PUC ponders what’s next for multimillion-dollar wind deal vacated by court

Now what? That’s the question being asked by regulators, utilities and representatives of one of the biggest business deals to hit Maine after Maine’s high court invalidated regulatory approval of the deal.
wind turbines at Mars Hill
Turbines at Northeast Wind's Mars Hill Project. Photo by Michael Surran.

UPDATE, March 24, 2014: 

Attorneys for the Houlton Water Co. filed a brief Monday requesting that the Public Utilities Commission order a multimillion-dollar wind power business venture to stop operating because the state’s highest court had vacated the agency’s approval of the venture.

“Houlton hereby requests that the Commission order that Emera, Emera Maine, and JV Holdco immediately cease and desist all activity with respect to the proposed transactions, retroactive to the date of the Law Court’s decision March 4, 2014 thereby nullifying all actions taken since that date, and provide verification within 10 days of all actions taken to cease and desist,” wrote the water company’s lawyers.

“The Reorganization statute, 35-A M.R.S. §708, provides, ‘no reorganization may take place without the approval of the commission,’” the brief continues. “Any activities that have occurred as a result of the transactions from the date of the Law Court’s Opinion to today are unlawful. The Commission has a duty to enforce state laws and it cannot turn a blind eye to violation of those state laws.”

Original report filed March 21, 2014:

What happens to a multimillion-dollar energy deal when the state’s highest court says the Maine agency that approved the deal was wrong?

The question is further complicated by the fact that the energy partners are currently operating nine wind turbine projects under the now-voided approval and developing several more.

A lawyer representing the side that challenged the deal and won the argument at the  state’s Supreme Judicial Court said Thursday that the business venture shouldn’t be allowed to continue operating.

“There is no approval of this. It has been vacated, nullified,” said Alan Stone, representing the Houlton Water Company.

Joanne Steneck, general counsel for the Public Utilities Commission, or PUC, which was the agency that granted the approval, said the Commission would be asking all parties to provide written comments on how the agency should handle the problem, which she said is a novel one.

“It’s never come up before,” said Steneck. “We’ve got to hear from everybody first, that’s always our first step.”

The deal is a complex transaction, worth hundreds of millions of dollars, to build wind turbines across the region. The joint venture is owned by First Wind and Nova Scotia energy giant Emera, and also involves Emera-owned utilities Bangor Hydro and Maine Public Service. The venture, called Northeast Wind, currently owns nine operating wind projects in the Northeast and is developing more.

The PUC approved the deal in 2012, and shortly afterwards, three parties appealed the decision: Stone’s client, the Houlton Water Company, the Industrial Energy Consumers’ Group, which advocates for lower energy prices, and the state’s Public Advocate, which represents the interests of ratepayers.

The appellants said the approval violated the state’s landmark Restructuring Act, which prohibits utilities from owning both transmission and generation because it is  anti-competitive and contributes to high electricity prices.

The court agreed and ruled unanimously in early March that the PUC used the wrong standard to approve the deal. The court vacated the PUC’s approval and told the commission to reconsider the deal using the standard articulated by the court in its opinion.

Just days after the legal appeal had been filed with the court in 2012, Emera and First Wind consummated the joint venture.

At that time, Eric Bryant, an attorney with the Public Advocate’s office, said that “It’s unusual for a company to make a decision when there’s risk involved that it may have to undo it because of a legal matter.”

At a meeting Thursday, the Commission discussed how it would handle its re-evaluation of the request for approval. PUC staff attorneys were present, as were attorneys and advisors to Bangor Hydro, First Wind and the appellants.

At that meeting, PUC staff did not initially raise the question of whether the deal lacked authorization to continue operating.

And that irked Stone.

Attorney Alan Stone
Attorney Alan Stone.

“We researched the legal effect of a court vacating the decision,” he said, “and there is no approval of this. There is no hiding from that; you need approval from the Commission. It has been vacated, nullified.

“Do we just sit back and apply willful blindness, and say ‘go do whatever you want while we sit back,’” Stone asked.

Stone said that the First Wind-Emera partnership should at the very least “cease and desist” operations.

The PUC’s hearing examiner Chuck Cohen suggested that Stone “put it in writing” and file a brief requesting that the PUC order the partnership to cease operating.

Stone said he would.

Asked what the status of the joint venture should be given the law court’s vacating of the PUC approval, First Wind spokesman John LaMontagne said Friday, “The Maine PUC yesterday laid out a process to reconsider the matters remanded to it by the Law Court, expeditiously and with appropriate input.  The joint venture has provided significant investment into the Maine economy to date and we have been pleased to be part of that.”

Emera likewise avoided answering the question directly.

“The Maine PUC has commenced its regulatory process, and indicated that the matters should be able to be resolved on a timely basis,” said Dina Bartolacci Seely, Emera spokeswoman. “We are participating fully in that process and remain hopeful that we will ultimately achieve a positive outcome.”

Moody’s Investors Service released an “Issuer Comment” after the joint venture approval was vacated by the state’s high court, indicating it was not concerned about the effect of the ruling.  “Maine Supreme Court ruling credit neutral for Northeast Wind Capital,” wrote Moody’s analysts. Northeast Wind Capital is an affiliate of the joint venture.

Should the PUC ultimately fail to approve the deal under its reconsideration, wrote Moody’s, “we believe that it could lead to Emera selling its 49% ownership in the joint venture.”


Naomi Schalit

Naomi Schalit is a co-founder of the Maine Center for Public Interest Reporting, which operates The Maine Monitor.
Previous Post
An illustration of a brown dog standing at attention in front of a wooden cutout of the state of Maine

Stuck at home

Next Post
An illustration of a brown dog standing at attention in front of a wooden cutout of the state of Maine

Christie to lecture on journalism’s “false god” as Donald Murray visiting professor at UNH

The Maine Monitor has five newsletters to keep you informed about Maine.