A tentative site plan shows one area where solar panels could be placed on homes and administrative buildings at the Indian Township reservation. The map was among several submitted by the Passamaquoddy Tribe to the U.S. Environmental Protection Agency as part of a grant application that secured $7.4 million for the project. (Courtesy of U.S. Environmental Protection Agency)

Maine utility regulators are weighing whether a proposal by the Passamaquoddy Tribe to install hundreds of rooftop solar panels would violate the state’s net energy billing rules. However they rule, experts say, could affect other groups in Maine looking to lower costly electric bills, too.

The tribal government last year secured a $7.4 million grant from the U.S. Environmental Protection Agency to put panels on more than 200 homes and administrative buildings at the tribe’s Indian Township reservation.

But the project hit a roadblock when the local electric company, the Eastern Maine Electric Cooperative, argued that it was too big to qualify for a state program the tribe says could save its members hundreds of thousands of dollars a year.

Maine’s net energy billing program incentivizes small-scale solar installations to help meet the state’s clean energy goals. It includes rules designed to prevent large projects from reaping the benefits, in order to limit how much a big developer, for instance, can drive up costs for other ratepayers.

At its core, the Indian Township dispute revolves around whether the proposal should be viewed as one large project, as the electric co-op claims, or hundreds of smaller projects, as the tribe argues. The answer could determine whether the plan is allowed to proceed.

“You can imagine a trailer park anywhere in Maine, or an affordable housing development or a retirement community wanting to facilitate the individual ownership (of solar panels), and I emphasize individual ownership,” said Seth Berry, a former state legislator and the executive director of Our Power, a nonprofit that advocates for clean energy and locally owned generation. “Those kinds of projects in the future … could be stopped and could be treated as, for all intents and purposes, a single, large, solely owned array.”

The Maine Public Utilities Commission opened a formal investigation in February, but the case has stalled for months because of a back-and-forth over what information it needs to make a decision — and whether it’s even considering the right questions.

Lawyers for the tribe have voiced concerns that further delays would jeopardize the project, even if regulators ultimately side with the tribe.

“In addition to the normal costs of litigation, the Tribe risks losing the funding it has secured for the projects at issue in this proceeding,” its lawyers wrote in an Aug. 4 filing, pointing to the sudden terminations of other already-promised EPA grants. “Each day that funds are not drawn down is a day that the Tribe risks losing those funds.”

Days later, the EPA notified the state that it was clawing back a separate $62 million award to install solar panels in low-income communities — part of a national effort to cut billions in solar funding.

NET ENERGY BILLING LIMITS

Under Maine’s net energy billing laws, residents with rooftop solar can receive credits on their bill for every kilowatt-hour of electricity they produce but do not use and is ultimately exported to the larger grid. They can then apply those credits to later bills.

To qualify for savings, projects connected to the infrastructure of Maine’s big, investor-owned utilities — Central Maine Power Co. and Versant Power — cannot exceed a generation capacity of 5 megawatts, or 5,000 kilowatts. With the handful of small, consumer-owned utilities that operate in rural parts of the state, the maximum is 100 kilowatts (unless the utility opts for the higher threshold). The Eastern Maine Electric Cooperative has never allowed projects more than 100 kW, according to several of its filings.

Regulators have traditionally used a series of nine questions to determine whether multiple installations should really be considered one “discrete electric generating facility.” Those questions include how close projects are to each other geographically, whether they share an owner or funding source and whether they are capable of being interconnected to the grid at the same location.

The commission has not been asked to apply that definition to projects under 100 kW before, hearing examiners Daya Taylor and Rikka Strong wrote in an April procedural order. They questioned whether the considerations typically used in cases involving Maine’s large utilities should apply to those with much smaller utilities like the co-op.

THE COUNT COUNTS

A worker carries a solar panel onto the roof of a home at OceanView, a Falmouth retirement community, in 2017. Experts say the outcome of a dispute between the Passamaquoddy Tribe and a local power company could impact future attempts to install resident-owned solar at scale within a single community. (Ben McCanna/Staff Photographer)

The tribe’s proposal includes installing solar panel arrays on 202 single-family homes, with capacities ranging from 5.8 kW to 11.5 kW. They would also install 21.5 kW solar arrays on a pair of multi-family homes, a 64.4 kW array on the tribal health center and a 50 kW array on the tribal government’s office building.

All told, the plan would mean installing more than 1,800 kW (1.8 megawatts) of generation capacity.

Each project would be connected to the grid individually and would have its own battery backup, capable of supplying power to the property during outages, according to the tribe’s initial request for an advisory ruling. The batteries, though, would not export electricity to the grid, the tribe said.

Each household that gets solar panels — or, for public buildings, the tribal government — would enroll in net energy billing separately, it states. “No individual project will exceed 100 kW.”

But that’s not how the electric company sees it.

THE CO-OP’S CASE

Eastern Maine Electric Cooperative argued that the project’s shared funding source, the fact that it would likely benefit from economies of scale by going through a single solar installer and the proximity of all the panels to each other point to it being a single generation facility, with a capacity far exceeding what the co-op is required to allow.

A handful of other small power companies, including the Van Buren Light and Power District and Houlton Water Co., have filed statements in support of the co-op.

Scott Hallowell, its executive director, told regulators Eastern Maine Electric Cooperative could lose between $225,000 and $330,000 a year in delivery revenue if the Passamaquoddy project goes through. Those costs would likely need to be shifted to the company’s remaining ratepayers, who may not be easily able to absorb higher bills.

The utility serves about 13,000 customers across parts of Aroostook, Penobscot and Washington counties, Hallowell told the commission.

“From a poverty basis, (the area is) probably around the worst part there is in the whole state,” Hallowell said. “We run a pretty lean margin.”

Last year, the company brought in more than $17.9 million in operating revenue, including $9.9 million from residential customers, according to its annual report. Its margin after expenses was only about $540,000.

“The rates in (the co-op’s) territory are going up if the tribe wins,” William Harwood, Maine’s former public advocate and a longtime energy and utilities lawyer, said in an interview. “It’s a real concern. And I don’t mean to minimize for a minute the cost of climate change and what it’s doing to our coastline, but we have to balance it somehow with the affordability problem.”

But Commissioner Patrick Scully and Chair Philip L. Bartlett II both said during a recent hearing that the project’s financial effect on the electric cooperative was likely not relevant.

“I don’t understand how I can take into consideration the economic impact of this proposal on (Eastern Maine Electric Cooperative) and its other members,” Scully said. “When that’s true of the very nature of (net energy billing). That’s the way that it works.”

POSSIBLE IMPACTS

Rep. Gerry Runte, D-York, a member of the Legislature’s Energy, Utilities and Technology Committee, said he hopes the case will reaffirm the state’s historic approach to net energy billing and supporting resident-owned projects. He said the tribe’s proposal is effectively the same thing as individual homeowners installing panels and opting into the program.

“The only difference here, fundamentally, I think, is who’s paying for it,” Runte said. “The tribe, yes, it’s acting collectively, but on behalf of a number of individual residents.”

Harwood, the former public advocate, noted that property ownership structures are different on reservations than elsewhere in the state: some residents own their homes but not the land the structures sit on, while others live in housing owned by the U.S. Department of Housing and Urban Development, for example.

“It may turn out that whoever wins this suit, it doesn’t apply to a lot of others,” Harwood said. “This is an area of net energy billing which wasn’t carefully considered when the program was put together.”

LIFE IN TOWNSHIP

Indian Township, also known as Motahkomikuk, is a community of about 760 residents, according to the latest census data. The reservation sits about 15 miles northwest of Calais and a few miles from the Canadian border.

“It’s a very rural area, underserved in many respects,” Trevor White, an environmental officer for the tribe, told the utilities commission at a hearing last month. White, and other tribal officials, did not return requests to discuss the case.

If allowed to move forward, the tribe’s proposal could save its members more than $7 million over the next 25 years, it said. In a place like Indian Township, that money could go far.

The average per-capita income for people living on the reservation was $14,435 in 2022, according to an analysis by the Harvard Project on American Indian Economic Development. That’s about a third of Maine’s per-capita average of about $42,035, according to the U.S. Census Bureau.

The reservation also saw an unemployment rate of 6.5% among members and a child poverty rate of 40.2% in 2022, according to the Harvard report. Those were both significantly higher than the statewide averages. Maine’s overall unemployment rate was 2.9% in 2022, according to the Maine Department of Labor; child poverty, meanwhile, hovered around 12%, according to an analysis by the Annie E. Casey Foundation.

The reservation’s rural position also leaves it vulnerable to extended power outages, while the long-term impacts of climate change threaten to undermine traditional ways of life, the tribe said in a filing. Localizing power generation could help minimize those outages while limiting the group’s environmental impact.

“We do seem to see more storms, and we do have power outages,” White told the commission. “That does cause hardship for people.”

Maulian Bryant, executive director of the Wabanaki Alliance, told the commission that the state has undermined tribal sovereignty “time and time again,” but argued that siding with the Passamaquoddy could help restore some independence.

“You can follow the historical path of subjugation, and depriving the tribe of its sovereignty and use of its own natural resources,” Bryant said. “Or you can take a different path, and work with the tribe to ensure that its proposal is treated fairly and achieves its important goals.”

Phil Bartlett, chair of the Maine Public Utilities Commission, speaks at a hearing in 2019. Bartlett said the effects a solar project by the Passamaquoddy Tribe may have on the local utility’s finances is likely irrelevant to regulators’ decision about whether to allow it. (Shawn Patrick Ouellette/Staff Photographer)

THE COST OF WAITING

On Tuesday, Berry, Runte and nearly a dozen other current and former lawmakers called on regulators to side with the Passamaquoddy. They sent a letter saying the case presents an “urgent opportunity and obligation” to recognize and uphold tribal sovereignty in Maine and argued that the electric co-op’s arguments are out of line with the purpose of Maine’s net energy billing rules.

“The Legislature has at no time expressed any intent or desire to treat multiple, individually owned, behind-the-meter, residential rooftop arrays as a single, discrete electric generating facility,” they wrote.

In an interview, Berry noted the tribe first requested approval from the commission late last year. Records show the electric co-op has repeatedly asked for additional information from the tribe, including emails between the tribal government and the solar installation company it intends to work with.

“I think it’s tragic that it has taken (more than) seven months already, and that the case has gone to discovery,” Berry said. “It seems to us that this is a delaying tactic designed to kill the project.”

Beyond the potential for funding to get pulled, Berry said the economic landscape surrounding solar power will change drastically after Jan. 1, when a number of longstanding federal tax credits are set to expire. Meanwhile, tariffs could drive up the costs of some solar equipment.

Leadership at the electric cooperative did not return multiple calls and written requests to discuss the case or respond to the claim of an intentional delay.

Regulators halted discovery on Aug. 15 and are set to weigh the central question of whether the project is eligible for net energy billing in the coming weeks.