Michael R. Goodwin, Executive Directc Tel 2076221938 Fax 2076231535 December 9, 2013 Mr. Patrick Woodcock Director Governor's Energy Of?ce 62 State House Station Augusta, Maine 04333-0062 Dear Patrick, Thank you for taking the time to meet with Jon Youde and I on December 4, 2013 to discuss the ?Draft Advisory White Paper? prepared by Chase Martin of the Maine Of?ce of Policy and Management relating to the Maine PowerOptions program. I truly appreciate your insights and questions regarding our program. As I stated in our meeting, I do take exception to a number of points and references made in the White Paper, as well as the stated purpose of the rev1ew. As a bit of background, the Maine PowerOptions (MPO) program was created in 1998 as a joint effort by the Maine Health and Higher Educational Facilities Authority and the Maine Municipal Bond Bank, both quasi?governmental organizations, to provide an aggregation group for the non-pro?t community in Maine. I?ve included copies of the legislation for both entities. Although the legislation has no express requirement that the program show cost savings, our goal is that through aggregation of our members? purchasing power, we enhance the opportunity to realize lower energy costs. We believe that our current membership of over 800 entities demonstrates there is a signi?cant bene?t to our members of participation in the program and, to my knowledge, none of our members were contacted as part of this review regarding their participation in our programs and the bene?ts the programs provide them. MPO currently provides bulk purchasing of fuel oil and electricity as well as assistance and expertise in planning the energy needs of our members. Membership is completely voluntary. We have an Internal Advisory Committee (IAC) made up of members whose role is to advise the MPO staff as to the changing needs of its membership as well as to review and select providers of service through various RFP processes. Maine PowerOptions is not a State program and we have never held it out to be. We receive no State funding. All program revenue is derived from provider contracts and membership fees, which range from $0-500 depending on the size of the entity and are a one- time fee paid upon becoming a member. Members are free to participate or not with no commitment. They are encouraged to compare rates and bene?ts with other Options. 127 CommunityDrive PO. Box 2268 Augusta, Maine - 043382268 - Mr. Martin?s report concentrated on the electricity portion of the program, which does make up the bulk of activity within the program. MP0 is a broker/aggregator licensed by the Public Utilities Commission. We select a power supplier through an RFP process every 3 years. This process is facilitated by the MPO staff in conjunction with the IAC. The responses are reviewed by the IAC and presentations are made by suppliers selected by the IAC. It is true that the various iterations of what is now Constellation NewEnergy has won the bid each time since the program?s inception and each time it was after a detailed and well thought out RFP process. It is our experience that Constellation has consistently agreed to terms that shift more of the market risk to energy suppliers than can be found elsewhere in the market. We do not market aggressively. In fact, we market very little with most new members coming as referrals from existing members. The only information that is provided to the supplier relates to the usage and consumption of a member so that accurate pricing can be provided based on that member?s needs. Use of our logo or name in any materials prepared by the supplier is strictly by our permission only. The conclusions reached by Mr. Martin?s review are based on many inaccuracies and omissions. I will comment on each of the White Paper?s Conclusions. 1. ?The abilitv of MP0 to demonstrate savings is non-existent.? As previously stated, the legislation that allowed the creation of MPO has no requirement for cost savings. MP0 is a service provided to its members. MPO has a membership of over 800 loyal members, a number that has remained quite constant over the years. Membership is completely voluntary and members are free to explore all other options in the market. Bene?ts to members are many, and include the total cost of their electricity, but also include such items as ?xed term pricing, favorable terms and conditions as well as any assistance a member may request in evaluating their options. Our contracts normally include all charges, such as line loss charges and capacity charges, unless a member requests such costs separately. Our members evaluate what we offer and how it ?ts into their business and budget and decide whether to participate or not. They are under no obligation to select us. I cannot understand how a report that purportedly attempts to measure bene?ts to members of a program does not include a survey of those members as to their experiences with the program and bene?ts they received. 2. ?Oversight of the program is weak.? MPO follows all rules required for all licensed broker/aggregators. This is a member driven program, with the IAC making recommendations and suggestions for all aspects of the program as well as the selection of the electricity supplier as part of an RFP process. Contrary to this conclusion, Mr. Martin was given a list of all member organizations which participate on the IAC, which he noted on pg 2 of his report in the paragraph labeled ?Review.? 3. ?The Constellation Energy contract is a concern.? MPO undertakes a detailed RFP every three years to select the electricity supplier for the next three years. The RFP is sent to all licensed electricity suppliers. Supplier responses are then reviewed by MPO staff and the TAG and interviews are held. As stated above, MPO has reviewed many responses to our RFPs and other similar contracts in this market, and Constellation Energy has always been willing to shift a greater amount of the market risk to the suppliers rather than to our members. The fee paid by the selected supplier is in lieu of MPO charging a separate user fee to each member and it is a ?at fee, which started at approximately $17,000 in the current contract and slowly increased to the approximately $19,000 we currently collect. This is not a ?hidden fee? but is well disclosed in all responses and discussed by the TAC. The MPO program has run at approximately break-even over the past 3?5 years, with losses in years prior. We operate the program as a service to our members. Making large profits has never been a goal of the program. 4. ?There are numerous alternatives available for MPO customers.? There are a number of alternatives available for our members and many of our members have discussed electricity options with them. We believe this is a good thing. We will provide a member with an indicative rate so they know what we can provide to them. We do not require any type of broker agreement at any time. They are free to look at all alternatives. It is a false expectation that any particular ?xed energy contract will turn out better than the market when energy markets are so volatile and unpredictable. The correct view is to evaluate each pr0posed contract as to whether it offers better than the market rates at the time it is offered, and MPO provides this opportunity to our members at minimal cost. Thank you again for reaching out to get our perspective on this report. I would be happy to discuss this further with you or anyone you feel it would be helpful to discuss it with. Sinrely, i R. Goodwin Executive Director 22 ?2055. POWERS OF AUTHORITY 22 ?2055. POWERS OF AUTHORITY The purpose of the authority is to assist participating health care facilities, participating institutions providing an educational program and participating institutions for higher education in the undertaking of projects and the re?nancing of existing indebtedness that are declared to be public purposes, and for the purposes of this chapter the authority is authorized and empowered(AMD) . 1. Bylaws. To have perpetual succession as a body politic and corporate and to adopt bylaws for the regulation of its affairs and the conduct of its business; 1971, c. 303, ?1 (NEW) 2. Seal. To adopt an of?cial seal and alter the same at pleasure; 1971, C. 303, ?1 (NEW) 3. Of?ce. To maintain an of?ce at such place or places as it may designate; 1971, C. 303, ?1 (NEW) 4. Sue. To sue and be sued in its own name, and plead and be impleaded; 1971, C. 303, ?1 (NEW) 5. Projects. To determine the location and character of any project to be ?nanced under this chapter and to acquire, construct, reconstruct, renovate, improve, replace, maintain, repair, extend, enlarge, operate, lease, as lessee or lessor, and regulate the same, to enter into contracts for any or all of such purposes, to enter into contracts for the management and operation of a project, and to designate a participating health care facility, a participating institution for higher education or a participating institution providing an educational program as its agent to determine the location and character of a project undertaken by the participating health care facility, participating institution for higher education or participating institution providing an educational program under this chapter and, as the agent of the authority, to acquire, construct, reconstruct, renovate, improve, replace, maintain, repair, extend, enlarge, operate, lease, as lessee or lessor, and regulate the same and, as the agent of the authority, to enter into contracts for any or all of such purposes, including contracts for the management and operation of such project; i 2007, C. 354, (AND) 6. Bonds. To borrow money and issue bonds, notes, bond anticipation notes and other obligations of the authority for any of its corporate purposes, and to fund or refund the same, all as provided in this chapter; 1971, C. 303, ?1 (NEW) 7. Rates and fees. Generally, to ?x and revise from time to time and charge and collect rates, rents, fees and charges for the use of and for the services furnished or to be furnished by a project or any portion thereof and to contract with any person, partnership, association or corporation or other body public or private in respect thereof; 1971, C. 303, ?1 (NEW) 8. Rules. To establish rules for the use of a project or any portion thereof and to designate a participating health care facility, a participating institution for higher education or a participating institution providing an educational program as its agent to establish rules for the use of a project undertaken by the participating health care facility, participating institution for higher education or participating institution providing an educational program; MRS Title 22 ?2055. POWERS OF AUTHORITY 2007, C. 354, ?11 (AND) 9. Consultants and agents. To employ consulting engineers, architects, attorneys, accountants, construction and ?nancial experts, superintendents, managers and such other employees and agents as may be necessary in its judgment, and to ?x their compensation; 1971, C. 303, ?1 (NEW) 10. Grants. To receive and accept from the Federal Government or the State or any other public agency loans or grants for or in aid of the construction of a project or any portion thereof, and to receive and accept loans, grants, aid or contributions from any source of either money, property, labor or other things of value, to be held, used and applied only for the purposes for which such loans, grants, aid and contributions are made; [1971, C. 303, ?1 (NEW) 11. Mortgages. To mortgage any project and the site thereof for the bene?t of the holders of bonds or notes or other obligations issued to ?nance such project; [1971, C. 303, ?1 (NEW) 12. Loans. To make loans to a participating health care facility, participating institution for higher education, participating institution providing an educational program, other entity eligible to use the authority or consortium of entities eligible to use the authority for the cost of a project in accordance with an agreement between the authority and the participating entity or entities, except that no such loan may exceed the total cost of the project as determined by the participating entity or entities and approved by the authority; [2007, C. 354, ?12 (AND) 13. Refund. To make loans to a participating health care facility, a participating institution for higher education or a participating institution providing an educational program to refund outstanding obligations, mortgages or advances issued, made or given by such a participating health care facility, participating institution for higher education or participating institution providing an educational program for the cost of the project; [2007, C. 354, ?13 (AND) 14. Apportionment. To charge to and equitably apportion among participating health care facilities, participating institutions for higher education and participating institutions providing an educational program its administrative costs and expenses incurred in the exercise of the powers and duties conferred by this chapter; [2007, C. 354, ?14 (AND) 15. Other acts. To do all things necessary or convenient to carry out the purposes of this chapter. In carrying out the purposes of this chapter, the authority may undertake a project for 2 or more participating health care facilities jointly, 2 or more participating institutions for higher education jointly or 2 or more participating institutions providing educational programs, and, upon undertaking the project, all other provisions of this chapter apply to and for the bene?t of the authority and such joint participants; [2007, C. 354, ?15 (AND) 16. Bulk purchases. To purchase, lease or otherwise acquire, ?nance, sell and transfer for, to or on behalf of itself and any eligible entities organized pursuant to the United States Internal Revenue Code, Section 501 or in partnership with any of its eligible entities organized pursuant to the United States Intemal Revenue Code, Section 501 commodities necessary for the daily operation of the facilities of the eligible entities, including, but not limited to, electricity, petroleum products, fuel oil and natural gas. For purposes authorized in this subsection, the University of Maine System and its colleges and universities are eligible participating institutions under the de?nition of eligible participant for the authority; and 2 I MRS Title @2055. POWERS OF AUTHORITY [1999, C. 231, ?1 (AMD) .1 17. Nonpro?t corporation. In accordance with the limitations and restrictions of this chapter, to cause any of its powers, duties, programs or operations to be carried out by one or more nonpro?t corporations. Nonpro?t corporations acting at the direction of the authority must be organized and operated under the Maine Nonpro?t Corporation Act. For the purposes authorized in this section the University of Maine System and its colleges and universities are eligible participating institutions under the de?nition of eligible participant for the authority 1997, C. 385, ?4 (NEW) SECTION HISTORY 1971, C. 303, ?1 (NEW). 1979, C. 680, ??10?13 (AMD). 1981, C. 470, (AMD). 1991, C. 50, ??8-13 (AMD). 1991, C. 584, ?4 (AMD). 1993, C. 390, ??12?18 (AMD). 1997, C. 385, (AMD). 1999, C. 231, ?1 (AND). 2007, C. 354, ??9?15 (AMD). The State of Maine claims a copyright in its codi?ed statutes. If you intend to republish this material, we require that you include the following disclaimer in your publication: All copyrights and other rights to statutory text are reserved by the State of Maine. The text included in this publication re?ects changes made through the Second Regular Session of the 125th Maine Legislature, is current through September I, 2012, and is subject to change without notice. It is a version that has not been o?icially certified by the Secretary of State. Refer to the Maine Revised Statutes Annotated and supplements for certified text. The Of?ce of the Revisor of Statutes also requests that you send us one copy of any statutory publication you may produoe. Our gOal is not to restrict publishing activity, but to keep track of who is publishing what, to identify any needless duplication and to preserve the State's copyright rights. PLEASE NOTE: The Revisor?s Of?ce cannot perform research for or provide legal advice or interpretation of Maine law to the public. If you need legal assistance, please contact a quali?ed attomey. 30-A AGGREGATION SERVICE 30-A AGGREGATION SERVICE 1. Authority. In addition to its other enumerated powers, but subject to the limitations imposed under subsection 2, the bank, on behalf of or in partnership with one or more governmental units or nonpro?t corporations organized under the Internal Revenue Code, Section 501, may aggregate governmental units and nonpro?t corporations to purchase in bulk electricity, petroleum products, fuel oil and natural gas. [2005, c. 190, 51 (AND) 2. Conditions; limitations. In exercising its authority under subsection 1, the bank: A. Is subject to all applicable provisions of law, including the provisions of Title 35-A relating to aggregators of customers of electricity; [1999, . 23 1, ?2 (NEW) . B. Must provide to any entity to whom it offers to provide services under subsection 1 notice that the entity is under no obligation to accept any of the services and that no other service provided by the bank is conditional upon or affected by the entity's acceptance or rejection of the offerMay not extend credit or vary the terms of credit based on an entity's acceptance or rejection of an offer by the bank to provide services pursuant to subsection 1; and [199 9, c. 23 1, 52 (NEW) . D. May not encourage or otherwise seek to persuade any entity to accept any services offered by the bank pursuant to subsection 1, if the entity has an application with the bank for a loan, until after the bank has taken final action on approving or rejecting the application(NEW) . 1999, C. 231, ?2 (NEW) SECTION HISTORY 1999, c. 231, ?2 (NEW). 2005, C. 190, ?1 (AND). The State of Maine claims a c0pyright in its codi?ed statutes. If you intend to republish this material, we require that you include the following disclaimer in your publication: All copyrights and other rights to statutory text are reserVed by the State of Maine. The text included in this publication re?ects changes made through the Second Regular Session of the 125th Maine Legislature, is current through September 1, 2012, and is subject to change without notice. It is a version that has not been o??icially certi?ed by the Secretary of State. Refer to the Maine Revised Statutes Annotated and supplements for certified text. The Of?ce of the Revisor of Statutes also requests that you send us one copy of any statutory publication you may produce. Our goal is not to restrict publishing activity, but to keep track of who is publishing what, to identify any needless duplication and to preserve the States copyright rights. PLEASE NOTE: The Revisor's Office cannot perform research for or provide legal advice or interpretation of Maine law to the public. If you need legal assistance, please contact a quali?ed attorney.