Economist: Cheap, dirty coal key cause of Maine's energy woes

Coal train economy
AP Photo/Seth Perlman

A Norfolk Southern Railroad train pulls transport cars full of coal through central Illinois on Oct. 9. 

LEWISTON — A former Maine state economist said late Wednesday that cheap, dirty coal and the federal government's unwillingness to enact a carbon pollution tax are the primary reasons Mainers pay more for power than most other Americans.

Charles Colgan, associate director of the University of Maine's Center for Business and Economic Research, was responding to a new video by Maine Gov. Paul LePage calling for reform that would open Maine up to more electricity imports from Canada.

"The biggest subsidy of all is the government's refusal to price coal (and oil) to include their social costs on the environment and health," Colgan said via email.

Maine has a disadvantage on electricity prices not because it uses renewable energy like hydro and wind power, but mainly because 42 percent of the U.S. gets its power from coal, which is among the cheapest sources of fuel, Colgan said.

He said Maine power would look very inexpensive if the true costs of coal energy were compensated.

"Maine's cost disadvantage on electricity could be wiped out or even become an advantage if the federal government were to impose a realistic carbon tax," Colgan said. "This is, of course very unpopular, but Maine's opposition to a carbon tax means that we are allowing other regions like the South to be more competitive than us on electricity costs while we are still getting the costs in the form of air pollution, climate change, etc. Not a really good deal."

LePage said renewables, mainly wind power, are too heavily subsidized by ratepayers and the federal government.

Colgan said several of the governor's statements in the video were off track.

"There were several comments he made that were odd (natural gas is not a renewable) or gratuitous (the implied rebuke to Angus King misses the point that wind power development was well under way in Maine before Angus got into the business; he was something of a late-comer)," Colgan said.

LePage also suggested opening up the state's electrical market to free market forces, but Colgan rejected the notion.

" . . . there are federal subsidies, direct and indirect, to all major energy sources and to many energy efficiency technologies," Colgan said. "Seeking a 'free market' in energy is one of the more futile things one could do."

Colgan said LePage's basic point, that Maine should consider importing more power from Quebec and New Brunswick, does deserve careful evaluation.

"Maine has several times in the past considered signing contracts with (Hydro-Quebec) and decided not to do it for various reasons," Colgan said.

In the 1980s, Maine opted to build biomass plants instead of joining with Quebec to beat the escalating price of oil-fired electricity at the time. He said the state of Vermont did decide to go with Quebec and now gets a large amount of its power from the province. He said that state's dependence on Canadian power could increase if Vermont Yankee, the state's nuclear plant, goes offline.

The wholesale electricity market in New England is complicated and while Maine might benefit from importing more power from Quebec, it would depend on several other important factors, Colgan said.

He said several questions need to be answered:

* What price will the Canadians charge?

* What will be the basis of changes in the price? 

* What are the transmission-line-construction costs and where will they have to be built?

* Will southern New England want Canadian power in sufficient quantity to justify the transmission line costs?

"We can't just say we'll piggyback off Hydro-Quebec going to southern New England if they don't want the power," Colgan said. "I'm also uncertain how much Hydro-Quebec wants to sell to New England."

Colgan noted that Hydro-Quebec, a socialized company, has been growing its supply of wind energy, particularly in the Gaspe Peninsula of northern Quebec.

Maine should carefully assess what role natural gas will play because new sources and lower prices are making it the most affordable form of energy, Colgan said.

"None of these questions imply that (Hydro-Quebec) is not a possible source: They only suggest that the governor's proposal deserves careful evaluation to see what roles it could play in Maine's energy mix," Colgan said.

sthistle@sunjournal.com

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Comments

FRANK EARLEY's picture

How are individual states charged for electicity????

Given that all the electricity in this country is regulated on three grids, one of which is the entire state of Texas, The rest of the country is supplied with the remaining two grids. They receive electricity from coal gas, and hydro. Any additional sources such as wind or off shore hydro, or solar are also distributed in the same grids. How are the states billed, and how can one state lower the cost. If Maine Vermont, and New Hampshire are on the same supply source, does everyone pay the same rate per kilowatt hour??????

Denis Ledoux's picture

Economist dices LePage Energy Theories

Poor Paul LePage. His hours and hours of pouring over meticulous studies evening after evening, reading big tomes written by leading experts, instead of watching tawdry, meretricious TV at the Blaine House—what a hero he is—are all for naught. Charles Colgan in one speech has pointed out all the lack of follow through and depth to Lepage's thinking.

That LePage's speech was all fantasy was such a surprise. We've all become so used to LePage's right on analyses--for big money interests!!

We need a recall or an impeachment process in this state. We need to remove clowns who make it to the top positions by manipulating the electoral system.

 's picture

recall King Angus

King Angus manipulates more than the electoral process.

 's picture

Well, we know of several

Well, we know of several municipal utilities in Southern New England who are willing to pay $99 per megawatt-hour for renewable generated electricity because they have signed contracts at this price and pass the added cost to the ratepayers.
We also know there is a 2000 megawatt DC line from Canada to Massachusetts that delivered over a million megawatt-hours of Canadian electricity to Southern New England, last August.
The problem with the electric market is the thinking of people like the economist in this story is incorporated as program measures by an unwitting government.

DANNY FITZSIMMONS's picture

So we should give tax breaks for using coal!

So if it is so cheap and fact is has higher btus than oil then give tax breaks for it then when we go coal or gas the sheiks can wallow in thier oil and wall street tycoons which have minipulated the oil pricing and have decimated our and the worlds economy since Katrina like Rommney (why do think he does not want to release his tax documents) will go belly up, oh what a sweet dream that would be.

 's picture

how mcuh coal does Maine use?

for electricity
Has anyone asked Boston if they want a fixed rate for 20 years from Hydro-Quebec? Boston could claim to be one of the GREENEST cities in the world if they buy Hydro.

 's picture

Coal, as a fuel source for

Coal, as a fuel source for electrical generation within ISO-NE, represented 0.32 % of the total for the week ending 10/14/12. The use of gas is cheaper than coal in New England and the use of every other fuel source, except grid solar, is cheaper than wind. No rocket science required here.

 's picture

cheaper cost, tax coal

Colgans answer to cheaper energy cost in Maine is to tax coal so that it raises the cost of energy in other parts of the country. That way everybody is paying the same for energy. So how does that lower the cost of energy to Mainers?

PAUL MATTSON's picture

Colgan is a kook.

Colgan is a kook.

PAUL ST JEAN's picture

Best post on the page....

Best post on the page....

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