Algonquin Power & Utilities Files Plan to Dispose of Thermal Generation at Maine Public Service

Algonquin Power & Utilities Corp. (APUC) has submitted to the Maine PUC a plan for the disposition of its thermal generation located within the service territory of Maine Public Service Company, in accordance with the PUC's April 30, 2012 order.

The PUC had required the disposition of the generation in an order authorizing several transactions which resulted in APUC becoming an affiliate of MPS and Bangor Hydro-Electric.

Within the MPS service territory, APUC, through a wholly owned subsidiary, Algonquin Northern Maine Gen Co. (Northern Maine Gen), owns the following thermal generation units:

• Caribou Steam (2 units): 21.7 MW

• Flo's Inn Diesels (3 Diesel units): 4.2 MW

• Caribou Diesels (4 units): 7.0 MW

Because, based on APUC's experience, "there is neither a market for the capacity or energy from its remaining active generation units nor a robust market for the sale of these assets, especially for a sale in place," APUC proposed to remove these generation units from its continuing control in the market place as follows:

In March 2011, Northern Maine Gen deactivated the Caribou Steam units and they are no longer operable. The Caribou Steam units remain at Northern Maine Gen's generating station in Caribou, and Northern Maine Gen is currently in discussions about the potential sale of these units with an unaffiliated third party buyer, but these discussions are very preliminary and no timeline for any such sale has been set, APUC said.

Northern Maine Gen previously received approved to deactivate 2.2 MW at the Flo's Inn generation station. Subsequently, a fire occurred at the Flo's Inn station that caused damage to the station's control system, forcing the entire station out of service. Because of the cost of repair as well as current market conditions, Northern Maine Gen on August 27, 2012 informed the Northern Maine Independent System Administrator that the remaining 2.0 MW at the Flo's Inn station would not be returned to service and would be retired. Northern Maine Gen will remain open to opportunities for the sale of the Flo's Inn station to an unaffiliated third party buyer

Northern Maine Gen also received approval to deactivate the Caribou Diesel units in February 2011. However, these units have remained in operation and currently are under contract with Algonquin Energy Services (AES). Because the sale of the capacity of the Caribou Diesel units in the ancillary market is no longer sufficient to cover operating expenses, upon completion of the AES contract, which is a month to month agreement terminable on thirty days notice, which the parties anticipate ending around November 2012, the Caribou Diesel units will be deactivated pursuant to prior approval received from the NMISA. During and after this deactivation process, Northern Maine Gen will remain open to opportunities for the sale of the Caribou Diesel units to an unaffiliated third party buyer

For all sales contemplated above, Northern Maine Gen expects that any such sale would be on an "as is, where is" basis, with the buyer taking responsibility for any station related liabilities including for environmental remediation.

APUC des not own any generation in the BHE territory.