65- 407 C.M.R. ch. 316, § 5

Current through 2024-46, November 13, 2024

Section 407-316-5 - COMPETITIVE SOLICITATION PROCESS

A.Periodic Solicitations

The Commission shall periodically conduct a competitive solicitation process for capacity resources, available energy and renewable energy credits. The Commission shall solicit bids for capacity resources no less often than every three years, unless it determines that the likely benefits to ratepayers from any contracts that might result from the solicitation process will not exceed the likely costs.

B.Requests for Proposals; Standard Form Contracts

The Commission shall solicit bids for capacity resources, available energy and renewable energy credits through the issuance of a request for proposals that contains standards, procedures and requirements for the bid solicitation process, and a description of any resource needs identified in the electric resource adequacy plan developed pursuant to section 9 of this Chapter. The request for proposals may contain a standard form contract. As part of the solicitation and selection process, the Commission may accept modifications to the standard form contracts. The request for proposals shall indicate that the proposals contain:

1. a description of the capacity resource and its resource priority category under subsection D(2);

2. a statement as to whether the resource is recognized as a capacity resource by the ISO-NE;

3. a statement of the projected value, if any, of energy production or reductions in energy associated capacity resources;

4. a demonstration that the proposed contract is within the contracting authority of section 4 of this Chapter;

5. a statement explaining the extent to which the proposed contract would promote the policies and objectives of this Chapter; and

6. the unit price and quantity bid for the capacity resource, any associated energy, and any renewable energy credits.

C.Evaluation of Proposals and Bidder Negotiations

The Commission shall evaluate submitted proposals to determine compliance with the standards, procedures and requirements contained in the request for proposals. Following review of proposals, the Commission may engage in negotiations or discussions with bidders or a subset of bidders to clarify, refine or improve the proposals. When only one bid has been offered, the Commission shall ensure that negotiations are based on full project cost disclosure by the bidder. The Commission may accept one or more of the proposals or none of the proposals based on its assessment of whether proposals meet the requirements of the request for proposals, satisfy the policies, objectives and selection criteria of this Chapter, and are within the contracting authority of this Chapter.

D.Evaluation Criteria

1.Ratepayer Value

The Commission shall consider and evaluate long-term contracts for capacity resources, any available energy, and any available renewable energy credits in terms of their potential to provide benefits to ratepayers. For purposes of this provision, long-term contracts that provide benefits to ratepayers may include, but are not limited to:

a. Contracts that provide capacity, energy or renewable energy credits at costs that are reasonably likely to be below their market value;

b. Contracts that are reasonably likely to reduce price volatility without increasing costs to ratepayers;

c. Contracts that enable generation resources to be constructed or operated that offset or negate transmission-related costs in a cost-effective manner; and

d. Contracts that enable generation resources to be constructed or operated that improve or maintain the reliability of the electric grid in Maine in a cost-effective manner.

2.Resource Priority

In the event the bid price of proposals are effectively the same, a limited amount of capacity resources is required, or the Commission exercises subjective judgment in evaluating the value or risk of non-price portions of proposals, the Commission shall give preference to capacity resources in the following order of priority:

a. interruptible, demand response or energy efficiency capacity resources located in Maine;

b. new renewable capacity resources located in Maine;

c. new capacity resources with no net emission of greenhouse gases as determined in consultation with the Maine Department of Environmental Protection;

d. new nonrenewable capacity resources located in Maine with preference given to new nonrenewable capacity resources with no net emission of greenhouse gases as determined in consultation with the Maine Department of Environmental Protection;

e. capacity resources that enhance the reliability of the electric grid of this State with preference given to capacity resources with no net emission of greenhouse gases as determined in consultation with the Maine Department of Environmental Protection; and

f. other capacity resources.

3.Greenhouse Gas Reduction Policy

The Commission shall ensure that any long-term contract authorized under this Chapter is consistent with the State's goals for greenhouse gas reduction under Title 38, section 576 and the regional greenhouse gas initiative as described in the state climate action plan required in Title 38, section 577.

E.Energy Efficiency Programs

1.Long-Term Contracts

If the Commission determines that the assessments on transmission and distribution utilities under Title 35-A, section 10110, subsections 4 and 5 will not provide sufficient funds to meet the energy efficiency program budget allocations articulated in the triennial plan or any annual update plan approved by the Commission pursuant to Title 35-A, section 10104, subsection 4 or any annual update plan approved by the Commission pursuant to Title 35-A, section 10104, subsection 6, the Commission may direct investor-owned transmission and distribution utilities to enter into long-term contracts for energy efficiency capacity resources and any available energy associated with such resources to the extent necessary to meet the energy efficiency program budget allocations articulated in the triennial plan or annual update plan. If those contracts result in a fee or assessment on ratepayers, the Commission may only direct an investor-owned transmission and distribution utility to enter into those contracts if:

a. the Commission provides notification to the joint standing committee of the Legislature having jurisdiction over utilities and energy matters of the proposed contract or contracts; and

b. The Legislature specifically authorizes the contract or contracts; or allocates an amount of funds from the account established under Title 35-A, section 3210-C, subsection 12, paragraph B that is no less than the total funds that will be deposited in the account under all proposed contracts over the full terms of those contracts.

2.Process

In the event that the Commission acts pursuant to this provision, it will solicit bids for energy efficiency capacity resources and any available energy associated with such resources through the issuance of a request for proposals that contains standards, procedures and requirements for the bid solicitation process and a description of the resource needs or the Commission will contract with the Efficiency Maine Trust, established pursuant to Title 35-A, section 10103, to deliver the energy efficiency capacity resources through a competitive solicitation process administered by the Efficiency Maine Trust.

F.Customer Benefits

1.Financial Security

To the extent the benefits to ratepayers of a long-term contract are projected to occur in the later years of the contract term, the Commission shall ensure that adequate financial security is in place so that it is reasonably likely ratepayers will obtain the projected benefits of the long-term contract. The purpose of financial security is to protect ratepayers from economic losses arising from a seller's breach of a long-term contract. For purposes of this provision, adequate financial security includes, but is not limited to, an irrevocable letter of credit, a corporate guarantee from a credit-worthy corporate parent or affiliate, a security interest in the generation project or cash. In determining the adequacy of the financial security and the amounts required, the Commission may consider: the potential costs, benefits and risks of the long-term contracts for ratepayers; the amount of capacity, energy and renewable energy credits purchased under the long-term contract; industry standards for financial security; and the cost of the financial security to the seller. The Commission may waive the requirement for financial security for energy efficiency contracts entered into pursuant to subsection E if it finds that financial security is not necessary to protect the interests of ratepayers.

2.Lower Cost Capacity and Energy Resources

To the extent practicable, the Commission shall ensure that ratepayers obtain the benefit of lower cost capacity resources of energy associated with those resources or of any renewable energy credits that may exist after the term of primary financing or subsequent replacement financing necessary for the development and construction of a generation project is completed. For purposes of this provision, primary financing or subsequent replacement financing means the permanent financing arrangements that fund the development and construction of a generation project. The Commission may obtain this benefit for ratepayers through a contract term of sufficient length, contract renewal or extension options or any other reasonable commercial means.

65- 407 C.M.R. ch. 316, § 5