Bangor Hydro Electric Company: Headwater Benefits

We represent Bangor Hydro Electric Company in defending a substantial claim before the Federal Energy Regulatory Commission (FERC) for compensation for headwater benefits relating to FERC licensed hydropower projects located along the Penobscot River in Maine.

Bangor Hydro is a former owner and licensee of six hydroelectric dams located downstream of storage and release projects owned by Great Northern Paper Co. (GNP), and for which GNP held licenses. Under the terms of the FERC hydro licenses, downstream licensees are required to compensate upstream project owners for the energy gains, or “headwater benefits,” the downstream project owners receive as a result of the regulation of water flow by the upstream projects. Since 2004, Bangor Hydro and several other parties, including the U.S. Bankruptcy Trustee for GNP, have been in litigation before the U.S. Bankruptcy Court in Maine and FERC to determine the amount of headwater benefits compensation due GNP.

One of the major issues in the case was the validity of a May 1999 contractual release by which GNP released Bangor Hydro from any liability for headwater benefits received prior to the date of the contract. In April 2010, a full evidentiary hearing was held before a FERC Administrative Law Judge to determine the extent to which Bangor Hydro was released by the release. In May 2010, the ALJ ruled in favor of Bangor Hydro on the validity of the release and denied most of the Trustee’s claim against Bangor Hydro. As of March 2011, the case remains pending on FERC’s docket for an assessment of headwater benefits not covered by the release.