Houlton’s municipal electric utility to unplug from Maine grid

Posted Feb. 07, 2017, at 2 p.m.
Last modified Feb. 07, 2017, at 4:50 p.m.

PORTLAND, Maine — Houlton’s municipal electric utility on Tuesday received final approval to disconnect from the northern Maine power grid and connect directly with Canadian lines.

Houlton Water Co. is in the final stages of securing a $5.4 million loan to fund about 11 miles of new power lines connecting it directly to the electric grid maintained by New Brunswick Power, which it expects to complete by the end of 2019.

The Maine Public Utilities Commission on Tuesday gave final approval to the terms of the loan and a 10-year service agreement with the Canadian utility, which Houlton Water said would save the average residential customer about $54 in the first year after becoming a direct transmission customer of the New Brunswick system.

The company argued during the case that the rest of the grid stands to benefit, too, but Emera Maine said losing Houlton Water as a transmission customer will raise its costs and increase the average customer’s annual bill by about $13.21 in the first year.

Regulators found the eventual impacts on rates for both utilities are “not trivial” but that rate impacts alone were not enough to approve or deny the proposal. Houlton Water serves approximately 5,000 customers in Houlton and the surrounding communities of New Limerick, Linneus, Hodgdon and Ludlow.

Houlton Water argued its departure would let its customers avoid paying for expected costly upgrades on Emera’s northern Maine system and also remove the need for Emera to make upgrades to serve load to Houlton.”

“With HWC leaving the Emera Maine transmission system, there will be additional benefits to the customers remaining on the northern Maine transmission system,” the company said in a prepared statement. “Those include additional transfer capability between Emera Maine and [New Brunswick Power] and avoided costs from transmission upgrades that would otherwise be necessary if HWC remained a customer of Emera.”

Regulators ultimately decided those avoided costs made the difference in finding the deal in the public interest, in a ruling issued in December.

They estimated that losing Houlton Water as a customer would remove Emera’s need to spend up to $20 million to upgrade transmission infrastructure serving Houlton, which it wrote is “nearing the end of its useful life.”

Instead, the utility estimates it will contribute at least $5.4 million to construction of a power line 1.5-mile line from its current system to the Canadian border at Woodstock, where it would connect with a new 9.3-mile New Brunswick Power line.

The avoided upgrade costs to Emera’s system, they wrote, ” tips the balance” in favor of the proposal.

The state’s consumer advocate opposed the deal, arguing that the company didn’t prove the arrangement would have a public benefit, including for the rest of Emera’s customers. The Office of the Public Advocate and Emera argued Houlton water overstated projected savings.

The company countered that Emera’s estimates of the costs to its customers were based on ” flawed analysis.”

With their approval, regulators in December wrote they remained concerned that terms with New Brunswick Power were not clearly for more than one year. The company on Jan. 27 filed updated agreement terms, effective Feb. 1, that specify the deal will end Jan. 31, 2027.

PUC members said Tuesday the updated terms satisfied those concerns. They also gave clearance for the company to hold proceeds from its loan in a Key Bank account, because lender Machias Savings does not allow depositors to hold Canadian currency.

 

SEE COMMENTS →