After decades of talking about true cross-border joint action at the provincial-state level, New Brunswick and Maine have taken the first step toward a possible working relationship in the management of their energy resources.
In early February, New Brunswick Premier Shawn Graham and Maine Governor John Baldacci signed a Memorandum of Understanding (MOU) committing both jurisdictions to see if they can come up with a plan for a single electricity market. The results should be known by the end of 2007.
The accord was driven by Maine’s soul searching about its ties to the New England electricity market. The state has grown unhappy and restive with its participation in the New England Regional Transmission Organization (RTO), because electric customers in Maine are paying a high price to improve the power market in Massachusetts and Connecticut, with little or no benefits foreseen for Maine.
Because of the RTO’s refusal to provide any relief, the Maine Legislature has mandated a study on whether Maine should withdraw from the New England arrangement and if it should proceed alone or seek a new arrangement with New Brunswick. In fact, the decision will be made by the state’s two largest utilities, Central Maine Power, owned by New York-based Energy East, and Bangor Hydro, owned by Nova Scotia’s Emera. But they will be heavily influenced by the state, and they are supporting the Maine study and the MOU.
Baldacci says that in his four years in office he has never talked by phone as much with all of Canada’s premiers as he has with Graham, since the Premier took office last year. The result is the MOU.
Could matters get beyond the talking stage? The sheer economics of a possible deal indicate they could. By sharing electric generating resources, the province and the state could reduce the need for each to maintain a high level of reserves and could supply one another efficiently. For example, when the Point Lepreau nuclear generator is shut down, Maine sources could supply the province. And when Maine is hit by a heat wave, cooler New Brunswick could help its neighbour.
The small northern Maine market, connected directly only with New Brunswick and not with the rest of the state, has several small links with the province. That relationship could be expanded. But most of Maine has been connected with the province by only one high voltage line. A second line is now under construction, and it is the key to the MOU and makes possible future sharing of power supply.
The biggest change must come in how Maine and New Brunswick view themselves. Maine has usually seen the province’s resources as back up during the summer and only as a part of its energy mix. There are more generators in Maine than the state’s customers need. But power from either Maine or New Brunswick faces transmission bottlenecks, limiting service to southern New England. Little power flows from Maine to New Brunswick. Maine is oriented toward New England by history and federal energy regulation.
New Brunswick has been careful about its cross-border involvement because of reluctance to take any risk of falling under U.S. regulation. It relies on selling power at the border to avoid American controls. And it has not been a significant power purchaser from Maine, because NB Power has sought to supply its customers solely from in-province generators.
Until now, neither has been able to surmount its traditional mindset to seek a closer relationship. That is why the MOU is of historic significance.
The success of the effort to create a new energy relationship between New Brunswick, and with it the Maritimes, and Maine depends mainly on the province. New Brunswick now has a functioning, though limited, power market, and an independent operator of its transmission system, a critical element of any real market. A provincial regulator controls both the market and the system operator. Can the province agree to make changes in its market rules and transmission system management and regulation to accommodate Maine partners?
Maine is unlikely to submit entirely to decisions made in Fredericton. Because the New Brunswick market rules could work reasonably well in Maine, the problems will be insuring uniformity and protecting against unilateral change by either side. The state and province could adopt identical governing legislation and agree to make changes only in concert, just as is done under the uniform state and provincial law systems now widely in use. Without accepting U.S. regulation, would New Brunswick accept neutral arbitration?
The MOU represents recognition that New Brunswick and Maine have common interests in energy policy. But the international border presents a challenge to come up with a way of managing those interests without either side dominating the other. New Brunswick and Maine must resolve that issue this year if the MOU is to lead to further steps forward.
Gordon L. Weil, a Maine-based energy consultant and former head of the State of Maine energy agency, proposed a Maine-Maritime power market in The Atlantica Power Market: A Plan for Joint Action, published in 2003 by the Atlantic Institute for Market Studies.