Emera Maine proposes Swans Island Electric Coop acquisition

Thursday, September 1, 2016

Maine utility Emera Maine and Swan's Island Electric Cooperative have asked the Maine Public Utilities Commission for approval of Emera Maine's proposed acquisition of the island cooperative.  The electric companies say reducing electric rates for consumers is the motivation.

Swan's Island Electric Cooperative is a member-owned rural electric cooperative incorporated in 1949.  The cooperative provides electric service to approximately 560 meters in the island communities of Swan's Island and Frenchboro.  It receives electricity from the mainland Emera Maine system, via undersea cables running from Mount Desert Island.

In a petition filed September 1, Emera Maine and the cooperative and described a proposed transaction through which Emera Maine would acquire most of Swan's Island Electric Cooperative's assets, acquire all of its service territory, and provide electric service to all Swan's Island and Frenchboro customers. Swan's Island Electric Cooperative would cease providing utility service, wind up its affairs, and formally dissolve the Cooperative.

The petition states that the "primary benefit of the proposed transaction is that Swan's Island and Frenchboro ratepayers will receive immediate and substantial rate relief."  According to the petition, the costs of providing electricity to a remote island and small cooperative membership have led to high electricity rates for customers of the cooperative.

The petition notes that Swan's Island customers currently pay delivery charges of 12.343 cents per kilowatt hour and Frenchboro customers pay 15.917 cents per kilowatt hour.  Fixed meter charges add another $46.84 per month for Swan's Island customers (or $48.26 for Frenchboro.)  The petition contrasts these rates to "a typical residential customer in Emera's Bangor Hydro District", with a delivery charge of 10.770 cents per kilowatt hour and a minimum charge of $7.48 per month.

According to the petition, the cooperative's high rates prompted members to investigate the possibility of a merger with Emera.  This led to the August 31, 2016 execution of an Asset Purchase Agreement, under which Emera will purchase the bulk of the cooperative's assets, acquire its service territory and provide service to its current customers, subject to regulatory approval.  According to the petition, 90% of votes by cooperative members supported the transaction.

The petition describes Emera's commitments as including the installation of modern "smart meters" for all new cooperative customers, and notes anticipation that the undersea cables will need replacement "within the next several years at an estimated cost of $3.4 million."  Emera points to its experience providing service to remote areas, including the Cranberry Isles.

The transaction requires approval by the Maine Public Utilities Commission.  The Commission has docketed it as Docket No. 2016-00209.

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