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<title>Maine Legislature Authorizes Full Retail Choice By Year 2000</title>
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<p align="left"><strong><small><font face="Arial">About The Author:</font></small></strong></p>
<p align="left"><font face="Arial" style="font-size: 9pt">Robert A. Olson is a partner in the law firm of
Brown, Olson & Gould, P.C. which maintains a nationwide practice in energy law,
public utility law and related commercial transactions.</font></p>
<p><small><font face="Arial"><font style="font-size: 9pt">He can be reached at:</font><br>
<br>
<b><font color="#0000FF">Brown, Olson & Gould, PC</font></b><br>
2 Delta Drive<br>
Suite 301<br>
Concord, NH 03301<br>
<a href="mailto:[email protected]">[email protected]</a><br>
(603) 225-9716<br>
<a href="mailto:[email protected]"></a></font></small></p>
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<p><b><u><br>
June 1997</u><br>
</b><big><big><big><strong>Maine Legislature Authorizes Full Retail Choice
By March 2000<br>
</strong></big></big></big><strong>by Robert Olson -- Brown, Olson and Wilson, P.C.<br>
</strong><font face="Arial" size="2">(<em>originally published by PMA OnLine Magazine:
05/98</em>)<br>
<br>
</font><font face="Arial">Recently the State of Maine passed legislation requiring the
implementation of retail competition in the electric utility industry by March 1, 2000.
The legislation requires divestiture of each investor-owned utility’s generation
assets and generation-related business on or before March 1, 2000. QF arrangements,
however, are exempt from the divestiture requirement. The legislation provides that all
retail customers will have the right to purchase generating services directly from
competitive power suppliers beginning March 1, 2000. Billing and meter services will also
be subject to competition starting in March 2002 or earlier if authorized by the Maine
Public Utilities Commission ("PUC").</font></p>
<p><font face="Arial">Under the new law, all competitive power suppliers must obtain a
license from the PUC before participating in the retail market. Prospective power
suppliers must provide the PUC with, among other things, evidence of financial stability
and evidence of the ability to enter into interconnection agreements with distribution
utilities. The PUC must establish rules requiring the disclosure of competitive power
suppliers’ rates, terms, and conditions of service. A power supplier must also show
the PUC that no less than 30% of its energy supply for retail sales in Maine comes from
renewable resources. The term "renewable resource" is defined so as to include
power from qualifying facilities ("QFs") as defined by the Public Utility
Regulatory Policies Act of 1978 and facilities that use traditional renewable resources
such as hydroelectric, biomass, wind, or solar power as long as the production capacity of
these facilities does not exceed 100 MWs. </font></p>
<p><font face="Arial">Each utility must submit a divestiture plan to the PUC by January 1,
1999, and the PUC must issue an order either approving or modifying the plan by July 1,
1999. A utility may request an extension of time for complying with this divestiture
requirement. The PUC may grant an extension if it finds that the extension will likely
improve the sales value of the asset. If an extension is granted, however, the utility is
required to transfer all of its generating assets to an affiliated company. Utilities must
also sell the rights to energy and capacity from all purchase power contracts, including
the agreements that are not subject to divestiture, such as QF arrangements.</font></p>
<p><font face="Arial">The legislation prohibits investor-owned utilities having 50,000 or
more retail customers from selling energy in the retail market. Affiliates of these
utilities may sell energy to customers located outside the former service territory of the
utility, however. These affiliates may also engage in retail sales within the
utility’s former service territory but may not sell more than 33% of the total
megawatt hours sold within the service territory. The legislation does not contain similar
restrictions for affiliates of smaller utilities.</font></p>
<p><font face="Arial">The PUC must provide a utility with a reasonable opportunity to
recover its verifiable stranded costs to the degree they cannot be mitigated. Utilities
are required to pursue all reasonable means of mitigation, including taking all lawful
means of reducing the cost associated with QF arrangements. The PUC must consider a
utility’s mitigation efforts in determining the level of stranded costs that will be
recovered. </font></p>
<p><font face="Arial">On October 1, 1997, the PUC must open a rulemaking proceeding to
establish the terms and conditions for standard offer services. Standard offer service is
open to all customers who have not selected a power supplier. The legislation provides
that this service must be available until at least March 1, 2005. In addition, the PUC is
required to administer a bidding process to select power suppliers to provide energy under
the standard offer service. The PUC is to review each bid submitted and select at least
three competitive power suppliers for each distribution utility’s service territory.
The legislation restricts the ability of affiliates of large utilities to compete for
standard offer services by preventing affiliated power suppliers from providing energy to
more than 20% of the load within the former service territory of the utility. </font></p>
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<p align="left"><font face="Arial">
<small>Robert A. Olson is a partner in the law firm of Brown, Olson &
Gould P.C.
which maintains a nationwide practice in energy law, public utility law and related
commercial transactions. He can be reached at:</small></font><p align="center">
<font face="Arial"><small><font color="#0000FF"><b>Brown, Olson & Gould, PC</b></font><br>
2 Delta Drive, Suite 301<br>
Concord, NH 03301 <br>
<br>
<a href="mailto:[email protected]">[email protected]</a> | (603) 225-9716<a href="mailto:[email protected]"></a></small></font>
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