An Act To Protect Maine's Biomass and Forest Products Industries by Allowing Biomass Generators To Enter into Short-term Contracts
Maine Legislature, Session 125, LD 1706
Committee: Energy, Utilities and Technology
Sponsors: FITTS, WILLETTE
Amends: 35-A MRSA §3602, 35-A MRSA §3603, 35-A MRSA §3604-A

Legislative Document 
No. 1706 
H.P. 1258 
House of Representatives, December 23, 2011 
An Act To Protect Maine's Biomass and Forest Products Industries 
by Allowing Biomass Generators To Enter into Short-term 
Contracts 
Approved for introduction by a majority of the Legislative Council pursuant to Joint Rule 
203. 
Received by the Clerk of the House on December 21, 2011.  Referred to the Committee on 
Energy, Utilities and Technology pursuant to Joint Rule 308.2 and ordered printed pursuant to 
Joint Rule 401. 
HEATHER J.R. PRIEST 
Clerk 
Presented by Representative FITTS of Pittsfield. 
Cosponsored by Representative: WILLETTE of Mapleton. 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  35-A MRSA §3602, sub-§4-A is enacted to read: 
4-A.  Qualifying biomass generator.  "Qualifying biomass generator" means a 
stand-alone electricity generating facility whose total power production capacity does not 
exceed 100 megawatts, that is fueled by wood or wood waste and that meets the 
eligibility requirements of section 3603, subsection 3, paragraph F. 
Sec. 2.  35-A MRSA §3602, sub-§5, ¶¶E and F, as enacted by PL 2009, c. 329, 
Pt. A, §4, are amended to read: 
E.  A nonprofit corporation, organized under the laws of the State, including a unit 
owners owner's association organized under Title 33, section 1603-101; or 
F.  A business corporation, organized under the laws of the State, at least 51% of 
which is owned by one or more residents of the State.; or 
Sec. 3.  35-A MRSA §3602, sub-§5, ¶G is enacted to read: 
G.  A business corporation that owns a qualifying biomass generator. 
Sec. 4.  35-A MRSA §3603, sub-§2, as enacted by PL 2009, c. 329, Pt. A, §4, is 
amended to read: 
2.  Program scope; limits on generating capacity. The commission shall limit 
participation in the program in accordance with this subsection. 
A.  The installed generating capacity of a program participant may not exceed 10 
megawatts. 
B.  The total installed generating capacity of all program participants combined may 
not exceed 50 megawatts. 
C.  The total installed generating capacity of program participants within the service 
territory of a single investor-owned transmission and distribution utility may not 
exceed 25 megawatts, unless a higher capacity limit is authorized by the utility and 
approved by the commission. The commission shall determine a generating capacity 
limit for the service territory of each investor-owned transmission and distribution 
utility at the outset of the program, taking into consideration the utility's electric load 
and share of electricity market in the State. The commission may modify the 
generating capacity limit under this paragraph based on program experience. 
D.  Of the 50-megawatt limit on total generating capacity under paragraph B, 10 
megawatts must be reserved at the outset of the program for program participants 
that: 
(1)  Have an installed generating capacity of less than 100 kilowatts; or 
(2)  Are located in the service territory of a consumer-owned transmission and 
distribution utility. 
The commission may modify the amount of generating capacity reserved under this 
paragraph based on program experience. 
E.  The total installed generating capacity of program participants that receive the 
renewable energy credit multiplier incentive under section 3605 may not exceed 10 
megawatts. 
This subsection does not apply to qualifying biomass generators. 
Sec. 5.  35-A MRSA §3603, sub-§3, ¶¶D and E, as enacted by PL 2009, c. 329, 
Pt. A, §4, are amended to read: 
D.  Have Except for qualifying biomass generators, have an in-service date after 
September 1, 2009; and 
E.  Satisfy Except for qualifying biomass generators, satisfy the limits on generating 
capacity established in subsection 2.; and 
Sec. 6.  35-A MRSA §3603, sub-§3, ¶F is enacted to read: 
F.  In the case of a qualifying biomass generator, demonstrate that the qualifying 
biomass generator creates one or more of the following benefits to the community 
and region in which the qualifying biomass generator operates: 
(1)  Jobs; 
(2)  Wood waste disposal; 
(3)  Local transmission and distribution system voltage support; or 
(4)  Support to the local economy. 
Sec. 7.  35-A MRSA §3603, sub-§4, as enacted by PL 2009, c. 329, Pt. A, §4, is 
amended to read: 
4.  Program incentives. Subject to the requirements of subsection 2, a program 
participant may elect one of the following program incentives: 
A.  A long-term contract for community-based renewable energy pursuant to section 
3604; or 
B.  The renewable energy credit multiplier pursuant to section 3605. 
If the program participant is a qualifying biomass generator, it is not eligible for the 
incentives described in paragraphs A and B but is eligible for a short-term contract for 
community-based renewable energy pursuant to section 3604-A. 
Sec. 8.  35-A MRSA §3604-A is enacted to read: 
§3604-A.  Short-term contracts for community-based renewable energy 
Short-term contracts with qualifying biomass generators for community-based 
renewable energy are governed by this section.  As used in this section, "short-term 
contract" means a contract having a term of no longer than 3 years. 
1. 
Investor-owned 
transmission 
and 
distribution 
utilities; 
required 
participation.  Notwithstanding section 3204, the commission shall direct investor-
owned transmission and distribution utilities to enter into short-term contracts with 
qualifying biomass generators located within the service territory of the utility for energy, 
capacity resources or renewable energy credits.  The commission shall direct investor-
owned transmission and distribution utilities to enter into contracts under this subsection 
only as agents for their customers and only in accordance with this section.  An 
investor-owned transmission and distribution utility shall sell energy, capacity resources 
or renewable energy credits purchased pursuant to this subsection into the wholesale 
electricity market or take other action relative to such energy, capacity resources or 
renewable energy credits as directed by the commission. 
2.  Sale of energy; contract procedures.  Energy, capacity resources or renewable 
energy credits contracted in short-term contracts pursuant to this section may be sold into 
the wholesale electricity market in conjunction with solicitations for standard-offer 
supply bids under section 3212 or solicitations for green power offer bids under section 
3212-A.  To the greatest extent possible, the commission shall develop procedures for 
short-term contracts for transmission and distribution utilities under this section having 
the same legal and financial effect as the procedures used for standard-offer service 
pursuant to section 3212 for transmission and distribution utilities. 
3.  Contract pricing; cost containment.  The commission shall ensure that in any 
contract entered into pursuant to this section the price for the capacity resources and 
renewable energy credits sold by a qualifying biomass generator does not exceed the 
projected market price for capacity resources and renewable energy credits at the time of 
delivery.  The average price of energy per kilowatt-hour within each contract year may 
not exceed the lesser of:  
A.  A rate that, together with revenues from any sales of capacity resources and 
renewable energy credits, is sufficient for the qualifying biomass generator to be 
financially capable of normal operations; and 
B.  Two cents per kilowatt-hour over the projected wholesale market price of energy 
at the time of delivery. 
Projected market prices may be determined by the commission at the time a contract is 
authorized, using recognized and reasonable industry forecasting methodologies. 
4.  Contract negotiation; large generators.  A qualifying biomass generator with a 
generating capacity of at least one megawatt may submit proposals to the commission for 
short-term contracts.  The commission shall review and approve a proposal if the 
commission determines that a short-term contract is necessary in order to ensure that the 
qualifying biomass generator is financially capable of normal operations and is able to 
achieve the benefits described in section 3603, subsection 3, paragraph F.  The 
commission shall negotiate short-term contracts with a qualifying biomass generator that 
submits an approved proposal on terms that are commercially reasonable and that commit 
all parties to commercially reasonable behavior. 
5.  Cost recovery.  The commission shall ensure that a transmission and distribution 
utility recovers in rates all costs of contracts entered into under this section, including, but 
not limited to, any effects on the utility's costs of capital.  A price differential existing at 
any time during the term of the contract between the contract price and the prevailing 
market price at which the energy is sold must be reflected in rates and may not be 
considered to be imprudent. 
6.  Contract payments.  Contracts for capacity resources and related energy entered 
into pursuant to this section must provide that payments will be made only after 
contracted amounts of energy have been provided. 
7.  Ratepayer protection.  The commission shall ensure that mechanisms are 
established to provide protections for ratepayers over the term of contracts entered into 
pursuant to this section. 
SUMMARY 
This bill authorizes the Public Utilities Commission to enter into short-term contracts 
with qualifying biomass generators.  This bill limits the price for the capacity and 
renewable energy credits generated by a qualifying biomass generator to the projected 
market price at the time of delivery.  The average price of energy generated by a 
qualifying biomass generator may not exceed the lesser of a rate that, together with 
revenues from any sales of capacity resources and renewable energy credits, is sufficient 
for the qualifying biomass generator to be financially capable of normal operations, and 
2¢ per kilowatt-hour over the projected wholesale market price of energy at the time of 
delivery.