An Act To Allow the Public Utilities Commission To Contract for Liquefied Natural Gas Storage and Distribution
Maine Legislature, Session 127, LD 0881
Committee Amendment CA_A_H600 (House)
Amends: 35-A MRSA §1902, 35-A MRSA §1903, 35-A MRSA §1904

COMMITTEE AMENDMENT" A" to H.P. 600, L.D. 881, Bill, "An Act To Allow 
the Public Utilities Commission To Contract for Liquefied Natural Gas Storage and 
Distribution" 
Amend the bill by striking out everything after the enacting clause and before the 
summary and inserting the following: 
'Sec. 1. 35-A MRSA §1902, sub-§2, as enacted by PL 2013, c. 369, Pt. B, §1, is 
amended to read: 
2. Energy cost reduction contract. "Energy cost reduction contract" er "eeatmet" 
means a contract executed in accordance with this chapter to procure capacity on a 
natural gas transmission pipeline, including, when applicable, compression capacity. 
Sec. 2. 35-A MRSA §1902, sub-§§3-A, 3-B and 3-C are enacted to read: 
3-A. Liquefied natural gas storage capacity. 
"Liquefied natural gas storage 
capacity" means storage capacity for liquefied natural gas installed in the State on or after 
January 1, 2016 that will benefit the State's energy consumers during times of regional 
supply constraint due to capacity limitations of interstate or intrastate pipelines or local 
distribution systems. 
3-B. Physical energy storage capacity. "Physical energy storage capacity" means 
liquefied natural gas storage capacity. 
3-C. Physical energy storage contract. "Physical energy storage contract" means a 
contract executed in accordance with this chapter for physical energy storage capacity. 
Sec. 3. 35-A MRSA §1903, sub-§§1 and 2, as enacted by PL 2013, c. 369, Pt. 
B, § 1, are amended to read: 
1. Electricity prices. It is in the public interest to decrease prices of electricity and 
natural gas for consumers in this State; aBa 
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COMMITTEE AMENDMENT "A "to H.P. 600, L.D. 881 
2. Natural gas expansion. The expansion of natural gas transmission capacity into 
this State and other states in the ISO-NE region could result in lower natural gas prices 
and, by extension, lower electricity prices for consumers in this State~; and 
Sec. 4. 35-A MRSA §1903, sub-§3 is enacted to read: 
3. 
Storage. 
Liguefied natural gas storage located in this State, under certain 
circumstances, may offer the potential to decrease energy costs by providing a hedge 
against gas price volatility caused by gas supply constraints, which in turn may lower 
natural gas prices and, by extension, lower electricity prices for consumers in this State. 
Sec. 5. 35-A MRSA §1904, as amended by PL 2015, c. 329, Pt. E, §1, is further 
amended to read: 
§1904. Energy cost reduction contracts; physical energy storage contracts 
The commission in consultation with the Public Advocate and the Governor's Energy 
Office may execute an energy cost reduction contract or a physical energy storage 
contract, or both, in accordance with this section. In no event may the commission 
execute energy cost reduction contracts for the transmission of greater than a cumulative 
total of 200,000,000 cubic feet of natural gas per day or for a tetal am0lffl.t that e:irneeas 
$75,QQQ,QQQ anftually. In no event may the commission execute physical energy storage 
contracts for a total amount that exceeds $25,000,000 annually, and in no event may the 
total amount of all contracts entered into under this section exceed $75,000,000 annually. 
1. Prior to executing an energy cost reduction contract. Before executing an 
energy cost reduction contract, the commission shall: 
A. Pursue, in appropriate regional and federal forums, market and rule changes that 
will reduce the basis differential for gas coming into New England and increase the 
efficiency with which gas brought into New England and Maine is transmitted, 
distributed and used. If the commission concludes that those market or rule changes 
will, within the same time frame, achieve substantially the same cost reduction 
effects for Maine electricity and gas customers as the execution of an energy cost 
reduction contract, the commission may not execute an energy cost reduction 
contract; 
B. 
Explore all reasonable opportunities for private participation in securing 
additional gas pipeline capacity that would achieve the objectives in subsection 2. If 
the commission concludes that private transactions, within the same time frame, 
achieve substantially the same cost reduction effects for Maine electricity and gas 
customers as the execution of an energy cost reduction contract, the commission may 
not execute an energy cost reduction contract; and 
C. In consultation with the Public Advocate and the Governor's Energy Office, hire a 
consultant with expertise in natural gas markets to make recommendations regarding 
the execution of an energy cost reduction contract. The commission shall consider 
those recommendations as part of an adjudicatory proceeding under subsection 2. 
1-A. Prior to executing a physical energy storage contract. Before executing a 
physical energy storage contract, the commission shall: 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT ·A "to H.P. 600, L.D. 881 
A. Pursue, in appropriate regional and federal forums, market and rule changes that 
will reduce the reliability risk faced by off-system natural gas users or on-system 
consumers and will provide a physical hedge to higher priced on-peak, winter period 
natural gas supplies. If the commission concludes that those market or rule changes 
will, within the same time frame, achieve substantially the same cost reduction 
effects for the State's electricity and gas customers as the execution of a physical 
energy storage contract, the commission may not execute a physical energy storage 
contract: and 
B. Explore all reasonable opportunities for private participation that would achieve 
the objectives in subsection 2-A. If the commission concludes that private 
transactions, within the same time frame, achieve substantially the same cost 
reduction effects for the State's electricity and gas customers as the execution of a 
physical energy storage contract, the commission may not execute a physical energy 
storage contract. 
2. Commission determination of benefits for an energy cost reduction contract. 
After satisfying the requirements of subsection 1, the commission may execute or direct 
one or more transmission and distribution utilities, gas utilities or natural gas pipeline 
utilities to execute an energy cost reduction contract if the commission has determined, in 
an adjudicatory proceeding, that the agreement is commercially reasonable and in the 
public interest and that the contract is reasonably likely to: 
A. Materially enhance natural gas transmission capacity into the State or into the 
ISO-NE region and that additional capacity will be economically beneficial to eleeffaie 
electricity consumers, natural gas consumers or both in the State and that the overall 
costs of the energy cost reduction contract are outweighed by its benefits to eleeffaie 
electricity consumers, natural gas consumers or both in the State; and 
B. Enhance electrical and natural gas reliability in the State. 
2-A. 
Commission determination of benefits for a physical energy storage 
contract. After satisfying the requirements of subsection 1-A, the commission may 
execute or direct one or more transmission and distribution utilities, gas utilities or natural 
gas pipeline utilities to execute a physical energy storage contract if the commission has 
determined, in an adjudicatory proceeding, that the physical energy storage contract is 
commercially reasonable and in the public interest and that the contract is reasonably 
likely to: 
A. Materially enhance liquefied natural gas storage capacity in the State or the ISO-
NE region and ensure that additional physical energy storage capacity will be 
economically beneficial to electricity consumers, natural gas consumers or both in the 
State and that the overall costs of the contract are outweighed by its benefits to 
electricity consumers, natural gas consumers or both in the State: 
B. Provide the opportunity for access to lower cost natural gas at times of regional 
peak demand for natural gas supplies or in the event of upstream natural gas 
infrastructure disruption: and 
C. Enhance electrical and natural gas reliability in the State. 
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COMMITTEE AMENDMENT ·A "to H.P. 600, L.D. 881 
3. Parties to an energy cost reduction contract or a physical energy storage 
contract. 
The commission may execute, or direct to be executed, an energy cost 
reduction contract or a physical energy storage contract, or both, that eoma-ias contain the 
following provisions. 
A. The commission may direct one or more transmission and distribution utilities, 
gas utilities or natural gas pipeline utilities to be a counterparty to an energy cost 
reduction contract or a physical energy storage contract, or both. In determining 
whether and to what extent to direct a utility to be a counterparty to a eofl:tfaet one or 
more contracts under this subsection, the commission shall consider the anticipated 
reduction in the price of gas or electricity or a reduction in the on-peak winter period 
price of gas or electricity, as applicable, accruing to the customers of the utility as a 
result of the eoBtFaet one or more contracts as determined by the commission in an 
adjudicatory proceeding. 
Any economic loss, including but not limited to any effects on the cost of capital 
resulting from an energy cost reduction contract or a physical energy storage contract 
for a transmission and distribution utility, a gas utility or a natural gas pipeline utility, 
is deemed to be prudent and the commission shall allow full recovery through the 
utility's rates. 
B. If the commission concludes that an energy cost reduction contract or a physical 
energy storage contract can be achieved with the participation of other entities, the 
commission may contract jointly with other entities, including other state agencies 
and instrumentalities, governments in other states and nations, utilities and 
generators. 
C. The commission may execute an energy cost reduction contract or a physical 
energy storage contract as a principal and counterparty. 
4. Approval by the Governor. The commission may not execute or direct the 
execution of an energy cost reduction contract or a physical energy storage contract 
unless the Governor has in writing approved the execution of the energy cost reduction 
contract or a physical energy storage contract. 
Sec. 6. 35-A MRSA §§1905 to 1907, as enacted by PL 2013, c. 369, Pt. B, §1, 
are amended to read: 
§1905. Funding of an energy cost reduction contract or a physical energy storage 
contract 
An eaergy eost Fedtietioa eoatmet Contracts under this chapter may be funded in 
accordance with this section. 
1. 
Assessments on ratepayers. 
The commission may direct one or more 
transmission and distribution utilities, gas utilities or natural gas pipeline utilities to 
collect an assessment from ratepayers for the following purposes: 
A. To finance the participation of a transmission and distribution utility, a gas utility 
or a natural gas pipeline utility in an energy cost reduction contract or a physical 
energy storage contract; and 
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COMMITTEE AMENDMENT "A "to H.P. 600, L.D. 881 
B. To pay the costs of energy cost reduction contract or physical energy storage 
contract evaluation and administration under section 1906, subsection 2. 
All assessments must be just and reasonable as determined by the commission and must 
be identified as an energy cost reduction contract charge or a physical energy storage 
contract charge on a ratepayer's utility bill. When determining just and reasonable 
assessments, the commission shall consider the anticipated reduction in the price of gas or 
electricity, as applicable, accruing to different categories of ratepayers as a result of the 
contract. 
2. Assessments on utilities. If the commission is the principal and counterparty on 
the an energy cost reduction contract or a physical energy storage contract, the 
commission may: 
A. Assess one or more transmission and distribution utilities, gas utilities and natural 
gas pipeline utilities in proportion to the anticipated reduction in the price of gas or 
electricity, as applicable, accruing as a result of the an energy cost reduction contract 
or a physical energy storage contract to the customers of the utility for any and all net 
costs to the commission of the commission's performance of the contract as 
determined by the commission in an adjudicatory proceeding. The cost to the utility 
of the assessment may be recovered by the utility in rates in the same manner as any 
other prudently incurred cost. 
3. Volumetric fee. The commission may establish and direct the payment to the 
trust fund of a volumetric fee on the use of gas by a consumer of natural gas obtained 
from a source other than a gas utility or a natural gas pipeline utility of this State in 
proportion to the anticipated reduction in the price of gas accruing to that consumer as a 
result of the an energy cost reduction contract or a physical energy storage contract as 
determined by the commission in an adjudicatory proceeding. 
§1906. Contract resale and administration 
The following provisions govern the resale and evaluation and administration of an 
energy cost reduction contract or a physical energy storage contract. 
1. Resale of natural gas pipeline capacity. The commission may negotiate and 
enter into contracts for the resale of all or a portion of the reserved natural gas 
transmission pipeline capacity acquired through an energy cost reduction contract. All of 
the revenue received as a result of the resale must be deposited into the trust fund. 
1-A. Resale of physical energy storage capacity. The commission may negotiate 
and enter into contracts for the resale of all or a portion of the physical energy storage 
capacity acquired through a physical energy storage contract. All of the revenue received 
as a result of the resale must be deposited into the trust fund. 
2. Contract evaluation and administration. The commission is responsible for 
assessing, analyzing, negotiating, implementing and monitoring compliance with energy 
cost reduction contracts and physical energy storage contracts. The commission may use 
funds for this purpose from the trust fund or may collect funds for this purpose through 
just and reasonable assessments placed on a transmission and distribution utility, a gas 
utility or a natural gas pipeline utility pursuant to section 1905, subsection 1, paragraph 
B. 
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COMMITTEE AMENDMENT ·A "to H.P. 600, L.D. 881 
Nothing in this section precludes a transmission and distribution utility, gas utility or 
natural gas pipeline utility from taking or having an interest in any facility subject to an 
energy cost reduction contract or a physical energy storage contract. 
§1907. Revenues from energy cost reduction contracts and physical energy storage 
contracts 
Revenues received from the resale of natural gas pipeline capacity acquired through 
an energy cost reduction contract or physical energy storage capacity acquired through a 
physical energy storage contract must be used in accordance with this section. 
1. 
Establishment of Energy Cost Reduction Trust Fund. The Energy Cost 
Reduction Trust Fund is established as a nonlapsing fund administered by the 
commission for the purposes of this chapter. The commission is authorized to receive and 
shall deposit in the trust fund and expend in accordance with this section revenues 
received from an energy cost reduction contract and revenues received from the resale of 
natural gas pipeline capacity acquired through an energy cost reduction contract. The 
commission is authorized to receive and shall deposit in the trust fund and expend in 
accordance with this section revenues received from a physical energy storage contract 
and revenues received from the resale of physical energy storage capacity acguired 
through a physical energy storage contract. 
The funds in the trust fund are held in trust for the purpose of reducing the energy costs of 
consumers in the State and may not be used for any other purpose, except as described in 
subsection 2. 
2. Distribution of funds. The commission shall distribute funds in the trust fund in 
the following order of priority: 
A. 
As a first priority, to the costs of monitoring and administering a contract 
pursuant to section 1906, subsection 2; and 
B. 
As a 2nd priority, to utilities and other entities to reduce energy costs for 
electricity and natural gas ratepayers and consumers subject to a volumetric fee under 
section 1905, subsection 3. The commission may distribute funds to benefit 
ratepayers of one or more transmission and distribution utilities, gas utilities or 
natural gas pipeline utilities or consumers subject to a volumetric fee under section 
1905, subsection 3 in a manner that the commission finds is equitable, just and 
reasonable. 
Sec. 7. 35-A MRSA §§1911 and 1912, as enacted by PL 2013, c. 369, Pt. B, §1, 
are amended to read: 
§1911. Reports 
The commission shall include in its annual report under section 120, subsection 3 a 
description of its efforts to pursue, in appropriate regional and federal forums, market and 
rule changes that will reduce the basis differential for natural gas coming into New 
England and data and analysis regarding leak emissions of greenhouse gases from 
liquefied natural gas storage that has been contracted for through a physical energy 
storage contract. 
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COMMITTEE AMENDMENT "A" to H.P. 600, L.D. 881 
§1912. Limitation 
The commission may not execute an eBergy eest FeElHetieB eeBtl=aet under this chapter 
a physical energy storage contract after June 1. 2017 or an energy cost reduction contract 
after December 31, 2018. The commission may continue to administer existing physical 
energy storage contracts and enter into agreements regarding the resale of physical energy 
storage capacity purchased through a physical energy storage contract after June 1. 2017. 
The commission may continue to administer existing energy cost reduction contracts and 
enter into agreements regarding the resale of natural gas pipeline capacity purchased 
through an energy cost reduction contract after December 31, 2018. 
Sec. 8. Limitation on effectiveness and contracting authority. Prior to 
September 1, 2016, the Public Utilities Commission may not initiate a proceeding for a 
physical energy storage contract on its own initiative or on the petition of any person, 
unless the commission has issued an order in the adjudicatory proceeding initiated under 
the Maine Revised Statutes, Title 35-A, chapter 19, pending as of February 1, 2016, for 
consideration of approval for one or more energy cost reduction contracts that includes a 
determination of the contract amounts to be purchased. The enactment of this Act may 
not be construed to reflect any legislative findings about the meaning of Public Law 
2013, chapter 369, Part B, section 1, nor to have any substantive or procedural effect on 
the commission proceeding for consideration of approval for one or more energy cost 
reduction contracts pending as of February 1, 2016.' 
SUMMARY 
This amendment replaces the bill. It amends the Maine Energy Cost Reduction Act 
by giving the Public Utilities Commission the authority to execute an additional contract 
under the Act called a physical energy storage contract, which is a contract for physical 
storage capacity of liquefied natural gas. As in the Act, for energy cost reduction 
contracts, the commission may only execute a contract in consultation with the 
Governor's Energy Office and the Public Advocate. A contract or contracts for physical 
energy storage under this amendment may not exceed in total $25,000,000 annually and 
the total of all contracts entered into under the Maine Energy Cost Reduction Act may not 
exceed $75,000,000 annually. This amendment makes the process for the determination 
and execution of a contract for physical energy storage consistent with the requirements 
for an energy cost reduction contract. The amendment specifies that prior to September 1, 
2016, the Public Utilities Commission may not initiate a proceeding for a physical energy 
storage contract unless the commission has issued an order in the adjudicatory proceeding 
initiated under the Maine Revised Statutes, Title 35-A, chapter 19, pending as of 
February 1, 2016, for consideration of approval for one or more energy cost reduction 
contracts that includes a determination of the contract amounts to be purchased. The 
amendment further specifies that the enactment of this amendment is not to be construed 
to reflect legislative findings on Public Law 2013, chapter 369, Part B, section 1, nor to 
have any substantive or procedural effect on the commission proceeding for consideration 
of approval for one or more energy cost reduction contracts pending as of February 1, 
2016. 
FISCAL NOTE REQUIRED 
(See attached) 
COMMITTEE AMENDMENT 
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Approved: 03/21/16 feac 
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LD881 
LR 1643(02) 
An Act To Allow the Public Utilities Commission To Contract for Liquefied Natural Gas Storage and 
Distribution 
Fiscal Note for Bill as Amended by Committee Amendment 'f\ { +l-U>W) 
Committee: Energy, Utilities and Technology 
Fiscal Note Required: Yes 
Fiscal Note 
Potential current biennium cost increase - Other Special Revenue Funds 
Potential current biennium revenue increase - Other Special Revenue Funds 
Fiscal Detail and Notes 
Under current law, the Public Utilities Commission (PUC) may execute energy cost reduction contracts for a total 
amount not to exceed $75,000,000 annually. This bill allows the PUC to enter into physical energy storage contracts 
until June 1, 2017 for a total amount not to exceed $25,000,000 annually and sets the maximum amount of energy cost"* 
reduction contracts and physical energy storage contracts to not exceed a total combined cost of$75,000,000, 
resulting in no net cost increase from executing contracts. Prior to September 1, 2016, the PUC cannot initiate a 
proceeding for physical energy storage contracts unless the PUC has issued an order in a currently pending 
proceeding, concerning energy cost reduction contracts, to determine the amount of funds, if any, may be expended on 
physical energy storage contracts. The bill also allows the PUC to contract for the resale of physical energy storage 
capacity, resulting in potential revenue to the Energy Cost Reduction Trust Fund within the PUC. There is no estimate 
at this time of how much revenue will accrue to the trust fund. The PUC has indicated that a consultant may be 
necessary in certain complex cases. No estimate on the costs to hire a consultant has been made at this time. 
LR1643(02) - Fiscal Note - Page 1 of 1