The Maine Public Utilities Commission was wrong to allow the owner of two northern Maine electricity-distribution companies to start a joint venture with a wind power-generating company, the Maine Supreme Judicial Court ruled Tuesday.

The court said the joint venture runs afoul of the state’s electricity industry restructuring law, adopted in 2000, which required utilities to operate as either power transmission companies or power generators, but not both.

The court agreed with the PUC that some of the language in the 2000 law was ambiguous but said the underlying goal – to uncouple electricity production and transmission – was clear.

The deal at the heart of the ruling was a 2012 proposal by Emera – owner of two electric distribution companies, Bangor Hydro Electric and Maine Public Service – to form a joint venture with First Wind, a company that is developing wind power in the state. Under the deal, Emera put $333 million into the joint venture, JV Holdco, in the form of an equity stake and a loan that could be converted to equity in return for a 49 percent stake in First Wind’s projects. First Wind got a 51 percent majority stake in the joint venture, and the two companies have since closed on the deal.

The PUC permitted the deal to go forward, arguing that a parent company’s minority stake in a power generation venture would not provide a direct financial benefit to Bangor Hydro and Maine Public Service beyond one subsidiary’s interest in another subsidiary’s financial success.

Emera combined Bangor Hydro and Maine Public Service on Jan. 1, and the two utilities are now known as Emera Maine.

The court noted that the law bars electricity-distribution companies from owning, having a financial stake in or otherwise exercising control over electricity-generating assets. The court said the PUC, in essence, required the deal to meet all three of those conditions and permitted the joint venture to go forward because the commissioners decided Emera wouldn’t have control over the joint venture’s generating operations.

“Such a reading would run completely contrary to the goal of the act to preserve the independence of (transmission and distribution) utilities from generators,” said the decision, written by Chief Justice Leigh Saufley. “The commission misinterpreted the statute.” Allowing such deals to go forward, Saufley said, could reduce competition and give one power generator an unfair advantage over others in dealing with a power distribution company.

“We are gratified that the court saw it the way we did,” said Eric J. Bryant, senior counsel with the Maine Public Advocate Office, which challenged the PUC ruling along with Houlton Water Co. and the Industrial Energy Consumer Group.

Bryant said the case now goes back to the PUC, which could order Emera to sell its stake in the joint venture or seek a way to restructure the deal to comply with the court’s ruling. He noted that the venture between First Wind and Emera no longer has state approval, and that fact alone could lead both companies to undo the joint venture, rather than go forward with a potentially time-consuming and costly search for a deal that would pass muster.

John Lamontagne, a spokesman with First Wind, said the company is reviewing the ruling and considering its options.

“We remain committed to the joint venture with Emera, as it provides Maine and the Northeast with substantial benefits from developing and continuing operations of new renewable energy assets,” he said in statement.

Emera did not return calls and emails seeking comment Tuesday afternoon.

Friends of Maine’s Mountains, a Weld-based nonprofit that opposes wind-energy projects, praised the decision Tuesday evening.

“This decision could be the salvation of Maine’s mountains,” said group spokesman Chris O’Neil, adding that the joint venture would have provided crucial financial support to First Wind’s projects, which “are neither necessary nor useful.”

Edward D. Murphy can be contacted at 791-6465 or at:

emurphy@pressherald.com