1. Maine’s Look at Distributed Generation
6/29/2001
Maine’s Look at Distributed Generation
6/29/2001
Presented by the Maine Public Utilities Commission
Presented by the Maine Public Utilities Commission

2. Legislative Background
Legislature required MPUC to report on DG issues, with recommendations, by Oct 2002
Regardless, the time is ripe
6/29/2001
Presented by the Maine Public Utilities Commission

3. Presented by the Maine Public Utilities Commission
6/29/2001
Maine Background
Strong history of supporting local generation and co-generation
Utility affiliate prohibited from owning DG
Small hydros need help selling generation
Some small generators want to sell their output to contiguous customers
Also, no transmission or capacity constraint.
Also, very little natural gas.
Last 2 points – there are cases in Maine right now related to those issues.
6/29/2001
Presented by the Maine Public Utilities Commission
Presented by the Maine Public Utilities Commission

4. Maine’s Issues - Interconnection
6/29/2001
Maine’s Issues - Interconnection
Contract
Procedures
Costs
Jurisdiction
Issues in Maine. We’ve all read the white papers. Our reports cover all the usual topics. But some that are not emphasized in the literature are very important in Maine.
Have a 5 MW IA, so progress has been made.
Utilities are claiming the PUC has no jurisdiction to order interconnection requirements. We’re wondering why other states have done it.
6/29/2001
Presented by the Maine Public Utilities Commission
Presented by the Maine Public Utilities Commission

5. Me’s Issues – Selling Generation
6/29/2001
Me’s Issues – Selling Generation
Into the pool – Very difficult under ISO rules
To other customers – When does DG owner become a competitive provider or a utility under the law?
Net billing – can it be used for DG generation?
One supplier in Maine was willing to buy small hydro output. No other easy market for DG output that we know of. Impossible to sell into ISO-NE right now.
4 cases in Maine regarding selling to a neighbor. If sold to “a tenant” and not to “the public,” a generator can sell power without being a T&D utility. We have allowed limited selling, to one other customer or to a few customer accounts all of whom lease from the same generator.
Net billing – 100 kW; residential use; no payment just net from month to month. Goal was to accommodate people generating for their own use.
6/29/2001
Presented by the Maine Public Utilities Commission
Presented by the Maine Public Utilities Commission

6. Maine’s Issues – Utility Pricing
6/29/2001
Maine’s Issues – Utility Pricing
Price structure – high vs low fixed price (rate design proceeding soon)
Standby rates
Pricing flexibility to retain customers – can DG compete?
Rates probably offer an artificial benefit to DG – per/kWh rates are higher than costs for a distribution-only company. I don’t believe changing rate design is a significant DG issue in Maine.
Standby rate design likely to rate until after utility rate re-design – ?
Utility price discounts one of the largest inhibitors of DG. Utility can almost always undercut. But it’s the proper price signal.
6/29/2001
Presented by the Maine Public Utilities Commission
Presented by the Maine Public Utilities Commission

7. Maine’s Issues – Stranded Costs
6/29/2001
Maine’s Issues – Stranded Costs
of central plant generation (past) – big problem for ratepayers
from DG (future) – how large is the problem?
Stranded cost about 1/3 of utilities rates. Will be paid down in about “Thoughtful peole” have a very real fear of customers leaving the system thereby causing remaining customers to pick up their contribution to stranded costs (ie, pay higher rates).
Utilities under a price cap plan so wouldn’t happen in the short run. But would if bypass was large enough.
6/29/2001
Presented by the Maine Public Utilities Commission
Presented by the Maine Public Utilities Commission

8. Maine’s Issues – Ownership
6/29/2001
Maine’s Issues – Ownership
Utilities prohibited from owning generation
Should utilities be allowed to own DG?
Should affiliates be allowed to own DG?
Different models – own plant, not electricity? Own and lease plant? Maintain plant?
Maine unique among states. In other states, the utilities can (and do) just buy back the output of DG. Not legal in Maine. Do generators have only one way to sell their output – into the pool either directly or to a NEPOOL member.
Policy makers very very hesitant to let utilities back into the power business.
6/29/2001
Presented by the Maine Public Utilities Commission
Presented by the Maine Public Utilities Commission

9. Overarching Principles
6/29/2001
Overarching Principles
MPUC recommendations must be based on economics
Should be an economically level playing field
All customers must pay for stranded costs – DG should not be considered economic simply because it bypasses stranded costs
Environmental benefits, fuel diversity, etc are not in the PUC arena. We’re economic regulators. Legislature can address.
No artificial barriers. No artificial incentives.
DG should not be a tool for stranded cost bypass. Obviously it would be for a customer. But as a policy matter we don’t support this use of DG. Simply hurts all other customers.
6/29/2001
Presented by the Maine Public Utilities Commission
Presented by the Maine Public Utilities Commission

10. Presented by the Maine Public Utilities Commission
6/29/2001
The MPUC Reports
MPUC Interim Report & Resource Dynamics Technology Report published
Final Report with recommendations due 10/1/2001
See web page
Contact
6/29/2001
Presented by the Maine Public Utilities Commission
Presented by the Maine Public Utilities Commission