An Emera Maine truck in front of one of the utilities' operations centers in Maine. Credit: Courtesy of Emera Maine

The Maine Public Utilities Commission on Thursday voted 2 to 1 against a Canadian company’s proposal to buy Emera Maine, citing concerns about risks to ratepayers, including whether it is able to pay for needed system upgrades.

Commission Chairman Philip Bartlett and Commissioner R. Bruce Williamson voted to reject the plan, while Commissioner Randall Davis voted to accept it.

The so-called stipulation was submitted to the commission last Dec. 9, with revisions on Dec. 13. It was signed by eight parties, including Emera Maine, the Maine public advocate and ND Paper, and was meant to meet the Legislature’s requirement put in place last year that the sale have a “net benefit” for consumers.

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The commission needed to assess whether the plan represented a broad spectrum of interests, whether the process of the proposed acquisition was fair and open and whether its benefits are greater than its costs.

“As the stipulation is currently drafted, the magnitude of the risks is great enough that I am unable to conclude that they are outweighed by the benefits,” Bartlett said.

Bartlett raised an ongoing concern about plans by ENMAX Corp. of Calgary, Alberta, to fund most of the acquisition by debt.

“Due to the proposed transaction, Standard & Poor’s has downgraded ENMAX’s credit rating and added a negative outlook,” he said. “The likely result is that ENMAX will have difficulty accessing capital markets for additional debt for the next several years to provide any capital infusion to Emera Maine.

“Emera Maine will largely be on its own and able to invest only what it can to finance itself,” he said.

The sale of Emera Maine, which has more than 150,000 customers across eastern and northern Maine, was announced last March and needs to be approved by the utilities commission.

ENMAX intends to buy Emera Maine from its parent company, Emera Inc. of Nova Scotia, for $959 million. Including Emera Maine’s debt, the deal will be worth about $1.3 billion.

Both ENMAX and Emera Maine said they still plan to go ahead with the sale and will continue to work with the commission during the regulatory process.

“The Maine Public Utilities Commission provided important guidance on elements of the proposed stipulation terms,” said Diana Stephenson, an ENMAX spokesperson. “We recognize and value the input we received, and ENMAX remains fully committed to working with the Office of the Public Advocate, the commission staff and intervenors as we continue to move forward in the regulatory process.”

ENMAX said it is confident the commission’s concerns can be fully addressed.

Emera Maine spokesperson Judy Long said her company is reviewing the decision “and remains engaged in and respectful of the regulatory process.”

Bartlett and Williamson said they could accept the plan if changes are made, including the dividends ENMAX can collect and how penalties for poor service are handled.

Bartlett said the plan does include some tangible benefits, including $8 million from ENMAX shareholders in the form of rate credits for Emera Maine customers and $5 million that Emera Inc. would pay to fund low-income utility rate relief. ENMAX and Emera Maine also have agreed to increase their community investments by 10 percent to $440,000 annually for at least five years.

Bartlett said it is more difficult to quantify the benefit from ENMAX’s pledge to not raise Emera Maine’s distribution rate before April 1, 2021. He would like to see that date extended by six months.

Another issue is that ENMAX wants to reimburse two costs for intervenors in the case, including expert-witness consulting fees.

Bartlett said paying the intervenors and consultants could create the appearance of a conflict of interest. Recipients may look like they are influenced by the money, he said.

“The Legislature has already anticipated a way for such witnesses to be compensated,” Williamson said. “It is a bad precedent and contrary to the public interest.”

Bartlett and Williamson said they would approve the stipulation if changes were made. Those include restricting dividends to ENMAX, not reimbursing intervenors and making Emera Maine pay the penalty for poor electric service rather than its ratepayers.

“A couple of these things would require revision of the stipulation,” Bartlett said.

The commissioners will issue an order about the deliberations, but the next steps are up to Emera Inc. and ENMAX, said Harry Lanphear, spokesman for the commission.