An Act To Improve Natural Gas Price Competitiveness for Maine's Manufacturers
Maine Legislature, Session 127, LD 1399
Committee: Energy, Utilities and Technology
Sponsors: BURNS, MAKER, TURNER
Amends: 35-A MRSA §1913

Legislative Document 
No. 1399 
S.P. 520 
In Senate, May 12, 2015 
An Act To Improve Natural Gas Price Competitiveness for Maine's 
Manufacturers 
Reference to the Committee on Energy, Utilities and Technology suggested and ordered 
printed. 
HEATHER J.R. PRIEST 
Secretary of the Senate 
Presented by Senator BURNS of Washington.  (GOVERNOR'S BILL) 
Cosponsored by Representative MAKER of Calais and 
Representative: TURNER of Burlington. 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  35-A MRSA §1913 is enacted to read: 
§1913.  Backstop agreements for natural gas pipeline capacity 
1.  Definitions.  As used in this section, unless the context otherwise indicates, the 
following terms have the following meanings. 
A.  "Backstop agreement" means an agreement entered into between an interstate 
natural gas pipeline and a designated replacement shipper pursuant to which the 
designated replacement shipper agrees, upon a default of an eligible customer, to 
enter into a service agreement with an interstate natural gas pipeline for an amount of 
the eligible customer's long-term interstate natural gas pipeline capacity under the 
same rates, terms and conditions as the eligible customer and for the remainder of the 
term of the eligible customer's contract term.   
B.  "Designated replacement shipper" means one or more gas utilities or transmission 
and distribution utilities required by the commission to enter into an agreement with 
an interstate natural gas pipeline for the long-term interstate natural gas pipeline 
capacity of an eligible customer. 
C.  "Eligible customer" means a commercial or industrial business or a subsidiary of 
that business that is located in this State and has an agreement for a term of not less 
than 15 years to transport a maximum daily quantity of 7,500 dekatherms per day of 
natural gas. 
D.  "Eligible natural gas pipeline capacity" means new or incremental natural gas 
pipeline capacity for the delivery of natural gas into this State or to delivery points 
within this State. 
2.  Order requiring execution of capacity backstop agreement.  Upon application 
of an eligible customer in accordance with subsection 5, the commission may require by 
written order that one or more gas utilities or transmission and distribution utilities enter 
into a backstop agreement, within 60 days of the commission's order, with applicable 
interstate natural gas pipelines for long-term interstate natural gas pipeline capacity that 
becomes available in the event of a default of the eligible customer, if the commission 
finds that the designated replacement shipper is capable of meeting the requirements of 
this section.  The commission's order must identify the amount of long-term interstate 
natural gas pipeline capacity for a backstop agreement.  Upon a commission order 
requiring execution of a backstop agreement pursuant to this section, the commission 
shall reduce the cumulative total capacity of energy cost reduction contracts established 
under section 1904 by the capacity of the backstop agreement. 
Within 20 days of receipt of an application under subsection 5 for an order under this 
section, the commission shall consult with the Office of the Public Advocate and the 
utility or utilities recommended by the eligible customer as the designated replacement 
shipper. The commission's review of an application under this section is nonadjudicatory.  
The commission shall approve or reject the application within 60 days by issuance of a 
written order. 
3.  Limitation on resale of natural gas capacity.  A backstop agreement approved 
by the commission must provide that the eligible customer's resale of natural gas pipeline 
capacity may not exceed 15% profit excluding any natural gas capacity transportation 
charges.  If resale profits exceed 15%, the additional revenue must be used to reduce 
transmission and distribution rates in the location of the eligible customer's electric utility 
service area in a manner determined by the commission. 
4.  Commission criteria.  The commission shall approve a request from an eligible 
customer and order one or more gas utilities or transmission and distribution utilities to 
enter into a backstop agreement with interstate natural gas pipelines pursuant to 
subsection 2 if the commission finds: 
A.  The designation of the utility or utilities as a designated replacement shipper will 
enhance the viability of an eligible natural gas pipeline capacity project; 
B.  The eligible natural gas pipeline capacity project will increase natural gas 
transmission capacity into the State and will further the legislative findings in section 
1903; 
C.  The risks to utility ratepayers of an eligible customer's default are reasonable 
when compared to the benefits to be achieved for the eligible customer and the State 
as a result of the new or incremental natural gas pipeline capacity to be provided; 
D.  The gas utility or transmission and distribution utility, or its parent guarantor, has 
and continues to maintain a long-term senior, unsecured debt rating, or in the absence 
of a long-term senior, unsecured debt rating, a local long-term issuer rating or an 
issuer rating, as applicable, of at least Baa3 with a stable outlook from Moody's 
Investors Service, Inc. and of at least BBB- with a stable outlook from Standard and 
Poor's Corporation; and 
E.  The eligible customer is unable to meet or maintain the creditworthiness standards 
required to obtain eligible natural gas pipeline capacity. 
5.  Application.  An eligible customer may apply to the commission to designate a 
utility as a designated replacement shipper and the application must provide a nonbinding 
recommendation of one or more utilities to be the shipper required to enter into a 
backstop agreement. 
6.  Actions presumed prudent; recovery of costs incurred.  A gas utility's or 
transmission and distribution utility's actions undertaken in furtherance of a commission 
order under this section, including execution of a backstop agreement, are presumed to be 
prudent and require no further commission approval. Notwithstanding anything to the 
contrary in subsection 1, paragraph A, with the approval of the commission, a gas utility 
or transmission and distribution utility required to enter into a backstop agreement for 
eligible interstate pipeline capacity as a designated replacement shipper under this section 
may recover in rates all costs reasonably incurred including administrative costs. 
7.  Limitation.  The commission may not order a backstop agreement under this 
section after December 31, 2018. The commission may continue to administer contracts 
entered into prior to December 31, 2018 and enter into agreements regarding the resale of 
natural gas pipeline capacity purchased through a backstop agreement after December 31, 
2018. 
SUMMARY 
This bill authorizes the Public Utilities Commission to order one or more gas utilities 
or transmission and distribution utilities to enter into a backstop agreement under which a 
designated replacement shipper agrees to enter into a service agreement with an interstate 
natural gas pipeline for the long-term interstate natural gas pipeline capacity of an eligible 
customer.