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Critics of the federally imposed fees say they will gives businesses reason to move jobs out of state.

By GLENN ADAMS The Associated Press August 22, 2007

WATERVILLE — Representatives of the paper-products industry, unions and consumers joined Gov. John Baldacci on Tuesday in support of Maine's appeal of a federal order that imposes what they call excessive and unjust fees to help expand generating capacity in southern New England.

They said Maine businesses and residential power consumers will pay an additional $300 million over the next four years, imposing a financial hardship while giving businesses more reason to shift jobs and machinery to states with lower energy prices.

"Maine has to be treated better than that," Baldacci told reporters outside Huhtamaki Packaging, which makes molded paper products out of recycled fiber. Baldacci said the fees imposed by ISO-New England were "unacceptable" and he will do all in his power to stop them.

The news conference was held a day after the Maine Public Utilities Commission filed an appeal challenging the charges in the District of Columbia Court of Appeals, one step below the U.S. Supreme Court.

PUC Chairman Kurt Adams said the state's appeal contends that ISO-New England, which operates the six-state region's bulk electric power system, has failed to demonstrate a need for the fees and that they are unreasonable.

The PUC says the fees already have increased rates of industrial and commercial customers by 6 percent. By 2010, medium and large businesses will see 10 percent increases, while residential customers will see a 6 percent rise.

Huhtamaki plant manager Ray McMullin said the Maine factory, which straddles the Waterville-Fairfield town line, pays energy costs that are 2 times higher than those of its sister plants and competitors in other states.

The company has already shifted two of its molding machines to Alabama in an attempt to equalize those costs. The added costs risk the loss of additional Maine jobs, McMullin said. A union official at the plant, which employs 425 people, agreed.

"We can't afford any more increases in energy costs," said Charlotte Gurney, a Huhtamaki mailroom worker at the plant and shop steward for Local 449 of the United Steelworkers.

Keith Van Scotter, president of Lincoln Paper and Tissue, said the industry can't absorb higher energy-related costs without detracting from wages, machinery and other plant expenses. He added that ISO-New England's fees add $50,000 a month in costs at the Lincoln mill, which was revived after it was set for closure in early 2004 and now employs about 400 people.

Saying it "will take a significant and focused effort" to turn around the high energy costs, Van Scotter called the PUC's court challenge "most welcome."

In the case of a central Maine school district, the new fees will add more than $22,000 this year in costs, eating up most of the $28,000 the district has received from the state for energy- efficiency improvements, said James Morse, superintendent of the Oakland-area District 47.

"It's absolutely insane Maine would be put in this situation," said Morse.

ISO-New England defends its effort to see that the region's electrical capacity keeps pace with demand, said spokeswoman Ellen Foley. To meet anticipated demand, the region needs the equivalent of one new power plant per year, she said.

Foley said that while a large share of ratepayers' bills covers the cost of fuel used by generating stations, only 5 percent goes toward ensuring a reliable supply of energy.

ISO's pricing program will discourage energy price volatility by encouraging power generation through non-fossil fuels, said Foley, adding, "ISO-New England is just as concerned as Maine about energy costs."