determine how to best maximize the value of RECs from the Verso contract.
The hearing examiners also directed Bangor Hydro-Electric to file an update on its plans to respond to a FERC order which denied BHE's request for a waiver of FERC standard of conduct rules to allow BHE to sell the output of the contracts in the ISO-NE market.
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