PowerFacts

New Maine PUC Report Confirms Competitive Power's Benefits

"This January 15, 2008 report, prepared at the request of the legislature and the product of months of extensive review, provides further confirmation that competitive suppliers are best suited to deliver benefits to consumers. The PUC report has rightly acknowledged the many potential adverse impacts of utility-owned rate-based generation in Maine and found competitive solutions to be the best option." John E. Shelk, President & CEO, EPSA

• "The Commission recommends against any immediate legislative changes that would allow the States utilities to re-enter the business of owning or controlling generation assets. The utilities have been out of the generation business for over seven years and, consequently, they no longer have in-house generation expertise." (p. 17-8, Report on Transmission & Distribution Utilities Participation in the Energy Supply Business, Maine Public Utilities Commission, January 15, 2008)
  
  
• "The [Maine] Public Advocate urges caution in considering whether utilities should be allowed back into the generation business, stating that the restructured market has protected customers from the financial risks associated with generation ownership." (p. 7)



• "The regulatory guarantee that utilities could recover all prudently incurred [costs] (even those that turn out to be above-market) could create an unfair competitive market." (p. 12)



• "In the event that the law is changed to allow utilities to own generation, a requirement to test all utility proposals through a competitive solicitation process is of utmost importance to minimize ratepayer costs and risks." (p. 10-11)



• "The Commission does not view the promotion of resource diversity or a lack of interest by market participants in different types of generation projects (other then natural gas facilities) that have significantly higher up-front capital costs as a sufficient rationale for allowing utilities back into the generation business. Resource diversity can be promoted through other means, such as long-term contracts or a renewable portfolio requirement. Moreover, there has been interest by non-utility entities in developing resources that rely on technologies that have significantly higher up-front capital cost than natural gas-fired generation (e.g. wind and coal gasification facilities)." (p. 11)



• "These [renewable] portfolio requirements, together with federal production tax credits, have resulted in substantial efforts of private development of renewable resources in Maine and New England. The current interest in private development of renewable resources throughout the region diminishes the need for utility participation in the market for resource diversity purposes." (p. 14)



• "The primary adverse impact on electricity consumers that could result from utility participation in the energy supply business is the creation of new stranded costs... the risk can not be eliminated and the more the risk is reduced through limited participation, the less potential benefit there will be for consumers." (p. 13)



• "There is no possibility that utilities, regulators or any other entity can predict future electricity prices with any degree of certainty. Thus, utility investment in generation can be viewed as at least equally likely to result in consumer benefit through lower prices or consumer harm through the creation of new stranded costs." (p. 14)

CONTACT: JOHN SHELK
(202) 349-0154or 703-472-8660

EPSA is the national trade association representing competitive power suppliers, including generators and marketers. These suppliers, who account for nearly 40 percent of the installed generating capacity in the United States, provide reliable and competitively priced electricity from environmentally responsible facilities serving global power markets. EPSA seeks to bring the benefits of competition to all power customers.