HALLOWELL — Following more than two years of study, the Maine Public Utilities Commission on Tuesday gave conditional approval to a plan in which electric consumers would underwrite a contract through their power rates that would help pay for expanded natural gas capacity in New England.

The vote – which ran counter to a PUC staff recommendation – was unanimous. However, one of the three commissioners dissented on which of two eligible pipeline projects to endorse. And they all agreed that four other New England states that are considering similar plans would have to follow suit before Maine would participate.

That could be a tall order, in light of the lack of consensus over whether the region’s energy future should maintain a strong role for fossil fuels or make a quicker transition to renewable sources and high efficiency. Industry observers also are keeping a close eye on Massachusetts, where the Supreme Court is set to decide a case in which the commonwealth’s approval of an energy contract for pipeline expansion was challenged by environmental activists. The decision could impact what the Maine PUC did Tuesday.

Whatever happens elsewhere, the PUC’s action has the effect of putting Maine on record as supporting pipeline expansion projects in which overall benefits to consumers appear to outweigh costs over the long term. It keeps the door open to broader regional cooperation, depending on what happens in other states.

It does not, however, clarify how much customers would pay on their bills, or when contracts might be signed. Any action would first need written approval from Gov. Paul LePage.

Mark Vannoy, the PUC chairman, said in an interview after the vote that the region’s heavy and growing reliance on natural gas leaves the state at risk for future price spikes. Without more pipeline capacity, he said, future prices will be higher. It’s now up to Massachusetts, Connecticut, Rhode Island and New Hampshire to act, a process he estimated could take more than 18 months.


“We’re going to be dependent on the other states and their regulatory processes,” Vannoy said.

Despite the uncertainty, the vote gave supporters of gas pipeline expansion a reason to be optimistic.

“It’s a historic decision,” said Tony Buxton, a lawyer who represents manufacturers in the Industrial Energy Consumer Group.

Although Maine uses only 9 percent of the region’s electricity, the vote gives Maine an outsized role, Buxton said, because it signals the start of a regional process.

The vote also was cheered by House Minority Leader Ken Fredette, R-Newport, a co-sponsor of the bill that created the PUC study and led to the vote.

“I applaud the decision by the Public Utilities Commission in providing leadership on the issue of lowering the cost of electricity for the Maine people and our businesses,” said Fredette. “The decision now provides a framework to work collaboratively with other New England states on a method to lower energy costs so Maine and New England can be competitive nationally for business growth, capital investments and job creation.”


But Ben Tettlebaum, a staff attorney with the Conservation Law Foundation, called it a product of failed leadership by LePage. The group is leading the challenge at the Massachusetts Supreme Court and maintains that the Maine PUC has overstated the benefits consumers can expect, while playing down the financial risks.

“The fossil fuel industry hoodwinked the PUC into gambling $1 billion of Mainers’ hard-earned money on a massive new gas pipeline,” he said. “From Day One, this LePage-appointed commission has been desperate to find any way to justify overwhelming concessions for Big Gas, no matter the cost.”


Natural gas is used to generate roughly half the electricity in the region. But as demand for gas grows, there’s not enough room in existing pipelines on the coldest winter days for power, manufacturing and heating. Amid a fast-changing energy landscape, in which low oil and gas prices and competing pipeline projects confounded past assumptions, regulators had to predict whether making consumers help pay for more gas would translate into lower wholesale electric prices, and in turn, lower electric rates.

Tuesday’s PUC decision ran counter to a recommendation last month from the agency’s staff that the state’s electricity and gas customers won’t benefit. The staff concluded that low oil and gas prices, new pipelines under construction or being permitted, and other factors could temper winter price spikes in wholesale natural gas without ratepayers getting involved.

Adding complexity to the analysis was the cancellation in April of the largest planned pipeline expansion project in the region, called Northeast Energy Direct. That project would have provided roughly two-thirds of the total new capacity. Its abrupt exit took both the largest financial risk for consumers, and the largest potential benefits, off the table.


Left to compete are two smaller projects. Access Northeast would upgrade an existing pipeline system, add liquefied natural gas storage and bring more gas to the region’s power plants. A second project, called Continent to Coast, would transport gas from Canada and the United States into the Maritimes & Northeast pipeline in Westbrook.

The law that led to the Tuesday’s action was approved by the Legislature in 2013, when a frigid winter and skyrocketing natural gas prices in New England forced factories to curtail operations on the coldest days. Worried Maine lawmakers passed a bill they hoped would prod energy companies to expand the region’s pipeline capacity. The idea is that adequate gas supply in the winter, when demand is high for both heating and power generation, will keep wholesale energy prices from spiking to levels that are well above the national averages.

The bill directed the PUC to study whether it made sense for ratepayers, through utility contracts, to buy up to 200 million cubic feet of natural gas, at an annual cost of no more than $75 million.

But much has changed since 2013.

Natural gas wholesale prices are lower now than they’ve been in more than a decade. Slack demand during a warmer-than-average winter dropped wholesale electric prices in 2015 to the second-lowest level in 12 years.

A new, $1 billion pipeline expansion called the Algonquin Incremental Market Project is 60 percent complete and set to begin pumping in November.


But at the same time, New England is losing generation from retiring nuclear power and oil units, and several new power plants planned for the future will burn natural gas.

So the PUC had to determine if Maine is at risk of experiencing another round of shortage-driven price hikes, or whether market conditions have changed in a fundamental way, making ratepayer investment unnecessary.

All three commissioners agreed that something should be done, but not on the best project. Vannoy and Bruce Williamson saw the greatest potential benefits from Access Northeast. Carlisle McLean, however, voiced concerns about whether the legal challenges to Access Northeast would keep the project from being built. Beyond the fight at the Massachusetts Supreme Court, opposition by some power plant owners to Access Northeast has been filed at the Federal Energy Regulatory Commission.

For those and other reasons, McLean thought the Continent to Coast project would make more sense. Although the benefits for Maine ratepayers are smaller, she reasoned, so are the risks.


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