PORTLAND, Maine — Maine’s top court struck down a joint venture among Emera Maine’s parent company and two power generators in a ruling Thursday that leaves open many questions about financial relationships between companies that supply power and those that transmit and distribute it.

The Maine Supreme Judicial Court overturned regulators’ approval of the $333 million joint venture among electric utility Emera Inc., wind developer First Wind, and Algonquin Power and Utilities Corp., which has hydropower facilities in Maine.

The ruling’s practical impact is limited. The Nova Scotia-based Emera Inc. in May reduced its stake in Algonquin and dissolved its First Wind investment in late 2014.

But the ruling appears to leave unanswered much bigger questions the case raised over the intermingling of financial interests between utilities and companies that generate power.

The answers have big implications for utilities in the state, as both Central Maine Power Co. and Emera Maine’s parent companies have substantial investments in power generation elsewhere and eyes toward investment in the region.

Lawyers at the Maine Public Utilities Commission are still reading the court’s order to understand those implications, according to commission spokesman Harry Lanphear.

The deal raised concerns from the outset.

This is not the first time that the court has ruled on the proposed partnership. In January 2013, it ordered state utilities regulators to review the deal. The Maine PUC did so, approving it for a second time the following July. The case was then appealed by the municipal utility Houlton Water Co. and the group representing interests of large power generators, the Industrial Energy Consumers Group.

Now, the court has sent it back to the PUC again, this time ordering explicitly that the three-person commission reject the deal.

“The court couldn’t have been more clear on how to proceed,” Lanphear said.

The deal called for both Emera and Algonquin to invest in First Wind through a new holding company created for that purpose. Together, the companies aimed to build, own and operate wind energy projects throughout the Northeast. It also allowed Emera, which serves mostly northern Maine, to boost its ownership interest in Algonquin to 25 percent from 8 percent.

The companies have since unwound the First Wind deal, when renewable giant SunEdison bought the wind power developer. (SunEdison subsequently filed for bankruptcy).

Dina Seely, a spokeswoman for Emera, said the company also reduced its stake in Algonquin to about a 5 percent share, less than before the deal was approved.

“As always, we respect the decision of the court, but this doesn’t have any impact on Emera or Emera Maine or our ownership interest in Algonquin,” Seely said.

Opponents said the deal challenged a central tenet of electricity deregulation.

They argued it blurred the lines between two markets that state law has deliberately kept separate: the generation of electricity and the distribution of electricity.

Maine deregulated the electric industry in 2000. The law states that “an investor-owned transmission and distribution utility may not own, have a financial interest in or otherwise control generation or generation-related assets.”

The prohibition intends to preserve a competitive market for power generation. If one generator has a favorable relationship with the company distributing that power to customers, it can give them an advantage and tip the scale in a market that’s supposed to put generators on equal footing to compete.

The deregulation law preserves that division with the idea that fair competition among generators will lead to lower power bills for consumers.

Regulators sought to limit the potential harms of the deal, but the court found they overstepped.

In approving the Emera-First Wind deal, regulators got around this strict prohibition by imposing their own set of terms, finding that the restrictions would eliminate the harms of that mutual financial interest. They argued that enough regulatory safeguards existed to assure the utilities did not give preferential treatment to affiliated generators.

The court struck down the approval because the deal imposed conditions on Algonquin, which generates power in Maine but is not a regulated utility under state authority. And that’s as far as the court said it needed to go to overturn the PUC.

“We need hold only that the Commission acted outside of its authority when it imposed conditions on an electricity generator such as [Algonquin], where those conditions contravene the legislative framework of allowing generators to operate with very little regulatory governance,” the ruling stated.

The justices found that they did not need to decide the bigger question of whether the state can impose restrictions on such a deal, to offset the potential harms of a power utility having a financial stake in power generation.

That underlying question is now up to regulators to clarify.

“I’m being told … parts are crystal clear and there are parts that we need to digest a little bit more,” Lanphear said.

Read the full decision from the Maine Supreme Judicial Court below.

Darren Fishell

Darren is a Portland-based reporter for the Bangor Daily News writing about the Maine economy and business. He's interested in putting economic data in context and finding the stories behind the numbers.