Maine Issues RFP for Renewable Energy, RECs and Capacity: Bids Due April 10

On February 14, 2020, the Maine Public Utilities Commission (Commission) issued a Request for Proposal (RFP) for the Sale of Energy and Renewable Energy Credits (RECs) from Qualifying Renewable Resources.

This RFP, which is the first of two competitive solicitations, stems from an Act to Reform Maine’s Renewable Portfolio Standard that the Maine Legislature enacted during its 2019 session. The Act directs the Commission to conduct two competitive solicitation processes to procure 1.715 million MWh of resources, or 14% of the total Maine retail electricity sales in 2018. At least 7%, but no more than 10%, must be procured through this first solicitation, with contracts approved by December 31, 2020. The remaining amount will be procured through a second solicitation process commencing in 2021.

Proposals submitted in response to the RFP must be for the sale of energy or RECs from Class 1A resources through a contract with one or both of the state’s investor-owned transmission and distribution utilities (T&D Utilities), Central Maine Power Company (CMP), and Emera Maine. Bidders may also offer to sell capacity as part of the contract, with preference given to proposals for the sale of energy.
Class 1A resources are defined in the Act as new renewable capacity resources (Class I resources) other than those resources that for the last two years either were not operated or were not recognized by the New England Independent System Operator (ISO-NE) as capacity resources, and, after September 1, 2005, resumed operations or were recognized by ISO-NE as capacity resources.

Renewable capacity resources may be solar or wind installations, or may rely on alternative renewable generation resources that do not exceed 100 MW, including: (1) fuel cells; (2) tidal power; (3) geothermal installations; (4) hydro; (5) biomass; or (6) anaerobic digestion for methane production. Energy storage systems are similarly allowed to participate as long as the system is either collocated with a qualifying generation resource or the Commission finds that the storage resource would result in a reduction in greenhouse gas emissions.

Proposal Terms
Contracts must be for a term of 20 years, with discretion given to the Commission to determine whether a longer term is warranted.  To the extent available, 75% of the energy or RECs procured through the selected contracts must come from Class 1A resources that began commercial operations after June 30, 2019, and the remaining 25% must come from Class 1A resources that began commercial operations on or prior to June 31, 2019. Proposals may be structured as physical or financial transactions, and must specify annual energy quantities or quantity caps for the amounts of energy or RECs for each year of the term. If capacity is included in the proposal, bidders may use separate prices for energy and capacity components or may include a single bundled price.

Evaluation Standards
The Commission will evaluate proposals using a scoring system for quantifying benefits to both Maine ratepayers and the economy. Proposals will be evaluated with 70% weight given to benefits to state ratepayers, with the remaining 30% given to benefits to the Maine economy. Benefits to the Maine economy include, but are not limited to the following:
a. Capital investments
b. Payments for the harvest of wood fuel
c. Employment
d. Payments to a host community
e. Excise, income, property and sales taxes paid
f. Purchase of goods and services
g. Avoided emissions resulting from operation of the resource

Bidders must include in their proposals a process for verifying to the Commission on an annual basis that the resource is continuing to maintain its benefits to the Maine economy, as well as the benefits to any energy storage system included with the proposed resource. Proposals must also include a requirement for performance security, determined on a project-specific basis.

If the Commission staff conducts the bid review process as it has done in similar prior solicitations for energy, capacity, and RECs, they will evaluate and analyze responsive bids and likely reach out to bidders with follow-up questions. Then the Commission staff may identify a short list of eligible bids along with a term sheet for Commission deliberation and approval. Following approval of the winning bidders’ proposals, the Commission will likely then direct the Commission staff to negotiate a long-term contract with both the winning bidder(s) and representatives of the T&D utilities.  Pursuant to the Act, Commission approval of the first round of final agreements must be issued by December 31, 2020.

For further information about the RFP process, or for any energy-related concern, please contact a member of Pierce Atwood’s Energy Practice Group: Jared des Rosiers or Sarah Tracy.