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 & 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
"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.
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