AUGUSTA - A Maine electricity consumers group hopes to convince the Maine
Supreme Judicial Court to reverse and vacate a Maine Public Utilities Commission
order that provides Central Maine Power Co., a safety net in the event of
falling profits, but sets no cap on excessive profits. The court has put
the issue on its April term calendar. Attorneys for the Industrial Energy
Consumer Group told Maine's highest court in a recent appeal of the PUC order
that if the court allows the order to stand, it will be the first time in Maine
history that a utility has had no ceiling for its rate of return.
"When the PUC did a rate case for CMP (last year), they set a floor on how
low the ROR could go, but no upper limit," said IECG attorney Anthony Buxton of
the Augusta offices of Preti, Flaherty, Beliveau, Pachios & Haley.
"Here we are facing sky-rocketing energy costs and for
them the sky's the
limit." IECG is a group of companies and manufacturers in Maine that
purchase large amounts of electricity for their operations. CMP rates, however,
also affect other business and residential consumers. Preti, Flaherty
attorney Donald Sipe, a former PUC staff attorney who also represents the IECG,
said that, historically, if utility profits went up, rates would be adjusted
downward correspondingly.
"By completely removing limits on CMP's earnings for a seven-year period, the
commission has violated state law, which requires that customers be protected
from paying rates that are unnecessarily high," Sipe said. "Rates that are
higher than necessary for the utility to earn a "fair'" profit are unjust and
unreasonable by definition under Maine law. The PUC order ignores this
definition and may require ratepayers to pay too much for service." Sipe
said that what are considered just and reasonable electric rates are required by
state law to be based on a measure of how much profit a utility earns. The PUC
order - Approval of an Alternative Rate Plan (ARP 2000) - allows CMP to earn
potentially unlimited profits on the backs of its customers.
The commission
order protects CMP from earning too little if profits fall. If CMP's rate of
return falls below 5.2 percent, the company is allowed to automatically increase
rates to recover half of the shortfall, yet there is no converse protection for
ratepayers if CMP profits rise disproportionately. "Thus rates will go up
if needed to protect CMP's earnings, but rates will never go down, even if CMP
earns 10, 20 or even 30 times more than necessary to return a fair profit to its
shareholders," Sipe said. "We don't believe this is necessary or wise. It is
also illegal under Maine law."
The firm filed its appeal earlier this month. The docket number is
PUC-00-633. The PUC originally approved the ARP 2000 stipulation in
November of 2000.
###
Preti Flaherty has offices in Portland, Bath and Augusta, Maine, Concord, NH and Boston, MA. With more than 80 attorneys, the firm counsels clients in the areas of business law, energy, environmental, estate planning, health care, intellectual property, labor and employment, legislative and regulatory, litigation, technology and telecommunications.
