An Act To Authorize the State's Participation in the Regional Greenhouse Gas Initiative
Maine Legislature, Session 123, LD 1090
Committee: Natural Resources
Sponsors: KOFFMAN, BARTLETT, BERRY, BLISS, BRAUTIGAM, CONOVER, CUMMINGS, DUCHESNE, EATON, EBERLE, HINCK, MARLEY, MIRAMANT, PENDLETON, PINGREE, PIOTTI, SIMPSON, TREAT, WATSON, BENOIT, DAMON, DOW, EDMONDS, MARTIN, MILLS, TURNER

Legislative Document 
No. 1090 
H.P.808 
House of Representatives, March 6, 2007 
An Act To Authorize the State's Participation in the Regional 
Greenhouse Gas Initiative 
Reference to the Committee on Natural Resources suggested and ordered printed. 
Presented by Representative KOFFMAN of Bar Harbor. 
Cosponsored by Senator BARTLETT of Cumberland and 
l1/~frJ·m~ 
MILLICENT M. MacFARLAND 
Clerk 
Representatives: BERRY of Bowdoinham, BLISS of South Portland, BRAUTIGAM of 
Falmouth, CONOVER of Oakland, Speaker CUMMINGS of Portland, DUCHESNE of 
Hudson, EATON of Sullivan, EBERLE of South Portland, HINCK of Portland, MARLEY of 
Portland, MIRAMANT of Camden, PENDLETON of Scarborough, PINGREE of North 
Haven, PIOTTI of Unity, SIMPSON of Auburn, TREAT of Farmingdale, WATSON of Bath, 
Senators: BENOIT of Sagadahoc, DAMON of Hancock, DOW of Lincoln, President 
EDMONDS of Cumberland, MARTIN of Aroostook, MILLS of Somerset, TURNER of 
Cumberland. 
Printed on recyc led puper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 38 MRSA c. 3-A, as amended, is repealed. 
Sec. 2. 38 MRSA c. 3-B is enacted to read: 
CHAPTER3-B 
REGIONAL GREENHOUSE GAS INITIATIVE 
§579-A. Regional greenhouse gas initiative 
1. Definitions. As used in this chapter, unless the context otherwise indicates, the 
following terms have the following meanings. 
A. "Administrative costs" means costs of the commission and department that are 
expended pursuant to and associated with the implementation of this section, 
including, but not limited to, costs of program planning and evaluation, securing 
necessary expertise, contract formation and administration and monitoring and 
enforcing contractual obligations. 
B. "Allowance" means an authorization to emit a fixed amount of carbon dioxide. 
C. "Cap and trade program" means a policy approach for controlling emissions from 
a group of emitting sources, such as electric generating facilities, by: 
(1) Setting an overall cap or maximum amount of emissions from all regulated 
sources per compliance period, rather than regulating each source individually; 
(2) Creating and issuing a certain number of authorizations to emit in the form of 
allowances and making them available to the marketplace through a sale by 
auction; 
(3) Limiting the total number of allowances made available in any compliance 
period; and 
(4) Requiring regulated sources to completely and accurately measure and report 
all covered emissions and tum in an equal number of allowances as emissions at 
the end ofthe compliance period. 
D. "Carbon" means carbon dioxide emissions. 
E. "Carbon cap" or "cap" means a cap on carbon. 
F. "Commission" means the Public Utilities Commission. 
G. "Covered facility" means any electric power generating unit that is subject to 
regulation pursuant to the initiative memorandum. 
H. 
"Electric power sector" means the 4 classes of consumers of electric power: 
industrial; business and commercial; municipal and institutional; and residential and 
low-income residential. 
I. 
"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. 
J. "Regional Greenhouse Gas Initiative" or "initiative" means the initiative referred 
to in the Memorandum of Understanding and the corresponding model rule. 
K. 
"Service provider" means a public or private provider of energy efficiency, 
conservation, demand-side or carbon reduction management services or an entity 
selected by the commission to contract with such providers or otherwise arrange the 
delivery of energy efficiency or carbon reduction programs. 
I I 
2. Cap and trade pro~ram. There is established a cap and trade program. 
A. By rule, the department, in consultation with the commission, shall establish a 
carbon dioxide cap and trade program to limit and then reduce the total carbon 
emissions released by electric generating stations that provide electric power to the 
State's utilities and end-use consumers. 
B. 
The department's rules establishing a carbon cap and trade program must be 
designed to comply with the Regional Greenhouse Gas Initiative and permit the 
holders of allowances to trade them in a regional market to be established through the 
initiative. 
3. Annual carbon bud~ets and allocation of tradable carbon allowances. The 
department shall, by rule, establish annual budgets for total emissions of carbon 
associated with the electric power sector in the State consistent with the initiative 
memorandum. 
A. In establishing annual carbon emission budgets, the department may not exceed 
the State's maximum allotment of annual allowances pursuant to the initiative 
memorandum, and shall reduce the budget if the total estimated annual estimated 
emissions for the budget year is 250 or more tons below the state cap. Any such 
reduction in the annual emission budget may be made contingent upon continued 
idling or retirement of a covered facility during the budget year. The department may 
make further reductions in the State's annual cap on a reciprocal basis with the other 
I 
states participating in the initiative. 
B. The department shall retire allowances to account for voluntary renewable energy 
sales within each control period within the State, consistent with the initiative model 
rule. 
C. The department shall annually convey 100% of allowances establ ished pursuant 
to this section into the Energy Efficiency and Carbon Reduction Trust Account 
established pursuant to subsection 6. 
4. Auction desi~n. The following provisions apply to the auction of allowances. 
A. Any tradable electric power sector carbon allowances established pursuant to this 
section must be sold through a public auction process open to all who wish to 
participate. 
I 
B. The commission, in consultation with the department, shall detennine and specify 
the method of auctioning allowances, including the design of the auction process, the 
entity that may conduct and manage the auction and the timing of auctions in any 
year. The auction process must be designed to mitigate the risk of market power and 
advance the purposes of this section. 
C. 
The commission, in consultation with the department, shall engage an 
independent contractor, consumer trustee or other entity experienced in auction 
design and management or contract with a consumer trustee or other entity 
detennined by the commission to be qualified to conduct auctions in a manner that 
ensures the efficiency of the auction process. The determination of an independent 
I 1 
contractor, consumer trustee or other entity must include an open and public request 
for proposals from parties seeking to conduct the auctions. Any person or entity 
selected by the commission to conduct the auctions may be reimbursed only for 
reasonable costs of administering the program, as determined by the commission. 
The independent contractor, consumer trustee or other entity is authorized to receive, 
hold and sell allowances for the long-term benefits of consumers. 
D. All proceeds from the sale of allowances, minus the administrative costs of the 
auction, must be deposited into the trust account. 
E. The commission shall require an annual report describing the auction and its 
results from the independent contractor, consumer trustee or other entity describing 
I 
the auction and its results. The report must be made available to the public and be 
submitted to the joint standing committees of the Legislature having jurisdiction over 
natural resources matters and utilities and energy matters. 
5. Energy Efficiency and Carbon Reduction Trust Account. The commission 
shall establish a trust account pursuant to this subsection. 
A. 
The commission shall establish the Energy Efficiency and Carbon Reduction 
Trust Account, referred to as "the trust account" in this section, to receive, hold, bank 
and sell tradable allowances and any revenue received from the sale of those 
allowances. 
B. 
All allowances and funds in the trust account may be used only for energy 
efficiency and programs that reduce the State's emissions of carbon dioxide and other 
greenhouse gases, except that: 
(1) Up to 5% of total funds may be used for costs of administration of this 
section; and 
(2) Up to 2% of total funds may be used for the administrative costs of the 
advisory board established in subsection 7, paragraph C. 
The commission may establish separate subaccounts for each of these purposes. 
C. Any interest earned on funds in the trust account must be credited to the trust 
account. Funds not spent in any fiscal year remain in the trust account to be used for 
future energy efficiency and carbon reduction programs. 
D. All funds collected pursuant to this section, whether held by the commission or 
the auctioneer or their agents, may be used only for the purposes of benefiting electric 
power consumers, reducing energy consumption and lowering the State's greenhouse 
gas emission profile. 
E. In the event funds are not expended or contracted for expenditure within 4 years 
of being deposited, the commission shall return the value of those funds to electric 
power consumers in a manner consistent with the costs of the program paid by each 
electric power sector for the year the funds were collected. 
6. 
Ener!!V efficiency and carbon reduction prOl!ram. 
The commission shall 
periodically develop and implement an energy efficiency and carbon reduction program 
pursuant to this subsection. 
A. 
In order to provide the maximum long-term benefit to the State's energy 
consumers and to achieve the greatest possible reductions in emissions of carbon and 
other gases that contribute to global warming, the commission, in consultation with 
the department, shall periodically develop and, to the extent of available funds, 
implement a statewide energy efficiency and carbon reduction program. 
To the 
maximum extent practicable, the program must: 
(1) 
Reduce the State's emissions of greenhouse gases consistent with the 
reduction goals of this chapter; 
(2) Benefit the State's energy consumers; 
(3) Build upon existing regulatory and administrative structures and programs 
that lower energy costs, improve energy efficiency or lower the State's carbon 
emissions profile; 
(4) Provide support for new emissions-reducing activities or projects that would 
not occur under existing programs or investments; 
(5) Support programs and activities that do not pose a significant risk to human 
health and the environment; 
(6) Fairly balance and distribute proceeds from the public sale of allowances in 
accord with the purposes ofthis section; and 
(7) Foster development and deployment of clean energy technologies and carbon 
abatement technologies that have significant carbon reduction potential. 
B. To the extent practicable, the energy efficiency and carbon reduction program 
must be coordinated and integrated with other energy-related programs of the State. 
C. To carry out its responsibilities pursuant to this section, the commission shall 
present an annual program plan to an advisory board composed of persons with 
relevant expertise and experience, including persons representing consumers in each 
electric power sector, environmental interest groups, public health groups, the Office 
of the Public Advocate, the University of Maine or other state academic institution, 
the department and the Energy Resources Council. 
Electrical generators, energy 
suppliers and utilities may be provided with one or more ex officio, nonvoting seats 
on the board. The commission may contract with appropriate entities with relevant 
expertise and experience to assist the board. The commission may merge the duties 
of the advisory board with other activities of the commission. 
I 
D. The commission shan hold at least one public hearing and invite, accept, review 
and consider comments and suggestions from interested parties prior to adopting or 
substantiany revising the energy efficiency and carbon reduction program. 
7. Implementation. The initiative must be implemented in accordance with the 
following provisions. 
A. In recognition of the superior cost and greenhouse gas reduction benefits resulting 
from accelerated and sustained investments in cost-effective energy efficiency, 
energy conservation and low-cost, low-carbon electric power system investments, the 
commission shall place a high priority upon delivery of cost-effective energy 
efficiency, conservation and demand-side management programs. 
To the extent 
funds are expended on this priority, the commission shall. to the extent practicable, 
balance and distribute proceeds from the public sale of anowances in approximate 
proportion to the cumulative program costs paid by each electric power sector, with 
costs to be averaged over a period of 3 or more years. 
B. The commission shall provide for competitive solicitations of targeted energy 
efficiency and greenhouse gas emissions reduction delivery programs as part of its 
overall development of programs under this chapter. The commission may arrange 
the delivery of energy efficiency and emission reduction programs by contracting 
with service providers. The commission shall select service providers in accordance 
with this paragraph. 
I 
(I) The commission shan select service providers through a competitive bidding 
process, except that: 
(a) The commission may select a service provider for one or more 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 programs and is consistent with the objectives of this 
chapter; and 
(b) For the delivery of energy efficiency and conservation programs to low-
income and residential consumers, the commission, without employing a 
competitive bidding process, may use 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. 
(2) To the extent practicable, the commission shall encourage the development 
of resources, infrastructure and skins within the State by giving preference to in-
state service providers. 
C. 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 
I 
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. 
8. Effect on other responsibilities. The responsibilities created by this section are 
in ~QQition_Jo all other responsibilities imposed by an.Y-.Qtb.!~I.J!!.~OL[.!lJe~-'m.iJ!H!Y_H91 
dimiQish or reduce ill1Y..P.0wer or authority of the commission or department including the 
authority to adopt standards and rules necessary for the State to join and fully participate 
in any multistate program, at any stage in the development and implementation of such a 
program, intended to control emissions of carbon dioxide or other substances that are 
determined by the department to be damaging or altering the climate. 
9. Rules. The commission and department shall each adopt rules necessary to 
implement this section. Rules adopted under this subsection are routine technical rules as 
defined in Title 5, chapter 375, subchapter 2-A. 
10. Report. The commission and department shall report by January 1st of each 
year to the joint standing committees of the Legislature having jurisdiction over natural 
resources matters and utilities and energy matters. The report must include a description 
of the implementation and operation of the initiative, the revenues collected and the 
expenditures made under this section, the statewide energy efficiency and carbon 
reduction programs and any recommendations for changes to law relating to the State's 
energy conservation or carbon reduction efforts. 
Sec. 3. Findings. The Legislature finds that: 
I. There is a growing scientific consensus that the increased anthropogenic emissions 
of greenhouse gases are enhancing the natural greenhouse effect, resulting in changes in 
the earth's climate, and that these changes in climate pose serious risks to human health 
and terrestrial and aquatic ecosystems globally, regionally and in the State; 
2. A carbon constraint on fossil fuel-fired electricity generation and the development 
of a carbon emissions cap and trade program will create a strong incentive for the 
creation and deployment of more efficient fuel-burning technologies, renewable resources 
and end-use efficiency resources and will lead to lower carbon emissions and lower 
dependence on imported fossil fuels; 
3. Absent federal action, some states are taking actions to work regionally to reduce 
electric power sector carbon emissions; 
4. The State has joined with these other states to design the Regional Greenhouse 
I 
Gas Initiative, and, in 2005, the Governor signed a memorandum of understanding 
signaling the State's intention to participate in the initiative; 
5. The State's participation in the initiative is a crucial and necessary step to meet the 
greenhouse gas emission reduction goals set forth in this Act; 
6. It is crucial to maximize the State's contribution to lowering carbon emissions 
while minimizing impacts on electric system reliability and unnecessary costs to the 
State's electric power and energy consumers; 
7. The accelerated deployment of low-cost energy efficiency technologies and the 
strategic use of low-carbon and zero-carbon generation are the best means to achieve 
these goals; and 
I 
8. It is crucial that funds made available from operation of a regional carbon cap and 
trade program be devoted to the benefit of the State's energy consumers through 
investments in a strategic portfolio of energy efficiency and low-carbon energy resources. 
SUMMARY 
This bill authorizes the State's participation in the Regional Greenhouse Gas 
Initiative. It establishes a carbon dioxide cap and trade program and establishes annual 
budgets for emissions of carbon associated with the electric power sector in the State.