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State panel issues final order in biomass plant fee dispute

By Ben Holbrook | Sep 14, 2016

An end to a fee dispute between Central Maine Power Co. and Georges River Energy LLC, which is trying to build a biomass plant on Robbins Lumber Co. property in Searsmont, is in sight following a final ruling by a state panel early this month.

For several months, Georges River Energy, which is owned by the Robbins family, and CMP have engaged in a debate over how much the power company can charge to connect the 8.5-megawatt biomass plant, which has a net generating capacity of 7.5-megawatts, to the grid.

Central Maine Power wanted to charge GRE a monthly operations and maintenance fee of 1.38 percent, which the Robbinses estimated would total about $343,000 a year. If CMP assessed such a fee, the Robbinses said the financial viability of the plant could be threatened. Those fees are related to interconnection and distribution upgrade costs CMP will incur to connect the plant to the grid.

As a result, the Robbinses in April asked that Maine Public Utilities Commission intervene in the matter. After several months of filings, the utilities commission issued an order that the Robbinses would be responsible for paying operations and maintenance fees, and that CMP should assess its fees based on actual costs and not on the 1.38-percent rate established under the company's terms and conditions.

Both CMP and the Robbinses filed comments related to the utilities commission's recommended decision in July. While both largely agreed with the decision, CMP argued that determining operations and maintenance fees based on actual costs would be difficult. The Robbinses, for their part, argued operations and maintenance fees can be applied only to interconnection facilities and not to distribution upgrades.

To connect the biomass plant to the grid, CMP has indicated it will need to reconstruct 4.8 miles of a three-phase line and make other improvements to support the biomass plant. Additionally, CMP is installing 24 strands of fiber-optic cable, only 16 strands of which will be used to connect the biomass plant to the grid. The additional strands could be used for other purposes in the future.

One of the issues that came to light during the dispute resolution process is that the public utilities commission's rules governing small generator interconnections, which would apply to the biomass plant, provide little guidance for resolving the fee dispute between CMP and the Robbinses.

For that reason, the Robbinses argued it is not responsible for distribution upgrade operations and maintenance expenses. However, CMP stated that actual costs can be interpreted to include operations and maintenance costs, and that distribution upgrades and interconnection facilities should not be distinguished when assessing charges, according to MPUC documents.

“On this point, the Commission concludes that, without specific provisions in Chapter 324 on the matter, the language in the standard agreement is ambiguous and does not resolve the issues presented in this case,” the utilities commission said. “Thus, the Commission will proceed to resolve the dispute by applying 'cost causation' and equity principles.”

In a Sept. 1 ruling, the commission determined that the Robbinses are responsible for all incremental costs incurred by CMP to maintain the required distribution upgrades. As noted by the commission, those upgrades would not be necessary except to connect the biomass plant to the grid.

The commission also agreed with the Robbinses that CMP's use of the formulaic 1.38-percent charge for special facilities established in its terms and conditions does not apply to the biomass plant project. A special facility, as defined by CMP, is any facility that is constructed “in addition to, or in substitution of, the standard facilities which the Company would normally install to provide service.”

The commission's final ruling states that CMP will assess a monthly distribution upgrade charge of 0.10 percent. That fee will cover the increased property taxes the company will pay for the distribution upgrades. CMP will also charge a yearly fee at a rate of 10.08 percent for interconnection facilities operations and maintenance. That fee will cover increases in property taxes as well as cover line, station equipment and engineering maintenance costs.

The project has until 2018 to begin generating power under terms of the state's Community-Based Renewable Energy Program. If it is brought online, the plant would burn bark, wood chips and sawdust, which in turn would power a steam turbine to generate electricity. Waste heat from the plant would be used to dry lumber and heat buildings at the adjacent Robbins Lumber sawmill.

All of the electricity generated by the plant would go onto the grid and CMP would purchase the power at a rate of 9.9 cents per kilowatt hour for a 20-year period.

The Robbinses and CMP have 20 days to file a petition asking the commission to reconsider its order. The decision can also be appealed to the Law Court within 21 days of the date of the order.

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