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Houlton Water Co. v. Public Utilities Commission

Supreme Court of Maine

November 17, 2016

HOULTON WATER COMPANY et al.
v.
PUBLIC UTILITIES COMMISSION et al.

          Argued: March 2, 2016

         On the briefs:

          Alan G. Stone, Esq., and Benjamin J. Smith, Esq., Skelton, Taintor & Abbott, Auburn, for appellant Houlton Water Company

          Anthony Buxton, Esq., Andrew Landry, Esq., and Robert Borowski, Esq., Preti, Flaherty, Beliveau & Pachios, Augusta, for appellant Industrial Energy Consumer Group

          William S. Harwood, Esq., and Rachel M. Wertheimer, Esq., Verrill Dana LLP, Portland, for appellee Emera Maine

          Charles Cohen, Esq., and Leslie Raber, Esq., Maine Public Utilities Commission, Augusta, for appellee Maine Public Utilities Commission

         At oral argument:

          Benjamin J. Smith, Esq., for appellant Houlton Water Company

          Charles Cohen, Esq., for appellee Maine Public Utilities Commission

          William S. Harwood, Esq., for appellee Emera Maine

          Panel: SAUFLEY, C.J., and MEAD, GORMAN, JABAR, HTELM. and HUMPHREY, JJ.

         Reporter of Decisions

          HJELM, J.

         [¶1] We are called on for the second time to consider a decision of the Maine Public Utilities Commission approving a petition for reorganization filed by Bangor Hydro-Electric (BHE) and Maine Public Service Company (MPS), which were regulated utilities engaged in the transmission and distribution of electricity, and, during the pendency of this proceeding, merged to become Emera Maine. Under the proposed reorganization, Emera Maine's parent company, Emera, Inc., would increase its ownership interest in Algonquin Power & Utilities Corporation (APUC), which is a publicly-traded company that is in the electricity generation business with generation facilities located in Maine. Because of the relationship that would result between Emera Maine, as a transmission and distribution entity, and APUC, a generator, the petition is subject to approval by the Commission.

         [¶2] In the first appeal, we vacated the Commission's order approving the petition[1] because the Commission misconstrued the governing statute in the Electric Industry Restructuring Act, 35-A M.R.S. §§ 3201-3217 (2015). See Houlton Water Co. v. Pub. Utils. Comm'n (Houlton I), 2014 ME 38, ¶¶ 35-38, 87 A.3d 749. On remand, the Commission again approved the petition. On this second appeal, filed by Houlton Water Company and the Industrial Energy Consumer Group (collectively, the intervenors), we conclude that the Commission acted outside of its authority when, in an effort to control the statutorily harmful effects of the transaction, it imposed conditions that would regulate APUC beyond what the Restructuring Act allows. We therefore vacate the Commission's order and remand with instructions to deny the petition.

         I. STATUTORY OVERVIEW AND BACKGROUND

         [¶3] As we discussed in Houlton I, when the Legislature enacted the Restructuring Act, one of its objectives was to encourage "competition and innovation in the generation of electrical power." Id. ¶ 3; 35-A M.R.S. § 3204; see also Cent. Me. Power Co. v. Pub. Utils. Comm'n, 2014 ME 56, ¶ 2, 90 A.3d 451. To promote that goal, the Legislature separated the generation of electricity from the transmission and distribution of electricity (T&D); and "greatly reduced" the Commission's regulatory authority over producers and generators of electricity to the extent that the parties to this proceeding "refer to power generation as 'unregulated' in Maine"; but preserved the Commission's authority to highly regulate T&D entities. Houlton I, 2014 ME 38, ¶¶ 4-5, 87A.3d749');">87A.3d749.

[T]he Act mandated that companies holding both generation and T&D assets divest themselves of the generation assets and generation-related activities .... Following divestiture, the Commission continues to regulate and oversee T&D utilities, which hold monopolistic rights to the limited T&D resources in Maine. Because the Restructuring Act allowed the
investor-owned electric utilities to keep their transmission and distribution assets, the former electricity providers were transformed into transmission and distribution utilities fully regulated by the Commission.

Id. ¶ 4 (citation and quotation marks omitted). As an element of the Commission's extensive regulation of T&D utilities, proposed reorganizations of T&D utilities are subject to the Commission's approval. Id. ¶ 6; 35-A M.R.S. §§708(2), 3204(5) (2015).

         [¶4] In April 2011, BHE and MPS petitioned the Commission pursuant to 35-A M.R.S. § 708(2), [2] which applies to the reorganization of utilities, to authorize their parent company, Emera, to increase its ownership position in APUC to 25% from roughly 8%.[3] As we described the proposed affiliate structure in Houlton I, "the proposed transactions would allow Maine's regulated T&D utilities-Bangor Hydro and MPS [now Emera Maine]-to be held in common ownership with companies engaged in electricity generation in Maine." 2014 ME 38, ¶ 9, 87 A.3d 749. The parties agree that this would result in an "affiliated interest" between ...


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