STATE OF MAINE PUBLIC UTILITIES COMMISSION Docket No. 2010-235 July 20, 2010 MAINE PUBLIC UTILITIES COMMISSION REQUEST FOR COMMENTS Long-Term Contracting for Offshore Wind Energy and Tidal Energy Projects CASHMAN, Chairman; VAFIADES, Commissioner I. SUMMARY The Commission seeks comments on the proper interpretation of the rate impact limitation provision contained in recently enacted legislation that directs the Commission to conduct a competitive solicitation for proposals for long-term contracts from deep-water offshore wind energy pilot projects or tidal energy demonstration projects. II. BACKGROUND During its 2010 session, the Maine Legislature enacted An Act To Implement the Recommendations of the Governor’s Ocean Energy Task Force (Act). P.L. 2009, ch. 615. Section A-6 of the Act directs the Commission, in accordance with the Maine Revised Statutes, Title35-A, section 3210-C, to conduct a competitive solicitation for proposals for long-term contracts to supply installed capacity and associated renewable energy and renewable energy credits from one or more deep-water offshore wind energy pilot projects or tidal energy demonstration projects. The Act requires the Commission to initiate the solicitation by September 1, 2010. The Act contains the following rate impact limitation provision: The commission may not approve any long-term contract under this section that would result in an increase in electric rates in any customer class that is greater than the amount of the assessment charged under Title 35-A, section 10110, subsection 4 at the time that the contract is entered. Id. Title 35-A M.R.S.A. § 10110(4) states: Funding level; base assessment.  The commission shall assess transmission and distribution utilities to collect funds for conservation programs and administrative costs in accordance with this subsection and shall make other assessments in accordance with subsection 5. The amount of all assessments by the commission under this subsection plus expenditures of a transmission and distribution utility associated with prior conservation efforts must result in conservation expenditures by each transmission and distribution utility, not including expenditures on assessments under subsection 5, that are fixed at a rate of 0.145 cent per kilowatt-hour. Title 35-A M.R.S.A. § 10110(6) specifies that transmission and substransmission customers are not eligible for conservation programs funded by the assessments in subsection 4 and subsection 5 and those customers are not required to pay in rates amounts associated with those assessments. III. REQUEST FOR COMMENTS The Commission requests comments on the proper interpretation of the rate impact limitation provision. Specifically, the Commission requests comments on the following possible interpretations: 1) Should the provision be interpreted to mean that all customers, in any customer class, may have a rate impact up to 0.145 cent/kWh (assuming no change to assessment under subsection 4 and no additional assessment under subsection 5) resulting from any above-market costs that might be associated with long-term contracts; or 2) Given the exclusion in subsection 6 noted above, should the provision be interpreted to mean that transmission and substransmission customers (i.e., industrial class customers) could have no rate increase resulting from any above-market costs that might be associated with long-term contracts, while distribution level customers (i.e., medium and small commercial customers and residential customers) may have a rate impact up to 0.145 cent/kWh (assuming no change to assessment under subsection 4 and no additional assessment under subsection 5). In addition, the Commission requests comments on the proper interpretation of the following language in the rate impact limitation provision: “the amount of the assessment charged under Title 35-A, section 10110, subsection 4 at the time that the contract is entered.” 3) Given that subsection 4 explicitly references subsection 5, should the provision be interpreted to include only the assessment specified in subsection 4 or should it include the assessment in subsection 4 and any additional assessment pursuant to subsection 5. In providing comments on the proper interpretation, the Commission requests that a rationale be presented that provides for a legislative intent or purpose supporting the interpretation. The Commission anticipates interpreting the rate impact limitation provision prior to the initiation of the long-term contract solicitation in September 2010. In this manner, the total allowed ratepayer cost for contracts (i.e., above-market contract costs) pursuant to the RFP would be defined prior to the submission of bids. The Commission requests that comments on this issue be filed by August 6, 2010. Reply comments may be filed by August 13, 2010. Dated at Hallowell, Maine, this 20th day of July, 2010. BY ORDER OF THE COMMISSION _______________________________ Karen Geraghty Administrative Director Request for Comment - Docket No. 2010-235