Any examination of Maine’s electric utilities joining a regional transmission organization (RTO) that would include northern Maine and parts of Canada shouldn’t work from the assumption that such an RTO, in and of itself, will automatically yield a range of benefits for the state’s electricity consumers, a number of industry stakeholders recently told the Maine Public Utilities Commission (PUC).

The PUC last month took the first step in preparing a study that it will complete for state lawmakers looking at the pros and cons of Maine’s joining such an RTO. The PUC has launched an inquiry as the vehicle through which it will conduct the required study. As the first step in the study, the state commission sought comments from interested parties on the appropriate scope of the study. The PUC has identified eight possible objectives of a Maine-Canada RTO.

In response, the Independent Energy Producers of Maine (IEPM) said it has “tremendous reservations” about the Maine-Canada RTO proposal. “While we recognize that NEPOOL [New England Power Pool] is far from perfect — and in fact have been one of the most vocal opponents of some of its policies — we also are highly skeptical that the grass will be greener on the other side.”

IEPM said that it has made a “tremendous investment” in reforming NEPOOL to be more responsive to the concerns of small and renewable generators. “To change course now, in fact to start all over, seems both premature and silly unless overwhelming benefits seem obvious. To the best of our knowledge, no one has pointed to such benefits.”

Along with the eight stated objectives listed by the PUC related to the possible RTO, IEPM suggested the state commission also explore several additional areas. Specifically, IEPM urged the PUC to examine transmission constraints, noting that constraints between Maine and New Brunswick could impede the realization of any advantages of a Maine-Canada RTO.

For its part, the Northern Maine Independent System Administrator (NMISA) said that it supports the PUC’s efforts to investigate the implications of Maine utilities joining a Maine-Canada RTO. But NMISA said that during the course of the commission’s investigation, the PUC should keep in mind that the northern Maine wholesale market is currently functioning well and delivering reliable and affordable power to northern Maine residents. An analysis of the benefits of a broader Maine/Canadian RTO should therefore include an analysis of the cost implications for the residents of northern Maine, said NMISA.

Moreover, NMISA told the PUC that the theoretical value of broader wholesale markets must be reconciled with the physical and geographical realities. “Even if a broader Maine/Canadian RTO were formed, the northern Maine market would likely have to continue as a distinct subregion for some time.” NMISA argued that the “mere creation” of such an RTO will not provide the full benefits of a broader wholesale market to the residents of northern Maine until additional transmission is built.

Meanwhile, the Maine Public Service Co. said that it believes that the “fundamental and necessary focus” of a PUC study of a Maine-Canada RTO should be an examination of the impact of the proposed RTO on Maine’s emerging energy markets in the northern and southern parts of the state. “The effect of the proposed RTO may be significantly different in rural northern Maine than it is in the more urbanized southern portions of the state.”

Although Maine Public Service said that it agrees with the goals set forth in the PUC study, such as lower cost and greater price stability, the company warned that it should not be a fore drawn conclusion that a Maine/Canadian RTO will result in these goals.

“Given the Commission’s apparent objectives to reduce electric costs for all consumers, ensure adequacy of supply and increase choices, it is not readily apparent that a single RTO for the state of Maine will yield such outcomes,” Maine Public Service went on to say.

For example, the company said that it is questionable to what degree the Maritimes region will be “long” on generation and to what degree multiple merchant generators will be attracted. “Due to potentially truncated liquidity, economic dispatch of generation within the Maine/Canadian region could result in higher cost generation being dispatched, thus impacting ultimate consumers’ costs.”

Moreover, Maine Public Service said that it is possible that such an RTO will have declining or limited liquidity with a minimal forward price view, thus limiting choices for customers and potentially increasing costs. “This is potentially possible should we see the closure of nuclear generation facilities within New Brunswick in the near term.”

The utility urged the PUC to examine the merits of multiple RTO jurisdiction within the state of Maine. Maine Public Service said that it is “apparent that merchant generators are increasingly being attracted to major load center RTOs to overcome the nation’s significant transmission limitations.” Therefore, it may be “more advisable for the major load centers of Maine to be linked to the major sources of market liquidity versus a Maine/Canadian RTO.”

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