12 February 2007

Maine, NB cooperate on electricity, NL likely behind development curve

Maine Governor John Baldacci and New Brunswick Premier Shawn Graham signed a memorandum of understanding on Friday to explore increased co-operation between the state and the province on electricity distribution.

Gov. Baldacci noted that both Maine and New Brunswick produce surplus electricity much of it coming from environmentally friendly sources like wind energy. Maine has also been looking at alternatives to an agreement covering New England states that the Maine Public Utilities Commission believes will cost Maine residents US$616 million over the next five years. As a result, Maine has begun to look at alternative energy sources to ensure Maine residents are not subsidizing excessive energy consumption in other states.

The memorandum commits the two jurisdictions to explore over the next two years options on establishing a common market for electricity, improvements to transmission facilities and interconnections and generally to examine areas of co-operation on electricity generation and distribution. While both jurisdictions produce more power than is consumed in the jurisdictions, both have peak demand times when power must be imported.

The Maine-New Brunswick agreement casts doubts about the meaning and value of a recent announcement by the Newfoundland and Labrador government on the Lower Churchill.

The day before the Maine-New Brunswick agreement, Premier Danny Williams announced that his province's hydroelectricity Crown corporation had filed an application with New Brunswick's electricity regulator for long-term transmission service.

The Newfoundland and Labrador announcement is essentially exploratory in nature, since the Lower Churchill project has not been approved for construction. As Premier Williams acknowledged to news media, his government is not currently in discussion with any potential purchasers of Lower Churchill power since the costs of the project have not been finalized.

By contrast, Maine and New Brunswick are exploring options over the next to years that would lead to freer energy flow between the two jurisdictions. Even according to official timelines, Lower Churchill will not be sanctioned before 2009 and no power is forecast to flow until 2015 at the earliest. Maine's requirements are immediate and New Brunswick and Quebec have the capacity to meet those needs well before 2015.

Cost of Lower Churchill power might also place it out of competition for New England needs. Some estimates put the cost of installing subsea cabling and other transmission systems to New Brunswick in excess of $2.0 billion. That's in addition to the cost of building the Gull Island and Muskrat Falls generating complexes.

There is some reason to believe the so-called Anglo-Saxon route for Lower Churchill power would be unprofitable. Premier Williams told reports last week that he was considering selling power into New England under a deferred revenue arrangement. That's likely code for selling at a loss.

Text of MOU:

Memorandum of Understanding Between The Province of New Brunswick And The State of Maine To Enhance The Mutual Benefits Of the Maine/New Brunswick Electrical Interconnections

WHEREAS, The State of Maine (“Maine”) shares electrical interconnections with the Province of New Brunswick (“New Brunswick”);

Maine also shares electrical interconnections with other New England states;

New Brunswick also shares electrical interconnections with the Maritime Provinces and Quebec;

New Brunswick and Maine each have located within their respective borders adequate and at most times abundant generation capacity;

New Brunswick and Maine export significant quantities of generation to southern New England for the benefit of all consumers;

New Brunswick and Maine each have abundant natural resources from which renewable energy, such as wind and tidal energy, can be harvested to generate electrical energy;

Maine and New Brunswick have each adopted policies to promote the development of renewable resources;

The northeastern United States needs new supplies of electrical energy, including renewables;

Maine and New Brunswick wish to expand opportunities for the mutual development and export of new electric generation capacity resources;

Maine and New Brunswick wish to increase the opportunities to transmit energy between the State and Province and to their neighbors in Canada and the United States;

Maine and New Brunswick wish to improve the efficiency of their respective electric systems and the interconnections between them to benefit consumers and the environment; and New Brunswick and Maine acknowledge the significance of climate change and recognize the importance of emphasizing the development and deployment of low emission electricity generation in the future.


I, Shawn Graham, Premier of the Province of New Brunswick, and I, John Elias Baldacci, Governor of the State of Maine, do hereby enter into this “Memorandum of Understanding Between the Province of New Brunswick and The State of Maine To Enhance The Mutual Benefits Of the Maine/New Brunswick Electrical Interconnections” and do hereby agree as hereinafter set forth.

Maine and New Brunswick agree to explore expansions of generation capacity, including renewables, and transmission opportunities by agreeing to jointly undertake the following tasks:

1. Study the feasibility of expanding generation capacity and transmission infrastructure to increase electrical flows across borders;

2. Identify processes and systems to provide transparency and efficiency in Maine and New Brunswick markets;

3. Study the feasibility of developing common market rules that could be applied in Maine and New Brunswick;

4. Explore the potential benefits and technical and legal impediments to the common provisioning of control area services (including balancing, dispatch and reserve sharing);

5. Explore the tariff and governance structures required for a regional transmission organization for Maine and New Brunswick; and

6. Examine the opportunities for compatible greenhouse gas emissions reduction regimes in the electricity sector.

Maine and New Brunswick agree to dedicate sufficient resources from their respective state and provincial agencies for the completion of the tasks described herein. Maine and New Brunswick agree to appoint one person from each government to serve as each state’s or province’s, as applicable, point of contact (the “Joint Representatives”).

The tasks are to be completed in two phases. Phase 1 work will overview the tasks, will assess priorities and possibilities, and will identify common principles (the “Principles”) to guide additional work and any future implementation. The Joint Representatives shall deliver to their respective governments a report on the Phase 1 activities no later than June 1, 2007.

Upon completion of Phase 1, and agreement on the Principles, Maine and New Brunswick agree to proceed to Phase 2. It will be guided by the Principles and will complete detailed assessments of all tasks. The Joint Representatives shall present a final Phase 2 report to their respective governments no later than January 1, 2008.

Upon completion of the tasks identified above, Maine and New Brunswick agree to consider entering into a further agreement to implement mutually beneficial actions. Upon mutual consent, this further agreement may include other states or provinces.

Signed and delivered this 9th day of February, 2007.

Premier Graham Official Signature Block

Governor Baldacci Official Signature Block

[Source: Maine Governor's Office]