PORTLAND, Maine — Before wind power developer Atlantic Wind moves ahead with its 50-turbine project in Somerset County, state regulators want to answer big legal questions about what kind of financial ties the developer can have with Central Maine Power Co.
Both companies are owned by the Spanish utility Iberdrola, though both are separated by various levels of corporate subsidiary relationships.
The Maine Public Utilities Commission on Tuesday opened an investigation into that matter, seeking to determine whether the financial relationship between Iberdrola and subsidiaries Atlantic Wind and CMP create a sufficient shared financial interest to violate state law.
Regulators twice before found that a similar relationship between Nova Scotia-based Emera and wind developer First Wind did not violate the Maine law that in 2000 restructured power markets, creating a competitive bidding process for power generators
The question hinges on one paragraph of the law, which states that “an investor-owned transmission and distribution utility may not own, have a financial interest in or otherwise control generation or generation-related assets.”
That restriction only pertains to Emera and CMP, which are the state’s two investor-owned utilities.
The Spain-based Iberdrola S.A. owns Iberdrola Renewables and Iberdrola USA.
Iberdrola Renewables, based in Portland, Oregon, is the parent company of Atlantic Wind. Iberdrola USA, based in New Gloucester, Maine, is the parent company of CMP.
CMP would not directly own wind turbines or a stake in Atlantic Wind, though the company would operate in CMP’s territory.
The Legislature did not include anything in the restructuring law about “affiliated interests,” leaving the Maine Supreme Judicial Court to set out a standard for judging whether such relationships are allowed.
It requires regulators to determine whether the financial relationship between two companies “is likely to produce incentives for favoritism that would undermine the purpose” of the state’s power market restructuring law.
The PUC determined this week it should answer those questions about the relationship between Atlantic Wind and CMP before considering Atlantic Wind’s request to have CMP secure for it a right-of-way to connect its planned 50-turbine Fletcher Wind project to the power grid.
Fletcher Wind is Atlantic Wind’s first planned project in the state, though it also has leased thousands of acres in Washington County.
Staff for the state regulatory agency wrote in a report that CMP wanted the PUC to first review and make a determination on the contract to secure a right-of-way before answering the larger legal questions raised by municipal utility Houlton Water Co.’s appeal of the previous Emera-First Wind deal.
Charles Cohen, the PUC staff member handling the contract case, wrote in January that he “does not believe that the proposed affiliated interest transaction is as straightforward as CMP’s characterization” and suggested that examination of the relationship between Atlantic Wind and CMP could inform the commission’s decision.
The staff discovered that is partly because if CMP is not able to negotiate a land deal for property adjacent to its own utility corridor it would allow Atlantic Wind to use the utility’s right-of-way, which Cohen wrote “clearly implicates the issues of preference raised by the Law Court” in the Houlton Water case.
Houlton Water in 2012 appealed regulators’ approval of Emera’s investment in First Wind, which the PUC approved for a second time in 2014, arguing there were adequate regulatory safeguards in place to prevent utilities from giving any preferential treatment to affiliated generators.
That decision prompted a second challenge from Houlton Water, which is requesting the court rehear the case.
Since, SunEdison bought First Wind and, with it, Emera’s stake in the company, disentangling itself from an affiliated interest case before state regulators.
John Clark, general manager of Houlton Water, wrote in an email that the company is still requesting the state’s top court rehear the case.
Those questions will be dealt with, in part, through the investigation regulators opened this week.
A spokesman for Atlantic Wind said in January that the developer hoped to apply for a state permit from the Department of Environmental Protection as early as summer 2015.