An Act To Establish the Regional Greenhouse Gas Initiative Act of
Maine Legislature, Session 123, LD 1851
Committee: Natural Resources
Sponsors: KOFFMAN, BARTLETT, ADAMS, BARSTOW, BERRY, BLANCHARD, BLANCHETTE, BLISS, BRAUTIGAM, CAIN, CAMPBELL, CUMMINGS, DILL, DUCHESNE, EBERLE, FAIRCLOTH, FISCHER, FLETCHER, FLOOD, GILES, HINCK, MARLEY, MAZUREK, MIRAMANT, NORTON, PATRICK, PERCY, PIEH, PINGREE, PIOTTI, PRATT, RECTOR, SA VIELLO, SIMPSON, SMITH, STRANG BURGESS, THERIAULT, TREAT, WAGNER, WATSON, WOODBURY, BENOIT, BOWMAN, BRYANT, DAMON, DOW, EDMONDS, MARTIN, MILLS, MITCHELL, RA YE, ROSEN, ROTUNDO, STRIMLING, TURNER
Amends: 35-A MRSA §3211-A, 35-A MRSA §3211-D, 35-A MRSA §3211-E, 38 MRSA §579

Legislative Document 
No.ISSI 
H.P.1290 
House of Representatives, April 11,2007 
An Act To Establish the Regional Greenhouse Gas Initiative Act of 
2007 
Reference to the Committee on Natural Resources suggested and ordered printed. 
111~ 
/J7.1l!0£~ 
MILLICENT M. MacFARLAND 
Clerk 
Presented by Representative KOFFMAN of Bar Harbor. (GOVERNOR'S BILL) 
Cosponsored by Senator BARTLETT of Cumberland and 
Representatives: ADAMS of Portland, BARSTOW of Gorham, BERRY of Bowdoinham, 
BLANCHARD of Old Town, BLANCHETTE of Bangor, BLISS of South Portland, 
BRAUTIGAM of Falmouth, CAIN of Orono, CAMPBELL of Newfield, Speaker 
CUMMINGS of Portland, DILL of Cape Elizabeth, DUCHESNE of Hudson, EBERLE of 
South Portland, FAIRCLOTH of Bangor, FISCHER of Presque Isle, FLETCHER of Winslow, 
FLOOD of Winthrop, GILES of Belfast, HINCK of Portland, MacDONALD of Boothbay, 
MARLEY of Portland, MAZUREK of Rockland, McDONOUGH of Scarborough, 
MIRAMANT of Camden, NORTON of Bangor, PATRICK of Rumford, PERCY of 
Phippsburg, PIEH of Bremen, PINGREE of North Haven, PIOTTI of Unity, PRATT of 
Eddington, RECTOR of Thomaston, SA VIELLO of Wilton, SIMPSON of Auburn, SMITH of 
Monmouth, STRANG BURGESS of Cumberland, THERIAULT of Madawaska, TREAT of 
Farmingdale, WAGNER of Lewiston, WATSON of Bath, WOODBURY of Yarmouth, 
Senators: BENOIT of Sagadahoc, BOWMAN of York, BRYANT of Oxford, DAMON of 
Hancock, DOW of Lincoln, President EDMONDS of Cumberland, MARTIN of Aroostook, 
MILLS of Somerset, MITCHELL of Kennebec, RA YE of Washington, ROSEN of Hancock, 
ROTUNDO of Androscoggin, STRIMLING of Cumberland, TURNER of Cumberland. 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 5 MRS A §12004-I, sub-§20-B is enacted to read: 
20-B. 
Environment: 
Natural 
Resources and 
Public Utilities 
Maine Energy 
Conservation 
Board 
$50 per day plus 
expenses 
35-AMRSA 
§3211-D 
Sec. 2. 35-A MRSA §3211-A, sub-§l, ~I is enacted to read: 
I. "Trade association aggregator" means an entity that gathers individual members of 
0 
a trade association together for the purpose of receiving electrical efficiency services 
or bidding on electrical efficiency contracts. 
Sec. 3. 35-A MRSA §3211-A, sub-§2, as amended by PL 2005, c. 569, §§1 and 
2, is further amended to read: 
2. Programs. The commission shall develop and, to the extef}t of availaale funds, 
implement conservation programs if} aeeordaHee with this seetiof} to help reduce energy 
costs of Maine consumers by the maximum amount possible. The commission shall 
establish and, on a schedule determined by the commission, revise objectives and an 
overall energy strategy for conservation programs. Conservation programs implemented 
by the commission must be consistent with the objectives and an overall energy strategy 
developed by the commission and be cost effective, as defined by the commission by rule 
or order. In defining "cost effective," the commission may consider the extent to which a 
program promotes sustainable economic development or reduces environmental damage 
to the extent the commission can quantify or otherwise reasonably identify such effects. 
Consistent with the other requirements of this section, the commission, in adopting and 
implementing conservation programs, shall seek to encourage efficiency in electricity 
use, provide incentives for the development of new, energy-efficient business activity in 
the State and take into account the costs and benefits of energy efficiency and 
conservation to existing business activity in the State. 
A. 
The commission shall consider, without limitation, conservation programs that: 
(1) Increase consumer awareness of cost-effective options for conserving energy; 
(2) Create more favorable market conditions for the increased use of efficient 
products and services; 
(3) 
Promote sustainable economic development and reduced environmental 
damage; afHl 
(4) Reduce the price of electricity over time for all consumers by achieving 
reductions in demand for electricity during peak use period~; and 
(5) Reduce total costs paid by electricity consumers in the State by increasing the 
efficiency with which electricity is consumed. 
Page I - 123LR2605(Ol)-1 
B. 
The commission, with regard to the assessment imposed under subsection 4, 
shall: 
(1) Target at least 20% of available funds to programs for low-income residential 
consumers, as defined by the commission by rule; 
(2) 
Target at least 20% of available funds to programs for small business 
consumers, as defined by the commission by rule; and 
(3) 
To the greatest extent practicable, apportion remaining available funds 
among customer groups and geographic areas in a manner that allows all other 
customers to have a reasonable opportunity to participate in one or more 
conservation programs. 
C. 
The commission shall hold at least one public hearing and invite, accept, review 
and consider comments and suggestions from interested parties prior to adopting or 
substantially revising conservation programs or the objectives and overall strategy for 
conservation programs. 
D. 
The commission shall monitor conservation planning and program development 
activities in the region and around the country. 
E. 
The commission shall implement conservation programs by contracting with 
service providers in accordance with subsection 3. 
F. 
The commission shall monitor and evaluate the delivery of conservation 
programs by service providers and assess the cost-effectiveness of programs in 
meeting the objectives and overall strategy established by the commission. 
G. 
The commission, to the extent possible, shall coordinate its efforts with other 
agencies of the State with energy-related responsibilities. 
H. 
The commission shall secure sufficient technical and administrative expertise to 
carry out its responsibilities pursuant to this section by: 
(1) Contracting with appropriate entities with relevant expertise and experience; 
(2) 
Establishing one or more advisory groups composed of persons with 
relevant expertise and experience; or 
(3) Any other reasonable means developed by the commission. 
I. 
The commission may coordinate its efforts under this section with similar efforts 
in other states in the northeast region and enter into agreements with public agencies 
or other entities in or outside of the State for joint or cooperative conservation 
planning or conservation program delivery, if the commission finds that such 
coordination or agreements would provide demonstrable benefits to citizens of the 
State and be consistent with this section, the conservation programs and the 
objectives and overall strategy for the conservation programs. 
J. 
The commission shall encourage school facility managers to complete an energy 
efficiency training and certification program established and conducted by the 
commission under this section. To the extent the commission determines necessary 
and appropriate to meet the goals of this paragraph, the commission may, in 
accordance with the requirements of this section, establish incentive mechanisms to 
encourage participation in this program. For purposes of this paragraph, "school 
facility managers" means persons employed by school administrative units in this 
State who are responsible for the design or operation of school administrative unit 
facilities or the heating, ventilation or air conditioning systems or equipment used in 
such facilities. 
Sec. 4. 35-A MRSA §3211-A, sub-§3, as enacted by PL 2001, c. 624, §4, is 
amended to read: 
3. 
Implementation. The comrrusslOn shall seek to implement the delivery of 
conservation programs in all regions of the State on an equitable basis and to citizens at 
all income levels. The commission may arrange the delivery of conservation programs 
by contracting with service providers. The commission shall select service providers in 
accordance with this subsection. 
A. 
The commission shall select service providers through a competitive bidding 
process. 
B. 
To the extent practicable, the commission shall encourage the development of 
resources, infrastructure and skills within the State by giving preference to in-state 
service providers. 
C. 
Notwithstanding paragraph A: 
(1) The commission may select a service provider for one or more conservation 
programs without employing a competitive bidding process if the commission 
finds that the selection of the service provider will promote the efficient and 
effective delivery of conservation programs and is consistent with the objectives 
and overall strategy of the conservation programs; and 
(2) 
For the delivery of conservation programs to low-income residential 
consumers, the commission, without employing a competitive bidding process, 
may utilize the delivery system for the Weatherization Assistance for Low-
income Persons Program administered through the United States Department of 
Energy and the network of for-profit and not-for-profit entities who have held 
contracts with transmission and distribution utilities to deliver conservation 
services to low-income and residential customers. 
Notwithstanding Title 5, section 1831, the commission is not subject to rules adopted by 
the State Purchasing Agent in selecting service providers pursuant to this subsection. The 
commission shall adopt rules establishing procedures governing the selection of service 
providers under this subsection. The commission shall consult with the State Purchasing 
Agent in developing the rules. 
A trade association aggregator is eligible to participate in competitive bid processes under 
this subsection. 
Sec. 5. 35-A MRSA §3211-A, sub-§4, as amended by PL 2005, c. 459, § 1, is 
further amended to read: 
4. Funding level. +he Except as provided in subsection 4-A, the commission shall 
assess transmission and distribution utilities to collect funds for conservation programs 
and administrative costs in accordance with this subsection. 
The amount of all 
assessments by the commission under this subsection plus expenditures of a transmission 
and distribution utility associated with prior conservation efforts must result in total 
conservation expenditures by each transmission and distribution utility that: 
A. 
Are based on the relevant characteristics of the transmission and distribution 
utility's service territory, including the needs of customers; 
B. 
Do not exeeed Are fixed at a rate of .145 cent per kilowatt-hour; 
C. 
Except as provided in subsection 7-A, are no less than 0.5% of the total 
transmission and distribution revenues of the transmission and distribution utility; 
and 
D. 
Are proportionally equivalent on a per-kilowatt-hour basis to the total 
conservation expenditures of other transmission and distribution utilities, unless the 
commission finds that a different amount is justified. 
Sec. 6. 35-A MRSA §3211-A, sub-§4-A is enacted to read: 
4-A. 
Additional assessment on transmission and distribution utilities. 
In 
addition to the assessment under subsection 4, the commission shall assess each 
transmission and distribution utility based on the utility's gross operating revenue. For 
the purposes of this subsection, "gross operating revenue" means revenue derived from 
filed rates, except from sales for resale. The commission may correct any errors in the 
assessments by means of a credit or debit to the following year's assessment rather than 
reassessing all utilities in the current year. 
The commission shall determine the 
assessments under this subsection annually prior to May 1 st and assess each utility for its 
pro rata share for expenditure, including funds for energy conservation programs, during 
the fiscal year beginning July 1 st following presentation of the commission's budget to 
the joint standing committee of the Legislature having jurisdiction over utility and energy 
matters and the joint standing committee of the Legislature having jurisdiction over 
appropriations and financial affairs. Each utility shall pay the assessment charged to that 
utility on or before July 1 st of each year. 
Sec. 7. 35-A MRSA §3211-A, sub-§4-B is enacted to read: 
4-B. 
Transmission and subtransmission voltage level. 
After July 1, 2007, 
customers receiving electric service at transmission and subtransmission voltage levels 
are not eligible for new projects undertaken under this section, and those customers are 
not required to pav the assessment imposed under subsection 4 or subsection 4-A. The 
commission shall reduce the rates of such customers by 0.145 cents per kilowatt-hour as 
of the first rate adjustment following the effective date of this subsection in a manner that 
reflects the elimination of the assessment under this subsection. 
Sec. 8. 35-A MRSA §3211-A, sub-§7-A, as enacted by PL 2003, c. 275, §2, is 
amended to read: 
7-A. Funds held in trust. All funds collected from electricity consumers pursuant 
to this section, inelliding assessments eolleeted from transaHssion and distribHtion 
litilities and deposited in the program fund or the adaHnistration fund and any prior 
eonsef¥ation efforts, are collected under the authority and for the purposes of this section 
and, whether held ay the eommission, transmission and distriaHtion Htilities or their 
agents, are deemed to be held in trust for the purposes of benefiting electricity consumers. 
In the event funds are not expended or contracted for expenditure within 2 years of being 
collected from consumers, the commission shall return the value of those funds to 
consumers by appropriate reductions in the assessment collected pursuant to subsection 4. 
Sec. 9. 35-A MRSA §3211-A, sub-§9, as enacted by PL 2001, c. 624, §4, is 
repealed and the following enacted in its place: 
9. Ratemaking and cost recovery. All assessments under this section are just and 
reasonable costs for rate-making purposes. The assessments charged to utilities under 
this section are just and reasonable costs for rate-making purposes and must be reflected 
in the rates of transmission and distribution utilities. 
Sec. 10. 35-A MRSA §3211-D is enacted to read: 
§3211-D. Maine Energy Conservation Board 
1. Establishment. The Maine Energy Conservation Board, as established in Title 5, 
section 12004-1, subsection 20-B and referred to in this section as "the board," is created 
to accomplish coordinated and integrated planning for Maine's energy conservation 
efforts and to provide advice and counsel on conservation and carbon dioxide reduction 
matters. 
2. Composition of board. The board is composed of 7 voting members appointed 
by the commission, none of whom may have a financial interest in energy efficiency or 
conservation delivery: 
A. A member representing commercial electrical consumers; 
B. A member representing industrial electrical consumers; 
C. A representative of the Office of the Public Advocate who represents the interest 
of residential electrical consumers; 
D. 
A member with significant knowledge of environmental issues and climate 
change policy; and 
E. The 3 trustees of the Energy and Carbon Savings Trust, established in section 
3211-E. 
The commission may also appoint 3 nonvoting members representing transmission and 
distribution utilities. The Commis~ioner of Environmental Protection, the chair of the 
commission and the director of the Governor's Office of Energy Independence and 
Security within the Executive Department serve as nonvoting, ex officio members. 
3. Terms; chair. Except for members appointed pursuant to subsection 2, paragraph 
E, the term of a voting member of the board is 3 years. If a voting member is unable to 
complete the term, the commission shall appoint a replacement. A voting member may 
serve a maximum of 2 consecutive terms. The board shall select a chair and vice-chair 
from the board's voting membership. 
4. Meetings; voting. The board may meet up to 6 times annually. If a voting 
member of the board is absent from more than one meeting without notice to the chair or 
vice-chair, the commission may appoint a replacement. 
An affirmative vote of 5 
members is required for any action. 
5. Staff. The commission shall provide staff support for the development of the plan 
under subsection 6. 
The board may contract with an independent consultant with 
expertise in energy efficiency programs and may expend for such services an amount not 
to exceed 1 % of the total amount in the conservation prOgram fund established under 
section 3211-A, subsection 5 and the Energy and Carbon Savings Trust established in 
section 3211-E. 
6. Biennial plan. The board shall develop and approve a detailed biennial plan, 
referred to in this subsection as "the plan," in accordance with this subsection. 
A. In developing the plan, the board shall seek input from the public. 
B. 
The plan must contain program budget allocations and general guidance or 
instructions on program implementation and make provisions for annual updates and 
reVlSlOns. 
C. 
The plan must include instructions for the use of funds in the conservation 
program fund established under section 321 I-A, subsection 5 and the Energy and 
Carbon Savings Trust established in section 32ll-E. 
D. 
The plan must seek to address the needs of all customer classes of the 
transmission and distribution utilities in the public interest. 
E. The plan must be presented to the commission for review and final approval by 
order. 
7. 
Rulemaking. 
The commission shall adopt rules for establishing and 
administering the board and its programs. Rules adopted pursuant to this subsection are 
major substantive rules as defined in Title 5, chapter 375, subchapter 2-A. 
Sec. 11. 35-A MRSA §3211-E is enacted to read: 
§3211-E. Energy and Carbon Savings Trust 
1. Definitions. As used in this section, unless the context otherwise indicates, the 
following terms have the following meanings. 
A. 
"Forward capacity market" means the program established by the regional 
transmission organization that is in effect on the effective date of this paragraph and 
compensates providers of electrical capacity with payments for the availability or 
reduction of capacity as determined by the regional transmission organization. 
B. "Regional transmission organization" means the independent systems operator 
that administers and oversees the wholesale electricity markets in which the State 
participates. 
C. "Trade association aggregator" means an entity that gathers individual members 
of a trade association together for the pumose of receiving electrical efficiency 
services or bidding on electrical efficiency contracts. 
D. "Trust" means the Energy and Carbon Savings Trust established in subsection 2. 
E. "Trustee" means a trustee of the trust. 
2. Establishment of trust. The Energy and Carbon Savings Trust is established and 
must be managed and administered by the commission to support the goals and 
implementation of the carbon dioxide cap-and-trade program established under Title 38, 
section 580-B. 
The trust is authorized to receive. hold, bank and expend revenue 
resulting from the sale of allowances and any forward capacity market or other capacity 
payments from the regional transmission organization that may be attributable to projects 
funded by the trust. The funds may not be used for any other pumose and are considered 
to be held in trust for the pumoses of benefiting consumers. 
A. 
The commission shall appoint 3 trustees for the Energy and Carbon Savings 
Trust. The commission shall appoint a diverse set of trustees who possess knowledge 
of high-efficiency energy conservation programs, carbon reductio!' programs or 
policy or substantial management expertise. 
B. A trustee serves a 3-year term. If a trustee is unable to complete the term, the 
commission shall appoint a replacement. 
Trustees may serve a maximum of 2 
consecutive terms. 
C. The trustees may meet periodically, in addition to participating in all meetings of 
the Maine Energy Conservation Board, as established in section 3211-D or upon 
request of the commission. If a trustee is absent from more than one meeting without 
notice, the commission may appoint a replacement. An affirmative vote of two-thirds 
of the members is required for any action. 
D. The trustees have a fiduciary duty to the customers of the State's transmission and 
distribution utilities in the administration of the trust. Upon accepting appointment as 
a trustee, each trustee must acknowledge the fiduciary duty to use the trust funds only 
for the pumoses set forth in this section. 
E. The trustees shall ensure that the goals and objectives of the trust, as established 
in this section and in commission rules, are carried out. The trustees shall represent 
the interests of the trust as participants in the development by the Maine Energy 
Conservation Board of the biennial plan pursuant to section 3211-D, subsection 6. 
F. The commission shall make available staff to support the work of the trustees. 
3. Trust inviolability. The co.nmission may not impair the value of the trust either 
directly or indirectly, or reduce, impair, postpone or terminate the amount of revenues 
arising from the regional greenhouse gas initiative program established under Title 38, 
chapter 3-B. The commission may take legal action in the name of the trust to oppose 
efforts to reduce, impair, postpone or terminate the amount of such revenues. 
The State pledges to, contracts with, and agrees with the purchasers of carbon dioxide 
emissions allowances and trustees for the proceeds of those allowances that neither the 
State nor any of its agencies, including the commission, may limit, alter, amend, reduce 
or impair the trust, its funds or any rights under the trust or ownership of the trust or 
security interest in the trust. The State acknowledges that such owners, holders and 
trustees may and will rely on this pledge, contract and agreement and that any such 
limitation, alteration, amendment, reduction or impairment without adequate provision 
will irreparably harm such owners, holders and trustees. 
4. Money invested. Any revenue received from the sale of allowances and any 
forward capacity market payments administered by the regional transmission 
organization or other capacity payments that may be attributable to projects funded by the 
trust are the property of the trust. Money in the trust not currently needed to meet 
obligations under Title 38. section 580-B or for the purposes of this section must be 
deposited with the Treasurer of State to the credit of the trust and mav be invested as 
provided by law. Interest on these investments must be credited to the trust. 
5. 
Ceiling on energy efficiency spending. 
The ceiling on energy efficiency 
spending from the trust is set at $5 per carbon dioxide allowance. Until that price ceiling 
is adjusted or removed, only the first $5 of each carbon dioxide allowance sold and 
deposited in the trust may be awarded to or directed to qualified projects for purposes of 
energy efficiency improvements. While the ceiling is in place, an allowance value above 
$5 must be used by the commission pursuant to sections 301 and 1322 for rebates to 
electric ratepayers calculated on a per-kilowatt-hour basis. 
6. 
Program plan. 
By December 31 st of each year, the trustees and program 
administrator under subsection 7 shall develop a trust program plan with support from the 
commission and with the input of the Maine Energy Conservation Board established in 
section 3211-D. The program plan must set guidelines for the evaluation and approval of 
proposed projects for which funding is sought from the trust. The commission may 
approve the trust program plan. 
7. 
Administration of trust funds; expenditures; projects. The trust must be 
administered in accordance with this subsection. 
A. 
The trust must be administered, and expenditures authorized by, a program 
administrator selected by the commission whose qualifications must include 
demonstrated expertise in the management of electricity efficiency programming and 
supervision of energy efficiency personnel. The administrator shall report to the 
trustees. The administrator shall organize staff resources of the commission for the 
trustees. Expenditures from the trust must be made pursuant to the annual trust 
program plan developed in accordance with subsection 6. To the extent possible, the 
trust program plan must be incorporated into the biennial plan approved by the 
commission pursuant to section 3211-D, subsection 6. 
B. During the years 2009, 2010 and 2011, not less than 85% of the trust must be 
allocated for measures, investments and arrangements that reduce electricity 
consumption. 
Subject to the apportionment between fossil fuel and electricity 
conservation pursuant to this subsection, the trust must fund projects that give priority 
to measures with the highest benefit-to-cost ratio, as long as cost-effective collateral 
efficiency opportunities are not lost, and that: 
(1) Reliably reduce greenhouse gas production by fossil fuel combustion in the 
State at the lowest cost in trust funds per unit of emissions; or 
(2) Reliably reduce the consumption of electricity in the State at the lowest cost 
in trust funds per kilowatt-hour saved. 
C. Expenditures from the trust relating to conservation of electricity and mitigation 
or reduction of greenhouse gases must be made predominantly on the basis of a 
competitive bid process for long-term contracts, subject to commission rules. Rules 
adopted to implement the competitive bid process under this paragraph may not 
include an avoided cost methodology for compensating successful bidders. Bidders 
may propose contracts designed to produce greenhouse gas savings or electricity 
conservation savings, or both, on a unit cost basis. Contracts must be commercially 
reasonable and may require liquidated damages to ensure performance. Contracts 
must provide sufficient certainty of payment to enable commercial financing of the 
conservation measure purchased and its installation. 
D. 
The trustees may target bid competitions in areas or to participants as they 
consider necessary, as long as the requirements of paragraph B are satisfied. 
E. Nonelectric savings programs must be used to maximize fossil-fueled energy 
efficiency and conservation and associated greenhouse gas reductions, subject to the 
apportionment between fossil fuel and electricity conservation set forth in paragraph 
B. 
F. The size of a project funded by the trust is not limited as long as funds are 
awarded to maximize energy efficiency and support greenhouse gas reductions and to 
fully implement the biennial plan approved by the commission pursuant to section 
3211-D, subsection 6. 
G. No more than 5% of trust receipts in anyone year may be used for the total 
administrative costs: 
(1) Of the commission and the trust related to this section; 
(2) 
Of the Department of Environmental Protection III administering the 
allowance auction under Title 38, chapter 3-B; and 
(3) Of the Attorney General, including activities pertaining to the tracking and 
monitoring of allowance trading activity and managing and evaluating the trust's 
conservation program. 
Of the trust receipts used for administrative costs under this paragraph, no more than 
40% in anyone year may be used for the administration of the trust. The trust may 
fund research approved by the Department of Environmental Protection in an amount 
of up to $100,000 per year to develop new categories for carbon dioxide emissions 
offset projects, as defined in Title 38, section 580-A, that are located in the State. 
H. In order to minimize administrative costs and maximize program participation 
and effectiveness, the commission shall, to the greatest extent feasible, coordinate the 
delivery of and make complementary the energy efficiency programs under this 
section, section 3211-A and section 321 O-C. 
I. Notwithstanding Title 5, section 1831, neither the trustees nor the commission are 
subject to rules adopted by the State Purchasing Agent in selecting service providers 
pursuant to this section. The trustees and the commission shall consider delivery of 
efficiency programs by means of contracts with service providers that participate in 
competitive bid processes for reducing energy consumption within individual market 
segments or for particular end uses. 
1. 
A trade association aggregator is eligible to participate in competitive bid 
processes under this subsection. 
8. 
Rulemaking. 
The commission shall adopt rules for establishing and 
administering the trust and its programs. These rules must include: 
A. 
Provisions for the expenditure of funds, including, but not limited to, the 
development of a plan and prOgram budgets, criteria for energy efficiency and other 
consumer benefit programs, the process for project selection and approval, minimum 
requirements for project monitoring and verification and the cost-effectiveness tests 
to be used for measuring and comparing program benefits and costs subject to 
subsection 7, paragraph B; and 
B. Provision for the independent evaluation of program expenditures to ensure cost-
effectiveness of projects to improve energy efficiency or to reduce greenhouse gases. 
Rules adopted pursuant to this subsection are major substantive rules pursuant to Title 5, 
chapter 375, subchapter 2-A. 
Sec. 12. 38 MRSA §579, as enacted by PL 2005, c. 330, §24, is amended to read: 
§579. Regional greenhouse gas initiative 
The department may participate in the regional greenhouse gas initiative as described 
in the climate action plan required in section 577-: and may coordinate its efforts with 
other states and jurisdictions participating in that initiative, with respect to: 
1. Regional market. The design, conduct and supervision of a regional market for 
carbon dioxide allowances; 
2. 
Additional offset categories. The establishment and mutual reCOgnItIon of 
additionaL offset categories that recognize the State's unique geography, economy and 
natural resources; and 
3. Ensuring no unfair disadvantage. Efforts seeking to ensure that electricity 
generated within participating states and jurisdictions is not unfairly disadvantaged as a 
result of imports of electricity from nonparticipating states and jurisdictions. 
Sec. 13. 38 MRSA c. 3-B is enacted to read: 
CHAPTER 3-B 
REGIONAL GREENHOUSE GAS INITIATIVE 
§580. Short title 
This chapter may be known and cited as "the Regional Greenhouse Gas Initiative Act 
of2007." 
§580-A. Definitions 
As used in this chapter, unless the context otherwise indicates, the following tenns 
have the following meanings. 
1. Allocation. "Allocation" means the number of carbon dioxide allowances to be 
credited to a carbon dioxide budget unit or to the general account of the sponsor of an 
approved carbon dioxide emissions offset proj ect. 
2. 
Carbon dioxide allowance. "Carbon dioxide allowance" or "carbon dioxide 
emissions allowance" means a limited authorization by the department for the emission of 
up to one ton of carbon dioxide. 
3. Carbon dioxide budget unit. "Carbon dioxide budget unit" means a fossil fuel 
fired electrical generating unit that serves a generator with a nameplate capacity equal to 
or greater than 25 megawatts of electrical output. 
4. Carbon dioxide budget unit compliance account. "Carbon dioxide budget unit 
compliance account" means the account established by the department wherein carbon 
dioxide budget units deposit carbon dioxide emissions allowances. 
5. Carbon dioxide emissions budget. "Carbon dioxide emissions budget" means 
the total amount of carbon dioxide emissions allowances allocated by the State on an 
annual basis. 
6. Carbon dioxide emissions offset project. "Carbon dioxide emissions offset 
project" means a project that reduces or avoids loading of carbon dioxide and other 
greenhouse gases in the atmosphere and is demonstrated to qualify as real, additional, 
verifiable, enforceable and pennanent as those tenns are defined in rules adopted by the 
department. "Carbon dioxide emissions offset project" includes, but is not limited to, 
landfill and agricultural methane capture and destruction, reduction in emissions of sulfur 
hexafluoride, sequestration of carbon due to afforestation and reduction or avoidance of 
carbon dioxide emissions from natural gas, oil or propane end-use combustion due to 
end-use energy efficiency and other categories established by the department by rule. 
7. Carbon dioxide offset allowance. "Carbon dioxide offset allowance" means a 
carbon dioxide allowance awarded to the sponsor of a carbon dioxide emissions offset 
project. 
8. Combined heat and power unit. "Combined heat and power unit" means a 
device that simultaneously generates electricity and thennal power and operates at a high 
level of output efficiency by utilizing the waste heat created as a by-product of electricity 
Page II - 123LR2605(Ol)-1 
generation for domestic, commercial or industrial heating or cooling purposes, and whose 
useful thermal output equals at least 10% ofthe fossil fuel energy input ofthe unit. 
9. Electrical generating unit. "Electrical generating unit" means a fossil fuel fired 
combustion device that serves a generator. 
10. Fossil fuel. "Fossil fuel" means natural gas, petroleum, coal or any form of 
solid, liguid or gaseous fuel derived from such a material. 
11. Fossil fuel fired. "Fossil fuel fired" means combustion of fossil fuel when the 
fossil fuel combusted constitutes, or is projected to constitute, more than 50% of the 
annual heat input on a British Thermal Unit basis. 
12. Generator. "Generator" means a device that produces electricity and is reguired 
to be reported as a generating unit pursuant to the United States Department of Energy 
Form 860. 
13. Gross electrical generation. "Gross electrical generation" means the electrical 
output in megawatts at the terminals of the generator. 
14. Integrated manufacturing facility. "Integrated manufacturing facility" means a 
facility that: 
A. Received an air emissions license from the department prior to the effective date 
of this subsection; 
B. Produces electricity from one or more carbon dioxide budget units, including one 
or more combined heat and power units, for transmission over the facilities of a 
transmission and distribution utility; and 
C. Routinely produces one or more other products for sale. 
15. 
Long-term electricity contract. 
"Long-term electricity contract" means a 
contract for a period of 3 years or more with a carbon dioxide budget unit for the 
purchase of electricity. 
16. 
Memorandum of Understanding; memorandum. 
"Memorandum of 
Understanding" or "memorandum" means the Regional Greenhouse Gas Initiative 
Memorandum of Understanding dated December 20, 2005 that establishes an electric 
power sector carbon emissions cap-and-trade program within the northeast region of the 
United States. 
17. 
Nameplate capacity. "Nameplate capacity" means the maximum electrical 
generating output, expressed in megawatts, that a generator can sustain over a specified 
period of time when not restricted by seasonal or other deratings. 
18. 
Regional greenhouse gas initiative. 
"Regional greenhouse gas initiative" 
means the initiative referred to in the Memorandum of Understanding and the 
corresponding model rule that memorializes the ongoing cooperative effort by the State 
and other states to design and implement a regional carbon dioxide cap-and-trade 
program covering carbon dioxide emISSIOnS from electrical generating units m the 
signatory states. 
19. Regional organization. "Regional organization" means the entity that will 
manage the regional greenhouse gas initiative on a regional basis and with which the 
State contracts for related service. 
20. 
Regional transmission organization. "Regional transmISSIOn organization" 
means the independent systems operator that administers and oversees the wholesale 
electricity markets in which the State participates. 
2l. Ton. "Ton" means 2,000 pounds. 
22. Transmission and distribution utility. "Transmission and distribution utility" 
means a transmission and distribution utility as defined in Title 35-A, section 3201, 
subsection 6, 12 or 16. 
§580-B. Cap-and-trade program established 
A carbon dioxide cap-and-trade program, referred to in this section as "the program," 
is established in accordance with this section. 
l. Application. All carbon dioxide budget units are subj ect to the carbon dioxide 
cap-and-trade program, except that a carbon dioxide budget unit is exempt from the 
program if: 
A. It is incapable of producing enough energy to generate 25 megawatts or more of 
electrical output; 
B. Its sale of electricity to any power distribution system is less than 10% of its gross 
electrical generation on an annual basis. In calculating this percentage, all electricity 
transmitted to the regional grid over the facilities of a transmission and distribution 
utility as a result of verifiable conservation and demand-side management initiatives 
or any emergency mandate of the regional transmission organization or lawful order 
of a governmental authority is not included in the calculation of annual sales; or 
C. Fifty percent or more of its annual heat input comes from the combustion of fuels 
other than fossil fuels. 
2. Contingent on initiation of comparable programs. The carbon dioxide cap-
and-trade program commences no earlier than January 1, 2009 and only when other states 
that are participating in the regional greenhouse gas initiative that produce a minimum of 
35,000,000 tons of annual carbon dioxide emissions budget and participate in a wholesale 
electricity market administered and overseen by the regional transmission organization 
have initiated a comparable carbon dioxide cap-and-trade program. 
3. 
Base annual budget. The base annual carbon dioxide emISSIOnS budget is 
established at 5,948,902 tons of carbon dioxide. Beginning with the year 2015, the 
annual carbon dioxide emissions budget must decline by 148,722 tons per year until 2018 
so that the annual carbon dioxide emissions budget for 2018 is 10% below the base 
annual carbon dioxide emissions budget. 
Page J3 - 123LR260S(OI)-1 
4. Rules implementing program. The department shall adopt rules to implement 
the program. The rules must contain: 
A. Provisions for the establishment of a system for the annual assignment, sale and 
distribution of carbon dioxide emissions allowances consistent with the carbon 
dioxide emissions budget; 
B. 
Provisions for the establishment of carbon dioxide budget unit compliance 
obligation accounts; 
C. 
Provisions for the establishment of carbon dioxide offset project allowance 
categories and requirements; 
D. 
Provisions for the implementation of a licensing process for carbon dioxide 
budget units; 
E. Provisions for the establishment of a carbon dioxide emissions and carbon dioxide 
allowance tracking program; and 
F. 
Provisions to manage the carbon dioxide allowance auction deVeloped in 
coordination with other states and jurisdictions in the regional greenhouse gas 
initiative and in a manner that is consistent with provisions adopted by those states 
and jurisdictions and, to the extent feasible, that: 
(1) Ensure close monitoring of allowance transactions in a manner that guards 
against collusion and market manipulation; 
(2) Ensure ongoing authentic price discovery and minimize price volatility; 
(3) Facilitate open participation for bidding to all individuals or entities that meet 
the financial requirements jointly adopted by the participating states; 
( 4) Minimize administration and transaction costs and provide for an open and 
transparent user-friendly system; 
(5) Provide that ongoing monitoring of market activity is undertaken by entities 
that have complete financial independence from any market participant; 
(6) For purposes of civil and criminal enforcement authority under section 349, 
establish a contract term at the time an allowance is purchased at the regional 
auction for violations of market rules jointly adopted by the participating states 
and jurisdictions or through another method of ensuring state jurisdiction; and 
(7) Guarantee that the Attorney General, the Public Utilities Commission and the 
commissioner have access to all auction information and information concerning 
allowance trading activity, including reports provided to the regional organization 
by a market monitor. 
Rules adopted pursuant to this subsection are routine technical rules as defined in Title 5, 
chapter 375, subchapter 2-A. 
5. Enforcement. Violations of this chapter are enforceable, and penalties may be 
imposed in accordance with sections 347-A, 348 and 349. 
6. 
Waiver of enforcement; suspension of compliance obligation. 
The 
commissioner has authority, under the exceptional circumstances set out in paragraphs A 
and B, to waive or suspend requirements of this chapter. 
A. 
If a regional greenhouse gas initiative auction results in price levels for 
allowances that are expected to be excessive, or that are excessive and will result, or 
are expected to result, in immediate and irreparable hann to the operations of a 
carbon dioxide budget unit regulated under this chapter, including but not limited to 
the termination of business at that location, the commissioner may, in consultation 
with the Attorney General and the chair of the Public Utilities Commission, grant 
waivers of enforcement for any violation by an individual regulated carbon dioxide 
budget unit of a requirement of this chapter. 
B. In cases of emergency events that are beyond the control of a carbon dioxide 
budget unit, the commissioner may temporarily suspend the compliance obligation 
under a particular permit until such time as the emergency no longer is in effect. 
The department shall adopt rules for the implementation of this subsection. 
Rules 
adopted pursuant to this subsection are major substantive rules as defined in Title 5, 
chapter 375, subchapter 2-A. 
7. 
Allocation of carbon dioxide emIssIons allowances. 
The department shall 
allocate 100% of the annual carbon dioxide emissions allowances for public benefit to 
produce funds for carbon reduction and energy conservation, as specified in this chapter. 
Except as provided in subsection 8, the department shall sell the carbon dioxide emissions 
allowances at public auction, in accordance with rules adopted under subsection 4. 
8. Combined heat and power incentive. The department shall set aside a portion of 
the State's annual carbon dioxide emissions allowances in an allowance account for 
carbon dioxide budget units that are combined heat and power units and are located at 
integrated manufacturing facilities. 
The department shall use these allowances for 
existing carbon dioxide budget units to reflect only that portion of each unit's emissions 
related to electricity generated at a carbon dioxide budget unit that is not transmitted 
across the facilities of a transmission and distributioJl utility. 
The department shall adopt rules setting forth the proper treatment of any combined heat 
and power units that commence operations after July 1, 2007. Rules adopted pursuant to 
this subsection are routine technical rules as defined in Title 5, chapter 375, subchaper 2-
A. 
9. Integrated manufacturing facilities. This subsection governs the treatment of 
integrated manufacturing facilities under this chapter. 
A. The compliance obligation for a carbon dioxide budget unit at an integrated 
manufacturing facility is the carbon dioxide emissions associated with electricity 
resulting from the combustion of fossil fuels and transmitted over the facilities of a 
transmission and distribution utility. 
Absent any contractual arrangement to the 
contrary, the department shall presume that electricity from sources other than carbon 
dioxide budget units is transmitted first. The department shall adopt rules governing 
the compliance obligation for electricity generated at integrated manufacturing 
facilities and transmitted over the facilities of a transmission and distribution utility. 
B. The department shall establish the Integrated Manufacturing Facility Retirement 
Account to ensure proper accounting for carbon emissions from the generation of 
electricity and heat from fossil fuels at integrated manufacturing facilities. 
C. The purchase of electricity pursuant to a long-term electricity contract renders the 
purchaser an owner of a carbon dioxide budget unit for purposes of this chapter and 
obligates the owner to obtain the carbon dioxide emissions allowances applicable to 
the compliance obligation associated with the carbon dioxide budget unit. 
For 
purposes of this paragraph, "owner" means: 
(1) The holder of any portion of the legal or equitable title in a carbon dioxide 
budget unit; 
(2) The holder of a leasehold interest in a carbon dioxide budget unit, other than 
a passive lessor or a person who has an equitable interest through such lessor 
whose rental payments are not based, either directly or indirectly, upon the 
revenues or income from that unit; or 
(3) 
A purchaser of electricity from a carbon dioxide budget unit under a 
contractual arrangement for greater than a 3-year period. 
If no person has title to the electricity under subparagraphs (1) to (3), the owner is 
anv holder of any portion of the legal or equitable title to the output of a carbon 
dioxide budget unit or any holder of a leasehold interest in such a unit. 
Rules adopted pursuant to this subsection are routine technical rules as defined in Title 5, 
chapter 375, subchapter 2-A. 
10. Annual report. The department and the Public Utilities Commission shall 
submit a joint report to the joint standing committees of the Legislature having 
jurisdiction over natural resources matters and utilities and energy matters by March 15, 
2009 and each year thereafter. The report must assess and address: 
A. The reductions of greenhouse gas emissions from carbon dioxide budget units, 
projects funded by the Energy and Carbon Savings Trust pursuant to Title 35-A, 
section 3211-E and carbon dioxide emissions offset projects; 
B. The improvements in overall carbon dioxide emissions and energy efficiency 
from sources that emit greenhouse gases including electrical generation and fossil 
fuel fired units; 
C. The maximization of savings through systemic energy improvements statewide; 
D. 
Research and support of new carbon dioxide offset allowance categories for 
development in the State; 
E. Management and cost-effectiveness of the State's energy conservation and carbon 
reduction programs and efforts, including projects funded by the Energy and Carbon 
Savings Trust established pursuant to Title 35-A, section 3211-E; and 
F. The extent to which funds from the Energy and Carbon Savings Trust established 
pursuant to Title 35-A, section 3211-E serve customers from all classes of the State's 
transmission and distribution utilities. 
The department and the Public Utilities Commission may include in the report any 
proposed changes to the cap-and-trade program established under this chapter. 
The joint standing committees of the Legislature having jurisdiction over natural 
resources matters and utilities and energy matters may report out legislation relating to 
the carbon dioxide cap-and-trade program. 
§580-:C. Construction; absence of limitation 
Nothing in this chapter may be construed to limit: 
1. Withdrawal by State. The ability of this State to withdraw from the regional 
greenhouse gas initiative; or 
2. 
Categories of carbon dioxide emissions offset projects. The categories of 
carbon dioxide emissions offset projects that may qualify under agreements among the 
states and jurisdictions participating in the regional greenhouse gas initiative, particularly 
with respect to additional categories that take advantage of the geographical, economic or 
natural resources of this State. 
Sec. 14. Major substantive rule making. Major substantive rules provisionally 
adopted pursuant to the Maine Revised Statutes, Title 35-A, sections 3211-0 and 3211-E 
must be submitted to the Legislature by January 15, 2008 for review by the Joint Standing 
Committee on Utilities and Energy during the Second Regular Session of the 123rd 
Legislature. The joint standing committee is authorized to submit legislation to the 
administration of the Maine Energy Conservation Board and the Energy and Carbon 
Savings Trust. 
Sec. 15. Ceiling on energy efficiency spending. Eight months prior to the 
expiration of the first compliance obligation period established under rules of the 
Department of Environmental Protection pursuant to the Maine Revised Statutes, Title 
38, section 580-B, the Public Utilities Commission, following the receipt of public input 
and based on an analysis of the efficacy of energy efficiency, rebates or other funded 
purposes in reducing energy costs, shall provide its recommendation to the joint standing 
committee of the Legislature having jurisdiction over utilities and energy matters 
regarding changing or removing the energy efficiency spending ceiling established in 
Title 35-A, section 321l-E, subsection 5. 
Sec. 16. Report; establishment of civil and criminal liability. Because 
orderly operation of the market for carbon dioxide allowances and reasonable availability 
and pricing of these allowances are an essential part of the State's air quality laws and 
programs, the Department of Environmental Protection shall consult with the Public 
Utilities Commission, the Attorney General and interested parties regarding the 
establishment of civil and criminal liability for disruption of the carbon dioxide allowance 
market established in the Maine Revised Statutes, Title 38, chapter 3-B. For purposes of 
this section, "disruption" includes the purchase of allowances in a volume that affects the 
orderly operation of the market or the reasonable availability of allowances or their price. 
The department shall submit a report of its findings by January 15, 2008 to the Joint 
I 
Standing Committee on Natural Resources and the Joint Standing Committee on Utilities 
and Energy. After receipt and review of the report, either committee or both committees 
may submit legislation on this issue to the Second Regular Session of the 123rd 
Legislature. 
Sec. 17. Staggered terms. Notwithstanding the Maine Revised Statutes, Title 35-
A, section 3211-D, subsection 3, of the original appointments of voting members of the 
Maine Energy Conservation Board, other than the members who are trustees of the 
Energy and Carbon Savings Trust, one member serves an initial term of one year, one 
member serves an initial term of 2 years and one member serves an initial term of 3 years. 
lOAn initial term of one or 2 years may not be considered a full term for purposes of 
limiting the number of terms for which a member may serve. 
Sec. 18. Rulemaking; legislative direction. 
I. Because the State has a number of integrated manufacturing facilities that produce 
electricity and heat or steam for use in manufacturing other products and that may sell 
electricity transmitted on the electric grid, rules adopted by the Department of 
Environmental Protection pursuant to the Maine Revised Statutes, Title 38, chapter 3-B 
must be designed in a way that recognizes the highly efficient production and 
consumption of energy at these facilities, prevents harm from regulatory uncertainty and 
unintended or unnecessary effects on these facilities and ensures their availability, as 
needed from time to time, to enhance the reliability of the electric grid serving this State. 
2. Because it is the Legislature's intent that all revenues derived from the sale of 
carbon dioxide emissions allowances be used for high-efficiency electricity and fossil 
fuel conservation to reduce greenhouse gases and minimize the costs of carbon reduction 
to Maine electric consumers, rules adopted by the Public Utilities Commission to 
implement the Energy and Carbon Savings Trust under Title 35-A, section 3211-E must 
be designed to ensure that proceeds deposited in the trust accruing from the sale of carbon 
dioxide emissions allowances be expended solely for energy efficiency and related 
improvements that serve to enhance the reliability of the State's electric grid. 
3. Rules adopted by the Department of Environmental Protection pursuant to Title 
38, chapter 3-B must establish a system under which proceeds from the sale of carbon 
dioxide emissions allowances may be returned to the electric customers as direct credits 
on their bills at times of heightened price pressure in regional allowance markets, thereby 
ameliorating grid instability at those times. 
4. Because certain carbon dioxide budget units have substantially reduced carbon 
dioxide emissions from their facilities prior to the effective date of this Act and operate as 
highly efficient resources, rules adopted by the Department of Environmental Protection 
pursuant to Title 38, chapter 3-B must require such carbon dioxide budget units to meet 
only the compliance obligation for that portion of power sold to the grid and require that 
allowances associated with such units' so-called "behind-the-meter" electrical generation 
must be retired from the system. Such rules must be designed to recognize that full 
operation of generating units in existence on the effective date of this Act, including 
highly efficient cogeneration facilities, is essential for the stability of the State's electric 
grid at times of peak demand for electricity. 
Sec. 19. Legislative findings, intent and declaration of purpose. 
1. The Legislature finds that the stabilization and the reduction of carbon dioxide 
emissions is mandated by and consistent with its duty to protect the health, safety and 
welfare of its citizens, enhance and maintain the quality of the environment, conserve 
natural resources and prevent air, water and land pollution. The Legislature further finds 
that the development of a program aimed at stabilizing and then reducing carbon dioxide 
emissions through a carbon dioxide cap-and-trade program is consistent with the state 
climate action plan and the expressed will of the Legislature that the State participate in 
regional efforts to reduce emissions of greenhouse gases. 
2. The purpose of the cap-and-trade program authorized by this Act is to ensure that 
real, verifiable, enforceable and permanent greenhouse gas emissions reductions occur at 
the lowest cost both to businesses operating within the State and to the citizens of the 
State. It is the intent of the Legislature that the statewide carbon dioxide cap-and-trade 
program be consistent with the carbon dioxide emissions budget under the Regional 
Greenhouse Gas Initiative Act of 2007. 
3. The Legislature further finds that it is essential to the well-being of the citizens 
and economy of the State and to the air quality laws of the State that an orderly and fair 
market be established for the trading of carbon dioxide emissions allowances. It is the 
intent of the Legislature to use every instrumentality of the State to protect its citizens and 
. businesses from any malfunction or manipulation of such a market. 
4. 
The Legislature further finds that the Energy and Carbon Savings Trust, 
established by this Act, depends on the unimpaired operation of the trust, and that 
contractors and providers would be irreparably harmed by any interference with the trust, 
its revenues or its contractors and providers by any entity, including the State. 
5. The Legislature further finds that achieving the carbon reduction objectives of the 
Regional Greenhouse Gas Initiative Act of 2007 requires fulfillment of the intent that 
electricity generated at a carbon dioxide budget unit, as defined in the Maine Revised 
Statutes, Title 38, section 580-A, and transmitted over the facilities of a transmission and 
distribution utility be regulated for associated carbon emissions. 
6. The Legislature further finds that, in enacting federal energy legislation in 2005, 
the Congress of the United States specifically recognized the authority of states to protect 
electric grid reliability through, among other things, electricity conservation efforts in 
periods of peak electric demand and that such state authority is not preempted by federal 
law. 
SUMMARY 
This bill establishes a statewide carbon dioxide cap-and-trade program for fossil fuel 
fired electrical generating units within the State that have a nameplate capacity equal to or 
greater than 25 megawatts and requires the Department of Environmental Protection to 
develop carbon dioxide cap-and-trade rules that ensure credible greenhouse gas emissions 
reductions. The bill also authorizes the Department of Environmental Protection to adopt 
major substantive rules regarding combined heat and power incentives and the Public 
Utilities Commission to adopt major substantive rules regarding the establishment and 
administration of the Maine Energy Conservation Board. The bill also authorizes the sale 
of carbon dioxide emissions allowances for the benefit of consumers and the creation of 
the Energy and Carbon Savings Trust.