HALLOWELL, Maine — State regulators on Tuesday approved a multimillion-dollar deal that gives the parent company of Bangor Hydro a large stake of the state’s largest wind farm owner and could fund construction of hundreds of wind turbines in Maine and the Northeast. The staff of the Maine Public Utilities Commission had recommended rejection of the deal.
All three members of the PUC voted in favor of a complex series of transactions among First Wind; Bangor Hydro-Electric Co. and Maine Public Service and their parent, Nova Scotia-based Emera Inc.; and Ontario-based Algonquin Power and Utilities Corp.
The commissioners said the economic benefit of such investment was substantial, that any potential harm from the deal could be mitigated by PUC-imposed conditions and that the deal helped meet the ambitious goals of Maine’s 2008 Wind Power Act. Maine has 205 commercial wind turbines that can produce 400 megawatts of electricity. Tuesday’s deal could pave the way for construction of turbines producing an additional 1,200 megawatts.
“I’m not sure it would be sound policy for the commission to turn down a several hundred million dollar investment on the ground,” said Commission Chairman Thomas Welch.
“The magnitude of this investment in Maine is seldom seen and even less so in renewable, clean development,” said Commissioner David Littell, a former commissioner of the Department of Environmental Protection.
“The Emera transactions meet a number of public policy goals, which encourage the development of investment in wind energy projects,” said Commissioner Vendean Vafiades.
Tuesday’s deliberations, which included statements from each of the commissioners and multiple conditions proposed for the deal, will be distilled into an order. That order will provide the written details of the commission’s decision and once issued can be appealed to the state’s highest court by any of the parties involved in the proceedings.
The deal originally proposed that First Wind, Emera Inc. and Algonquin Power and Utilities Corp. would jointly build and operate wind energy projects in Maine and elsewhere in the Northeast. After a failed bid to go public in 2010, which left First Wind cash-hungry, the deal is a way for the Boston-based company to continue building wind towers across Maine and the region. The deal also allows Emera and Algonquin to reach new energy consumers in the United States.
Legal filings estimate the worth of the deal as $880 million at the “high end.”
Algonquin subsequently pulled out of the portion of the deal to invest in First Wind’s holdings but remained a partner with Emera in related plans to expand into Northeast energy markets. Emera has a 49 percent interest in the proposed project and First Wind owns 51 percent. Originally Emera and Algonquin shared the 49 percent interest, as both entities were contributing to the financing — Emera $333 million and Algonquin $85 million. Algonguin pulled out its financial support earlier this year, giving Emera full financial control of the 49 percent ownership.
This separate deal between Emera and Algonquin allows Emera to invest in Algonquin and both companies will then buy, or invest in energy companies in the United States and Canada, according to Sasha Irving, Emera’s spokeswoman. The companies in press releases have described the deal as the pursuit of “specific strategic investments of mutual benefit.”
Algonquin has said its plans include “investment opportunities relating to unregulated renewable generation, small electric utilities and gas distribution utilities.” One of Algonquin’s businesses is already in the process of acquiring New Hampshire’s Granite State Electric Co.
Emera has said it will invest in “opportunities related to regulated renewable projects within its service territories and large electric utilities.”
Tuesday’s decision stands in contrast to the January recommendation of PUC staff that commissioners reject the deal because “the risk of harm to ratepayers exceeds the benefits.”
In a draft decision, staff wrote that the deal posed unacceptable potential for hikes in electricity prices, “even if conditions intended to mitigate the risk of harm to ratepayers were imposed.”
Several other parties also objected to the deal in filings over the last year with the commission.
Small electricity generators were joined in their objections by industrial energy users such as Verso, Huhtamaki and Madison Paper and the Maine public advocate, who represents the interests of utility customers. Some of them, like PUC staff, argued that electricity rates would rise; others said the plan would violate the state’s Restructuring Act of 2000, which prohibits utilities from owning both transmission and generation because it is seen as anti-competitive and contributing to high electricity prices.
Anthony Buxton, attorney for the industrial energy users who protested the deal, said Tuesday that the commissioners had hurt Maine’s energy consumers.
“The irony is that at a period when the competitive market is working very well, we have taken the risk of impairing the competitive market by allowing the vertical integration of utilities,” said Buxton. “We did away with that in 2000 and got a very competitive market — and now it will be at risk.”
“I agree that there are risks associated with the transactions,” said Vafiades, “but have determined the benefits are significant.”
Those risks, commissioners said, could be dealt with by imposing a number of conditions on the deal.
“There are a lot of them, probably 30, maybe more,” Welch said after the meeting.
One set of conditions, said Welch, would ensure that the companies did not favor their newly affiliated partners over lower-priced transmitters and distributors of power, thus costing customers more. Other conditions would limit employees of the affiliated companies from moving back and forth between companies, carrying information that they normally would be prevented from sharing.
Then, said Welch, “you want to have a healthy utility so they can do the things you rely on them to do.” So the PUC will impose conditions “that insulate both Bangor Hydro and Maine Public Service from any financial problems that Emera might have as a result of this transaction.”
Emera spokeswoman Irving said Tuesday, “We’re very pleased the three commissioners agreed unanimously that this is a positive transaction for the state of Maine and we look forward to receiving the final written order and we’ll review it at that time.”
First Wind’s CEO Paul Gaynor thanked the commissioners for their approval. “The partnership will drive further growth of well-sited and well-run wind energy projects in the Northeast,” Gaynor said.