65- 407 C.M.R. ch. 304, § 7

Current through 2024-25, June 19, 2024

Section 407-304-7 - SANCTIONS

This section governs sanctions applicable to violations of 35-A M.R.S.A. §§3205, 3206 and this Chapter. For purposes of imposing a sanction under this Section, the provisions of a distribution utility's implementation plan and Chapter 820 are incorporated into this Chapter. Penalties collected pursuant to this section must be deposited in the Public Utilities Commission Reimbursement Fund.

A. General Administrative Penalties; Disgorgement. The Commission may, in an adjudicatory proceeding, impose an administrative penalty of up to $100,000 for a violation of 35-A M.R.S.A. §§3205, 3206 or this Chapter. Each day a violation continues constitutes a separate offense. In addition, the Commission may, in an adjudicatory proceeding, require disgorgement of profits or revenues realized as a result of a violation of 35-A M.R.S.A., §§3205, 3206 or this Chapter.

B. Violations of the 33% Market Share Limitation. If an affiliated competitive provider exceeds the 33% market share limitation imposed by Section 4, the penalty is determined according to the following:

1. If in the calendar year reported pursuant to Section 4(A) (current calendar year), the actual retail sales (measured in kilowatt-hours) of an affiliated competitive provider plus its contracted retail sales (measured in kilowatt-hours) exceed 33% but not 35% of the total retail sales in its affiliated distribution utility's service territory in the year previous to the year reported pursuant to Section 4(A) (prior calendar year), the penalty equals the difference between the average revenue per kilowatt-hour the affiliated competitive provider received for sales in the service territory of its affiliated distribution utility during the current calendar year and the New England independent system operator average market clearing prices for capacity and energy for the current calendar year, multiplied by the kilowatt-hours in excess of 33% of the total retail kilowatt-hours sold within the affiliated distribution utility's service territory in the prior year, up to a maximum penalty of $100,000 per day.

For example, assuming the total retail sales within a distribution utility's service territory in calendar year 2002 was 9,000,000,000 kWhs, an affiliated competitive provider could not sell more than 2,970,000,000 kWhs (9,000,000,000 * 0.33 = 2,970,000,000) within that distribution utility's service territory in calendar year 2003 without incurring a penalty. If, hypothetically, in 2003 the affiliated competitive provider sold 34% of the 2002 total retail kWh sales within its affiliated distribution utility's territory, received $91,800,000 in revenues associated with those sales and the average market clearing price for capacity and energy in 2003 was $0.025 per kWh, a penalty of $450,000 would be due: [(0.34 * 9,000,000,000 kWhs = 3,060,000,000 kWhs; excess sales = 3,060,000,000 - 2,970,000,000 = 90,000,000 kWhs; average revenue per kWh = $91,800,000/3,060,000,000 kWhs = $0.030 per kWh sale price; therefore the penalty = 90,000,000 * (0.030 - 0.025)=$450,000].

2. If the affiliated competitive provider's actual retail sales (measured in kilowatt-hours) plus its contracted retail sales (measured in kilowatt-hours) in the current calendar year exceed 35% of the total retail sales in its affiliated distribution utility's service territory in the prior calendar year, the penalty equals the penalty as determined in subsection 1 plus the average revenue per kilowatt hour the affiliated competitive provider received for sales in the service territory during the current calendar year multiplied by the kilowatt hours in excess of 35% of the total retail kilowatt-hours sold within the affiliated distribution utility's service territory in the prior year, up to a maximum penalty of $100,000 per day.

For example, using the same assumptions as in subsection 1 except that in 2003 the affiliated competitive provider sold 38% of the 2002 total retail kWh sales within that distribution utility's territory and received $102,600,000 in revenues associated with those sales, a penalty of $9,000,000 would be due: [(0.38 * 9,000,000,000 kWhs = 3,420,000,000 kWhs; sales in excess of 33% but up to 35% = (0.35 * 9,000,000,000) - 2,970,000,000 = 180,000,000 kWh; sales in excess of 35% = 3,420,000,000 - (0.35 * 9,000,000,000 kWhs) = 270,000,000 kWhs; therefore the penalty = 180,000,000 * (0.030 - 0.025) + (270,000,000 * 0.030) = $900,000 + $8,100,000 = $9,000,000].

C. Divestiture. The Commission shall require a distribution utility to divest an affiliated competitive provider if the Commission determines in an adjudicatory proceeding that:

1. The distribution utility or its affiliated competitive provider has knowingly violated Title 35-A M.R.S.A. §3205, or this Chapter and the violation resulted or had the potential to result in substantial injury to retail consumers of electric energy or to the competitive retail market for electric energy; or

2. An affiliated competitive provider obtains an unfair market advantage as a result of an entity's ownership of 10% or more of the stock of the distribution utility.

65- 407 C.M.R. ch. 304, § 7