Seeking Competition Among the Uncompetitive: Maine PUC Must Define “Competitive” in Biomass Subsidy Proceeding

What makes a competitive bidding process “competitive”? The Maine PUC is currently grappling with this question in Docket No. 2016-00084 in which it is tasked with awarding contracts for up to 80MW of biomass generation. Under a new law, P.L. 2015, ch. 483, the PUC must solicit bids from eligible biomass resources. Lawmakers passed the bill to support Maine’s forest products industry, which has suffered as a result of a string of mill closures in recent years. Under the law, the PUC may enter into “above-market” contracts with biomass generators and pay for the above-market costs from special revenue funds to shield ratepayers from higher energy costs that would result from the contracts. The law is designed to help loggers and other forest service employees that rely on biomass generators, which are struggling to compete against low oil and gas prices.

Although the Legislature has set aside up to $13.4 million for these new contracts, the law has several built-in limitations to contain costs. One of the biggest such protections is triggered if the PUC concludes that the solicitation of bids is “not competitive.” In that case, the PUC may decline to award any contracts. The PUC requested comments from stakeholders last month on how it should determine whether its solicitation is competitive. Comments from Emera Maine and ReEnergy Biomass focused on the inherent safeguards in the competitive bidding process itself, which requires that bidders meet certain criteria specified in the law. Comments from the Industrial Energy Consumer Group, argued for a “competition-in-fact” standard under which the process would be considered competitive only if the Commission received two or more bids.

Last week the PUC issued its formal Request for Proposals but has yet to define what constitutes a competitive process under the statute. Proposals are due on July 29.