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Attorney General Releases Report on Inquiry into Former PUC Chair Kurt Adams' Interactions with First Wind
June 2, 2010
For Immediate Release
Office of the Maine Attorney General Report on Inquiry into Former PUC Chair Kurt Adams Interactions with First Wind
Contact: Kate Simmons (207) 626-8577
On April 30, 2010, the Maine Office of the Attorney General commenced an inquiry in response to suggestions that former Public Utilities Commission (?PUC?) Chair Kurt Adams acted improperly when he accepted an employment offer from First Wind on April 16, 2008, which included the transfer to him of 1,200,000 unvested Series B securities.
This office interviewed PUC staff, PUC commissioners, and Mr. Adams. We reviewed emails, corporate documents, employment contracts, PUC and Federal Energy Regulatory Commission (FERC) pleadings, and the record relating to the PUC?s deliberation of whether to intervene before FERC on the disqualification of the Stetson Wind Farm from the first Forward Capacity Auction (?FCA?).
Legal Authority of the PUC
A preliminary concern for this review is the authority of the PUC over any matters involving First Wind. The PUC consists of three commissioners appointed by the Governor, each for six year terms. 35-A M.R.S. ? 103. As a result of the restructuring of the electrical industry, the PUC does not regulate electrical generators, including wind power generators, or the wholesale market for electricity. 35-A M.R.S. ?? 102, 3201, 3202. Rather, the Independent System Operator-New England (?ISO-NE?), a private entity that was created and is regulated by FERC, oversees the regional market for wholesale electricity.
Since ISO-NE?s decisions significantly impact Maine ratepayers, the Legislature authorized the PUC to ?[i]ntervene and participate in proceedings at the Federal Energy Regulatory Commission (FERC)?whenever the interest of competition, consumers of electricity or economic development in this State are affected,? and to ?use all means within its authority and resources to advocate for and promote the interests of Maine ratepayers in any proceeding at the Federal Energy Regulatory Commission involving the development, governance, operations or conduct of an independent system operator.? 35-A M.R.S. ? 3215.
The Legislature further directed the PUC to ?monitor electricity markets and sale opportunities physically accessible to wind power installations in this State to determine whether such markets and opportunities are available for the sale of wind energy in accordance with federal and state law.? 35-A M.R.S. ? 3403(1). The commission may ?initiate regulatory and other legal action to protect access to markets by wind power facilities located in the State.? 35-A M.R.S. ? 3403(2).
The review of the facts revealed the following:
Fall 2007. Representatives of Central Maine Power (CMP) meet with the PUC to discuss the Maine Power Reliability Project (MPRP), CMP?s proposal to expand transmission lines in Maine. Adams reviews with staff the alternative routes for the proposed transmission lines. Adams determines that one of the alternatives would expand the line directly behind his residence. He privately hires Attorney Toby Dilworth to advise him as to whether he might have a conflict of interest in presiding over this major and lengthy proceeding before the PUC.
October 15, 2007. Dilworth issues his opinion that Adams does not have an actual conflict that would require recusal but Dilworth advises Adams to disclose the possible conflict to the Attorney General?s Office and to request an opinion. He cautions that while there is ?no basis for you to disqualify yourself at this time,...you will need to evaluate whether you can make a fair and unbiased decision when the matter is filed.?
November 6, 2007. ISO-NE makes an informational filing with FERC regarding qualification of electricity generators to participate in the first Forward Capacity Auction (FCA) for electricity. The filing disqualified the Stetson Wind Farm in Springfield, Maine, due to ISO-NE?s finding that there was insufficient transmission capacity from Orrington South. Stetson Wind Farm is owned by First Wind Holdings, LLC (?First Wind?), then UPC Wind Management, LLC (?UPC?).
November 9, 2007. A PUC staff economist brings the issue of Stetson?s disqualification to the attention of a PUC staff attorney, Lisa Fink. Fink emails the PUC commissioners (Kurt Adams, Sharon Reishus, and Vendean Vafiades) and suggests that they discuss the matter at their weekly meeting on the wholesale markets.
November 25, 2007. Fink indicates by email to the commissioners that she cannot attend the next scheduled wholesale markets meeting and notes, ?I do think we need to decide whether to comment at FERC on the FCM [Forward Capacity Market] qualification filing made by ISO, specifically the disqualification of the Stetson wind project.? The meeting is cancelled due to the press of other business, delaying discussion of Stetson.
December 10 or 11, 2007. Because of his possible conflict in presiding over the major MPRP proceeding, Adams begins to explore employment opportunities outside of the PUC and contacts First Wind, an energy developer not regulated by the PUC. A meeting is scheduled for December 21, 2007.
December 12, 2007. Adams notifies Fink and the commissioners by email that he is ?aware of a potential conflict? with the Stetson matter and asks to be taken ?out of the loop on this for now.? There is no evidence that Adams participated in any matter before the PUC involving UPC or First Wind after this date.
December 17, 2007. The Stetson disqualification issue is on the agenda for deliberation by the commissioners. Adams recuses himself from consideration of the issue. The other two commissioners approve Fink?s recommendation to intervene before FERC on the issue of Stetson?s disqualification by ISO-NE.
December 18, 2007. Fink and Washington D.C.-based counsel for the PUC make an electronic filing with FERC entitled a ?Motion for Leave to Intervene and Protest Out of Time.?
December 21, 2007. Adams meets with representatives of First Wind to discuss possible employment with the company.
January 11, 2008. FERC issues its order granting the PUC?s request to intervene, but upholds ISO-NE?s disqualification of the Stetson project in a ruling adverse to First Wind.
January 18, 2008. Fink transmits the order to the commissioners and advises against taking an appeal.
December 28, 2007 through February 22, 2008. Adams and First Wind exchange emails about Adams? possible employment at First Wind.
February 22, 2008. Adams declines First Wind?s offer of employment by email. ?I look forward to watching your company thrive in Maine and elsewhere.?
March 18, 2008. Chief Deputy Attorney General Linda Pistner issues an opinion about Adams? possible conflict in presiding over the MPRP proceeding. She concurs with Dilworth that Adams does not have an actual conflict of interest but advises Adams to disclose his interest in the project at the outset of the MPRP proceeding in order to permit any party to raise objections to his participation. Based on Pistner?s analysis, Adams concludes that he should not preside over this major transmission line proceeding and he contacts First Wind to accept the position.
March 26, 2008 through April 16, 2008. Adams and representatives of First Wind exchange emails regarding terms of employment and the documents necessary for his signature.
April 16, 2008. Adams signs the documents required for his employment at First Wind, including the ?Restricted Unit Agreement.? The agreement includes the following provisions:
? The agreement transfers 1,200,000 Series B-3 Units with a $1.57 threshold value.
? The units ?are subject to all the restrictions applicable to Series B Units as set forth in the LLC Agreement and in this agreement.?
? Except as provided by Section 4 of the Agreement, the transferee units are ?Unvested Series B Units.?
? The units do not become vested until the one year anniversary of continuous employment. The vesting schedule is as follows: One third of the B Units are vested at one year; the second third is vested at the two-year anniversary of employment; and the last third of the B Units is vested at the third anniversary of continuous employment.
? The B Series Units are forfeited if the transferee resigns or is terminated for cause.
The units have no market value at the time of the transfer.
May 1, 2008. Adams? resignation as PUC Chair is publicly announced by the Governor?s Office.
May 18, 2008. Adams begins work at First Wind as a senior vice president.
The statute relating to conflicts of interest is found at 5 M.R.S. ? 18, which provides in relevant part:
An executive employee commits a civil violation if he personally and substantially participates in his official capacity in any proceeding in which, to his knowledge, any of the following have a direct and substantial financial interest: A. Himself, his spouse or his dependent children; B. His partners; C. A person or organization with whom he is negotiating or has agreed to an arrangement concerning prospective employment; [1979, c. 734, ?2 (NEW).] D. An organization in which he has a direct and substantial financial interest; or E. Any person with whom the executive employee has been associated as a partner or a fellow shareholder in a professional service corporation pursuant to Title 13, chapter 22-A, during the preceding year.
As demonstrated by the chronology, Adams complied with this law by disqualifying himself from any proceeding in which he arguably had a ?direct and substantial financial interest.?
The only other statutes of possible relevance are contained in Chapter 25 of Title 17-A, the Maine Criminal Code. Our review of the facts discloses no evidence of a violation of these laws, in particular because Adams recused himself appropriately from any decision-making which might have raised the appearance of a quid pro quo or inappropriate influence.
Our review of the facts and the law finds no cause for further action regarding Kurt Adams interactions with First Wind at the end of his service as Chair of the PUC.