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Draft Order Would Prohibit Utility From Offering Sought Heat-Pump Program Opposed By Retail Suppliers

August 24, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

A Maine PUC hearing examiner's report concerning Emera Maine’s proposed Heat Pump Program, under which the utility would offer heat pumps to customers, would conclude that the utility itself may not offer the program, though the program may be offered through an affiliate.

Under Emera Maine's Heat Pump Program, proposed to be available to residential and small commercial customers, Emera would own, have installed using qualified contractors, and maintain eligible ductless mini-split heat pumps and associated metering equipment at the customer’s home or business. Customers participating in the Program would receive service under a proposed Heat Pump Service and Equipment Rate (Heat Pump Rate), which would include a monthly “Customer Equipment Charge” in addition to transmission, distribution and stranded cost charges, with the distribution component discounted during the period of October 1 through April 30 of each year

Electricity Maine, among other parties, had opposed Emera Maine's proposed offering on the grounds that it did not meet the statutory definition of "Core Utility Service."

Maine statute defines "Core utility service" as meaning the generation, transmission or distribution of electricity or gas, services necessary to perform those functions, services for which the utility is the provider of last resort or services that the PUC requires the utility to provide, except that any service that a utility provides outside its service territory is not a core service.

Statute prohibits a utility from offering any non-core services, and requires that if a utility's owners wish to offer such services, any non-core services must be offered through an affiliate of the utility

Furthermore, statute defines transmission and distribution plant as, "all real estate, fixtures and personal property owned, controlled, operated or managed in connection with or to facilitate the transmission, distribution or delivery of electricity for light, heat or power for public use and includes all conduits, ducts and other devices, materials, apparatus and property for containing, holding or carrying conductors used, or to be used, for the transmission or distribution of electricity for light, heat or power for public use."

The hearing examiner would conclude that heat pumps are not a core utility service, and therefore may not be offered by the utility.

The hearing examiner notes that transmission and distribution plant is clearly defined as the equipment that transmits, distributes or delivers electricity, not equipment that uses electricity to provide light, heat or power. "Heat pumps neither transmit, distribute nor deliver electricity; thus, they cannot be considered transmission and distribution plant pursuant to Section 102(20-A), Rather, heat pumps are devices that use electricity to extract heat from, in this instance, ambient air. As a device that uses electricity to provide heating (or cooling) in a home or business, in terms of this question, heat pumps are no different than any other end-use devices, such as refrigerators or light fixtures," the hearing examiner said

"[W]e find that Emera’s Heat Pump Program is not a Core Utility Service and, pursuant to Chapter 820, is required to be offered through an affiliate. With respect to the question of whether Chapter 820 should be waived to allow the Program to be offered through the utility, we see no compelling reason for such a waiver. The Chapter 820 requirements provide important safeguards to prevent a utility from gaining an unfair advantage over other companies that are offering the same goods and services in the marketplace - in this case heat pump sales, installation and maintenance. Moreover, as discussed in Section III(C) below, we see no barriers to offering the Program through an affiliate of Emera Maine, and the affiliate approach would be consistent with other arrangements approved by the Commission," the hearing examiner said

The hearing examiner would also deny Emera Maine's argument that the program may proceed as a pilot contemplated by statute, with the examiner noting that such a pilot was already conducted, and Emera Maine's instant program was not designed as a pilot in accordance with statute.

Emera has objected to the use of an affiliate to offer the program. The hearing examiner responded, "To the extent that the ability to disconnect for non-payment of the Customer Equipment Charge is key to the program’s success, and Emera were allowed to do so, it would raise concerns regarding its competitive advantage over other providers of heat pumps."

Should Emera Maine propose to provide a Heat Pump Program through an affiliate, several issues, including the design of the T&D rates for heat pump service and the ratemaking treatment of any discounts, remain to be resolved, the hearing examiner noted

Docket No. 2015-00090

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