Gov. Janet Mills on Monday asked the Maine Public Utilities Commission to open an investigation into why Central Maine Power is belatedly telling solar developers that their projects are causing technical problems at substations that in some instances could require multimillion-dollar upgrades.

Mills said she is especially concerned that some solar projects were already built and ready to operate, “and it is deeply regrettable that CMP apparently did not anticipate these issues at the time they entered into these interconnection agreements,” Mills wrote in a letter to PUC Chair Philip Bartlett.

The governor said she also wants the agency to start a broader review of Maine’s electric utilities to ensure they have the systems and planning to accommodate the growth of renewable energy generation.

After receiving the letter, Bartlett told the Portland Press Herald that the PUC “expects to start a formal proceeding regarding this matter in the next few weeks.”

Mills’ letter served as a catalyst to already mounting pressure for state utility regulators to act on news of CMP’s interconnection problems following a story published last week by the Press Herald.

The unexpected news has Maine’s fast-growing solar industry scrambling, trying to determine whether some projects can still be built and wondering if businesses and municipalities that had contracted to buy the power will cancel their contracts.

A survey sent last week to members of the Maine Renewable Energy Association found that more than 100 solar projects in 74 communities have received revised cost estimates from CMP totaling tens of millions of dollars. The trade group is drafting a formal request for the PUC to investigate and is expected to deliver it later this week.

This community solar project near Route 1 in Belfast is already built and scheduled to be in service soon, but Central Maine Power is unexpectedly indicating that the developer, SunRaise Investments of Portsmouth, New Hampshire, will first need to spend an unspecified amount of money to fix voltage problems at the local substation. Photo courtesy of Greg M. Cooper

Among the top concerns is determining exactly when CMP realized that the cost of connecting solar projects to the grid would be higher than agreed to in previously signed contracts. Also of interest is why the updated solutions being requested by CMP are so much more expensive than the initial upgrades.

“What did CMP know and when did they know it?” asked Jeremy Payne, the renewable energy group’s executive director. “If CMP sat on this for a certain amount of time, that’s completely unacceptable.”

Similar questions are being asked by a national association of businesses and nonprofits that promotes solar development. It also is requesting a probe at the PUC.

“CMP cannot be allowed to retroactively assess millions on projects that have already started to move forward,” said Kaitlin Kelly O’Neill, northeast director for the Coalition for Community Solar Access. “Not only will this threaten a massive amount of clean energy development already in the works, but it will send a signal to investors that Maine is too risky a bet for future projects.”

Asked early Monday – before Mills sent her letter – if the PUC would open an inquiry, Bartlett said he was aware that the Maine trade group and others would be making a formal request in the near future. He said the PUC was gathering information, and that he expected to consult with the two other commissioners this week.

Bartlett acknowledged that delving into the timeline surrounding CMP’s awareness of problems was critical, notably for projects already in the ground.

“It’s legitimate to question why this wasn’t discovered sooner,” Bartlett said. “What process was undertaken during initial studies, especially for projects already constructed?”

In a written response to questions, CMP said it believes an investigation would slow down the collaborative process of working with customers to find a reasonable solution to the problem, “but of course we will cooperate with any MPUC inquiry should it be initiated.”

“CMP has been working collaboratively with a group of solar developers to find safe, reasonably priced solutions for the hundreds of projects that have requested to connect while continuing to reliably serve all customers,” the statement reads in part. “The amount of new power these projects will bring onto the system exceeds our current peak load demand and needs to be examined carefully. The information sent out last week in an email was in response to this group’s request for additional information about potential costs and impacted substations.”

SOLAR PROJECTS THREATENED

The controversy is erupting as scores of solar developers are building and proposing projects in Maine worth hundreds of millions of dollars.

The unprecedented activity is being spurred by recent state policies and laws aimed at encouraging a rapid shift from oil and gas to renewable electric power for running cars and heating buildings. The state’s new Climate Action Plan, a blueprint for how to electrify Maine’s economy, reduce carbon emissions and prepare for a changing climate, strongly encourages solar development.

But the solar industry says the current momentum is now threatened because CMP’s apparent technical problems could prompt investors and power buyers to hold back.

For instance, Encore Renewable Energy of Burlington, Vermont, has five Maine projects pending with a total value of $40 million. The power would go to lowering electric bills at some large Maine companies, including L.L. Bean and Pratt & Whitney, as well as school districts and municipalities.

CMP already had conducted studies on the impact of connecting those projects to power substations. Two of them, in Paris and Oakland, triggered substation upgrades costing $600,000 and $250,000, respectively. Encore agreed to the charges and signed an interconnection agreement with CMP in December.

In January, it received revised cost estimates of $1.3 million and $9 million.

The revision was so shocking, according to Spencer Egan, the company’s project developer, that it felt like a bad practical joke.

“Needless to say, such costs will prohibit these projects from being built,” Egan wrote in an email to the legislative committee that handles energy matters. “Now it appears that all five of our projects are on substations with similar issues, jeopardizing our entire portfolio.”

In an interview Monday, Egan said the company had similar substation voltage issues two years ago with some projects in Vermont. In those cases, the local utility, Green Mountain Power, was able to engineer solutions with an average cost of $75,000.

Egan expressed hope that something can be worked out quickly in Maine. It’s hard to retain financing for projects in the face of such uncertainty, he said.

“Our projects are just about fully permitted,” he said. “We’re ready to get building whenever we get a green light from CMP. The question now is, how fast can the PUC and CMP come to a resolution on this issue?”

CMP’S ABILITY QUESTIONED

At issue is the process by which renewable power projects connect to the electric grid.

Before any project gets built, a utility does what’s known as a system impact study. The analysis ensures the substation and local distribution network can safely and reliably handle the new power.

Any cost to upgrade the system is the responsibility of the developer. Upgrades in Maine typically run between $100,000 and $600,000, developers say. If the price is too high, the project may not be financially feasible.

If a project does move forward, CMP and the developer then sign an “interconnection agreement.” Typically, that’s the end of negotiations.

But something happened in mid-January that developers say is unprecedented in their experiences in other states. Solar developers began receiving emails from CMP indicating that many of their projects had caused, or would trigger, a voltage problem at its substations. An updated system impact study would be needed, CMP said.

The demand on Maine’s utility grid from the growing wave of renewable energy proposals has been on the state’s radar for a couple of years now, since lawmakers passed aggressive bills aimed at encouraging more clean-energy projects to help blunt the impacts of climate change.

The scope of the problem was laid out last week in a letter to lawmakers on the Legislature’s utilities committee from David Flanagan, CMP’s executive chairman.

The number of projects seeking to interconnect is unprecedented in CMP’s history, Flanagan said, which is why the company created a 100-person team to help process the 600 or so requests from developers of renewable energy projects.

Flanagan explained how CMP’s transmission and distribution system, designed over the past century, wasn’t built to handle power from hundreds of small, intermittent generators scattered around the service area. He also noted that proposals have come in representing 2,000 megawatts of new supply, which is 300 megawatts above the system’s peak demand, or customer usage.

“The transition to a new structure to facilitate large volumes of generation on the distribution system will require new engineering designs and investments to accommodate a potential reversal of that traditional one-way power flow,” Flanagan said.

 CMP is seeking solutions as quickly as possible, and at the lowest possible cost, Flanagan said.

“Of course, our first priorities are public safety and system reliability,” he said. “We must protect the system from short circuits and overloads, which would be a danger to both the public and our employees, first and foremost.”

Still, Flanagan didn’t provide any insight into why CMP signed connection agreements with developers, agreed on the cost and then sought to change the terms.

On Monday, the Press Herald received and reviewed sections of an interconnection agreement for a solar project to be built in CMP’s service area. The initial agreement estimated a cost of roughly $618,000 to upgrade parts of the substation and distribution system. The upgrades include various high-voltage, automatic switches that protect the system, controlling and monitoring electricity flow.

The developer subsequently received a new agreement. The most notable addition was the request to fund the installation of a transformer that steps down extra-high voltage. The added estimated cost: $8.4 million.

In its written response Monday, CMP said it is “actively examining options for much lower cost alternatives and will be reaching out to those specific developers.”

Payne, the executive director of the Maine Renewable Energy Association, said his group has two goals. The most immediate is to solve the interconnection confusion with projects already permitted and/or built. The broader goal is to determine whether CMP is capable of connecting the amount of renewable generation that will be needed in coming years to electrify the state’s economy, with a transition to electric vehicles and heat pumps.

“We’re not just interested in pointing fingers,” he said. “We were told CMP has been investing in the grid over the years, such as the ($1.4 billion) Maine Power Reliability Program. We’re finding out that’s not the case. Why? Were mistakes made?” 

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