Could Maine Ratepayers end up paying wind plants in Maine the REC value obtained from contracts involving other State RPS programs ? That would be quite perverse, but strange things happen when lawmakers screw around in the private sector.
Maine ratepayers have endured many long term contracts for electrical energy that became so burdensome with exorbitant costs, the contracts were bought out, the generator shut down and compensatory payments to the generator becoming ratepayer-responsible " stranded costs "
Maine is still in the "long term contract " business. Regulators bring investor owned transmission and distribution ( T & D ) companies together with generators to arrange energy purchases, despite the fact electricity re-structuring of 2000 was supposed to decouple supply from T & D.
The two largest Maine T & D companies are currently coupled by contract with two large scale wind generators and two other contracts with two other wind generators are under review.
By contract, T & D companies purchase output from the wind plant owners at a set price per kilowatt-hour. This price escalates annually. By law, the T & D companies can not resell this output in the retail market. T & D has to take the moment's wholesale price from the New England Regional Electric Market, a price that constantly changes, so the pricing risk is passed from the generator to T & D and consequently from T & D to the ratepayers.
The wind plant owners also contract-for-purchase another product with each megawatt-hour of output, the Renewable Energy Credit (REC).
These RECs need to be purchased by companies providing the retail electric market as proof of compliance with renewable portfolio standards (RPS). Generally, the greater the need for RECs, the higher the price obtained by generators.
The REC market includes all of New England, except Vermont. The prices for RECs in states outside of Maine currently fetch over 10 times the Maine REC price, so Maine wind plant owners, naturally, sell to the high price.
These long term contracts for output are for twenty years and assumptions based on future wholesale prices on electricity have to be made. These forecasts have often been inaccurate and unintended high costs to ratepayers are often realized well before the end of contract. The decision to buy out a " sour " contract has occurred all too frequently, in the past.
Buying out long term contracts with wind plant owners are considerably more complicated with RECs tied to output but not part of the contract with T & D. Buying out these contracts would be a lot more troublesome. Two products, output and RECs, inherently tied to each other, but sold separately ; severing one contract, severs the other.