For the second time, the Maine Supreme Judicial Court has rejected a state commission’s approval of a proposal by Emera to increase its stake in an electric generating company.

Emera, a Nova Scotia-based energy company, is parent to Emera Maine, an electric distribution utility that operates mostly in northern Maine.

Emera sought to increase its ownership interest in Algonquin Power & Utilities Corp., a publicly traded electric generating utility with facilities in Maine.

The state’s law on electricity restructuring is intended to keep generating and distribution companies separate to encourage competition in the industry.

In an appeal of the Maine Public Utilities Commission’s initial approval of the proposal, the state Supreme Court rejected the plan by Emera to increase its 8 percent stake in Algonquin to 25 percent, saying the PUC misread the law on electricity restructuring. The court said the PUC failed to recognize that the increased stake in Algonquin could produce incentives for favoritism between the two companies.

The proposal was then sent back to the PUC, which again approved the deal, but added 50 conditions on Algonquin’s operations.

On Thursday, the court struck down the PUC’s approval of the revised deal because of those conditions.

In its ruling, the court said the state’s laws on electric generating utilities are designed to allow them to operate “with little regulatory governance,” and the long list of conditions violates that goal of the law. That meant the PUC exceeded its authority in adding the conditions, the court ruled.

The court sent the decision back to the PUC with instructions for the commission to reject the proposal.

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