Mill officials say renewables not to blame for Maine's high energy costs

LEWISTON — Representatives of Maine's pulp and paper industry said Wednesday that efforts by Gov. Paul LePage's administration to change the state's renewable energy policies are likely to do more harm than good when it comes to the price of electricity.

File photo

The Verso paper mill in Bucksport has plans to build a biomass energy plant.

They may also hurt the paper industry, which employs 7,500 workers statewide, according to Bill Cohen, Verso Paper Corp.'s manager for mill communications and regional government affairs.

Cohen said his company is hoping to refocus the energy debate at the Legislature in 2013 and is encouraging lawmakers and LePage to rethink changes they might have in mind for how to reduce the final price a consumer pays for a kilowatt-hour.

"Last session it got quite contentious because he was very specifically concerned about the renewable portfolio standard and that has a tremendous impact on Verso," Cohen said. "Basically, we hadn't even finished a $42 million investment and he was trying to take away some of the rules by which we had made that investment."

Cohen was talking about Verso's decision to install a biomass power plant that produces electricity and steam for its paper mill in Bucksport. That plant, which can produce 25 megawatts of energy, is allowed to sell its excess electricity to Maine's power market and make a profit because of the renewable portfolio standard.

The standard allows all renewable energy facilities that generate less than 100 megawatts of energy to be eligible for inclusion in the portfolio. The standard also carves out an exemption that allows all wind projects, even those over 100 megawatts, to be eligible.

LePage proposed a bill last legislative session that would have changed the standard by removing the 100-megawatt cap. That would have the effect, according to Cohen and Verso, of flooding Maine's market with power from large hydropower facilities in Quebec. It could make Verso's recent investment a moot point, Cohen said. 

But Patrick Woodcock, the newest director of the Governor's Office of Energy Independence, said LePage simply wants to level the energy playing field in Maine. The governor wants all producers of renewable energy, big and small, to have a fair shot at the market, Woodcock said.

He said that lowering the cost of electricity in Maine has been a key focal point for the LePage administration because it is one of the biggest concerns for businesses here and businesses considering moving here.

"We are very clearly focused on lowering manufacturing costs," Woodcock said. "The fact of the matter is, Maine has the 12th-highest electricity prices in the country, and that is an uncompetitive statistic when you look at bringing new businesses in."

But because the renewable portfolio standard only accounts for about 3 percent of the total price of a kilowatt-hour in Maine, Cohen said the governor is misguided.

The real issue, according to Cohen and a group of industry executives, is the shortage of natural gas pipeline capacity into New England. 

Even if Maine could expand its capacity to move natural gas around the state, that wouldn't ultimately help the price of natural gas if the state couldn't bring in the volume it needs to fill a growing demand, Cohen said.

Natural gas pipeline systems across New England must be upgraded and expanded. Cohen said that investment has been estimated to be in the $2 billion range, but it's difficult to convince Maine lawmakers and policymakers that infrastructure investments in other New England states will help our economy, he said.

Cohen said any legislation that attempts to tackle the costs of electricity by simply carving out parts of a complex policy based on a misconception won't advance more affordable power.

"First of all, you have the whole policy around the renewable portfolio," Cohen said. "You can't just take a piece of it; you've got to understand the whole policy, but let's debate the whole policy and not just one little part of it."

Woodcock said the governor agrees with Cohen and Verso on the natural gas issue and has worked toward expanding access to that fuel resource to both industries and residents.

"It is absolutely critical that we increase our natural gas infrastructure, absolutely critical," Woodcock said. "There are low-cost options to natural gas in the United States and Maine industries need to have access to this new resource that can power Maine jobs."

Woodcock said the state still needs to take a holistic approach.

"It is not one single aspect of Maine's energy situation that is causing this, but we need to look at every single aspect and that's what the governor has been doing and looks forward to doing with the new Legislature," Woodcock said.

State Sen. John Cleveland, D-Auburn, the Senate chairman of the Legislature's Energy, Utilities and Technology Committee, said Wednesday he was not aware of any bills that would be coming before his committee but that bill drafts were not due until Jan. 18.  

Cleveland said part of the rationale behind the renewable portfolio standard was to ensure that Maine had a diverse mix of renewable energy sources.

He said the 100-megawatt cap was meant to keep any one source from being able to flood the Maine market and hold it captive. "The idea was to try and encourage a variety of diverse power-generating sources and not be overly dependent on any one particular source," Cleveland said.

He said any proposals, from the governor or lawmakers, on energy would be given fair and careful consideration by his committee.

sthistle@sunjournal.com

The Truth About Maine's Electricity Costs

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Comments

Roger Moulton's picture

So what Verso is saying

Is that we should pay higher rates for electricity due to a poor business decision they made? Bite me Verso bite me, convert your biomass into natural gas or something usable and profitable. Don't tell me we should pay more for electricity so that your biomass boiler makes money.

Norman Mitchell's picture

One more thing

This company should stop buying wood from Canada ! They don't like us buying power from Canada ! We don't like them buying wood from Canada , stop the stream of logs from north of the boarder ! Our loggers want to work too ! Sounds like a bunch of hypocrites to me !

 's picture

It would be nice if Verso

It would be nice if Verso Paper could thank the Maine ratepayers for their 2 million dollar contribution to this biomass boiler. I don't think we will see it coming back to us from the profits Verso Paper gets from the sales.

JOANNE MOORE's picture

Remove the 100 megawatt cap.

Hydropower is an excellent renewable. Who cares where it comes from. We need cheap power in Maine to attract business. Any attempt to discredit hydropower is made in fear that it will monopolize the industry. It should. If other forms of energy can't measure up why should the ratepayer subsidize them?

Let the marketplace play out. Let the competition begin!

 's picture

Efficiency Maine has

Efficiency Maine has allocated $8,927,224 US under the state's Industrial Grant Program to 16 projects. 
Verso Paper in Bucksport - $2,000,000 US grant towards the cost of a $45,900,000 US biomass boiler.

Norman Mitchell's picture

Facts

People should learn before they go to the press fact is the problem with the rps is that it favors wind power , The idea was to try and encourage a variety of diverse power-generating sources and not be overly dependent on any one particular source," Cleveland said. The fact is the Idea was to make people in the wind industry rich the only green in this law is in the pockets of the wind developers ! The Idea was to make wind power the only renewable power source in the state ! here is what the law calls renewable energy //Chapter 32: 2. Definitions. As used in this section, unless the context otherwise indicates, the following terms have the following meanings:
B-2. "Renewable energy credit" means a tradable instrument that represents an amount of electricity generated from eligible resources or renewable capacity resources. [2009, c. 542, §2 (AMD).]

B-3. "Renewable capacity resource" means a source of electrical generation:

(1) Whose total power production capacity does not exceed 100 megawatts and relies on one or more of the following:

(a) Fuel cells;

(b) Tidal power;

(c) Solar arrays and installations;

(d) Geothermal installations;

(e) Hydroelectric generators that meet all state and federal fish passage requirements applicable to the generator; or

(f) Biomass generators that are fueled by wood or wood waste, landfill gas or anaerobic digestion of agricultural products, by-products or wastes; or

(2) That relies on wind power installations. [2009, c. 542, §3 (NEW).] notice no cap on Wind power !! So why aren't they complaining about that ? It would be ok for wind power to being able to flood the Maine market and hold it captive. This law needs to be revisited and the favoritism of wind power needs to stop, so how is wind better than the other forms of green energy ? Could it be that people like Angus King got rich from it , could it be the people who created this law where bias ? Kurt Adams, former chairman of the Maine Public Utilities Commission. Adams left in 2008 to be a top executive at First Wind. Or Juliet Browne (First Wind lawyer) was appointed by Baldacci to a 2007 wind-power task force her husband, Rep. Jon Hinck . The standard also carves out an exemption that allows all wind projects, even those over 100 megawatts, to be eligible. This is the reason our electric rates are going up wind power ! All to go state to places that wont allow wind power in their state Maine is the greenest state in the us when it comes to electric power generation, fact we generate only .4% of our electricity from Oil . Fact is wind power is bad for Maine bad for tourism and a job killer a new study shows for every green job created 4 jobs are lost . Kill the cap stop the government from picking winners and losers capitalism works if you let it its what made America Great not government ! Government needs to get out of the way and stop being the problem time for government to step back and be part of the solution!

RAYMOND FRECHETTE's picture

Competition is what will

Competition is what will drive down the cost of anything including electricity. Open the market to all on an equal basis. Those who are more efficient will come out the winner. The current system seems to favor certain groups and exclude others.

Gerald Weinand's picture

The LePage administration

The LePage administration continues to repeat the lie that electricity from dams larger than 100MW cannot be sold here in Maine (the largest dam is Maine is 73MW). This is false - it's just that such power cannot qualify as part of the Renewable Portfolio Standard (RPS).

 's picture

The renewable sector has it's

The renewable sector has it's own niche within the overall electrical generation industry. Leveling the field within this niche allows competition to determine the most favorable costs to the ratepayer. So, if hydro at 99MW is renewable, then why isn't hydro at greater than 100MW also renewable. Same with biomass, same with wind, thermal, solar. Making the standard based on costs to ratepayers isn't new, it's the mission statement for the Maine PUC.

Gerald Weinand's picture

The 100MW cap is there to

The 100MW cap is there to prevent Hydro-Quebec from taking over the entire RPS. HQ could provide all the RPS electricity required at a price that the other renewables can't match, but then still receive the stack price at the end of the day.

Again, nothing is stopping HQ from putting their power into the Maine market - it just must be in the open side, not the RPS side.

But I do agree that wind farms should also be capped at 100MW - fair is fair.

 's picture

Q: WHO PAYS FOR EFFICIENCY

Q: WHO PAYS FOR EFFICIENCY MAINE PROGRAMS?
A: The bulk of Efficiency Maine’s funding to date has come from what’s called the “systems benefit charge,” which is included in all electric bills and calculated on a per-kilowatt hour consumed basis. The systems benefit charge for a typical Maine home amounts to about $8 a year. The revenues flow to EM via the Conservation Program Fund.

Beginning on July 1, 2009, Efficiency Maine also began receiving funding from the Regional Greenhouse Gas Initiative (RGGI) and the American Recovery and Reinvestment Act Programs (ARRA), which can be used for efficiency programs geared to reducing the use of not only electricity, but other fuels as well.

 's picture

Funding for the Bucksport

Funding for the Bucksport Renewable Energy Project includes a grant from Efficiency Maine. Efficiency Maine is an independent trust that invests in cost-effective energy efficiency or alternative energy projects to reduce energy costs and improve Maine's business environment.

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