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FERC Freezes Florida's Move Into Maine

FERC Freezes Florida's Move Into Maine

The New England electric market is getting crowded, so crowded that a Florida-based utility poised to move into that market now is trying to get out of an $846 million deal to purchase Maine generating assets.

The FPL Group has gone to court to nullify the arrangement made last January to buy the non-nuclear generating plants owned by Central Maine Power. Florida Power said the Federal Energy Regulatory Commission changed its rules in a way that will make it harder to run Maine's older power plants in competition with new plants now being built. A FERC order on restructuring of the New England Power Pool (NEPOOL) issued in October threw out a provision that had been in effect since 1971 requiring new power generators to pay for upgrades to NEPOOL's transmission system so there would be enough transmission capacity to go around. Without this rule there could be a shortage of transmission capacity. Also, the newer, more efficient plants will be more competitive since they are not burdened with the costs of new transmission. It will be awhile before the actual amount of new capacity is determined, but a variety of companies have announced plans for up to 20,000 MW.

One market source said FPL had an extra incentive to drop a deal it had become disillusioned with after discovering its winning bid was about $200 million above the offers of contending potential owners.

Central Maine is fighting to collect the $846 million, saying Florida Power knew the electric market is undergoing restructuring. And, in fact, the auction sale of the 1,185 MW in hydro and oil-fired plants was done in compliance with the state's unbundling plans. The deal, which lacks state and federal approvals, has not been completed.

Ellen Beswick

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