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Maine PUC Calls for Competition; Rules Against Monopoly Franchises

Maine PUC Calls for Competition; Rules Against Monopoly Franchises

The Maine Public Utilities Commission is allowing several gas distribution companies to compete to provide new service to multiple areas in the state. The commission approved, subject to certain conditions, the formation of CMP Natural Gas by Central Maine Power and Energy East Corp. (parent company of New York State Electric &amp Gas) last week and gave it authorization to plan gas distribution services in the Augusta, Waterville, Bangor, Windham, Bethel, Bath/Brunswick and the southern coastal areas, all of which would be receiving gas service for the first time.

However, CMP will be competing for customers in the Bath/Brunswick area and possibly other locations with Northern Utilities and will be in the ring with Bangor Gas Company L.L.C., the partnership of Sempra Energy and Bangor Hydro, in the Bangor area. Bangor Gas also has applied for authority to serve Hampden, Hermon, Milford, Bradley, Eddington, Orrington and Bucksport.

The commission's decision, which went against the advice of its staff, allows more than one natural gas distribution public utility to provide service to an area, thereby allowing local competition for a utility service that has long been viewed as a monopoly service. The commission determined that the benefits of competition for the introduction of natural gas service to an area outweigh the benefits of restricting service to a single provider. Whether an entity ultimately serves in an area will depend on whether it secures enough customers to pay for construction of the gas delivery system to the area.

"[C]ompetition should be favored over regulated monopolies unless there is a strong case that monopolies can do better. Competition has already produced increased enthusiasm for natural gas development in Maine; let's not cut off competition now," said Chairman Thomas L. Welch.

The commission determined that CMP Natural Gas's rate plan and project proposal would be approved so long as CMP modifies its proposal to ensure that investors, and not customers, will bear the risks of the proposed new local distribution venture. It will be necessary for CMP Natural Gas to file modified project plans and to obtain necessary corporate organization approvals from federal or state agencies before it can construct its system and operate as a public utility.

"We knew all along that CMP Natural Gas was the best choice to provide these Maine communities safe, economical natural gas service. Local government officials and potential customers supported our project and that certainly carried weight with the Commission," said CMP Natural Gas President Tim Kelley.

Rocco Canonica

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