SOUTH PORTLAND — Gov. Paul LePage said Thursday that the state’s energy policy is “broken” and advocated for a stronger push on the part of the private sector and state government to find ways to increase the amount of natural gas that makes its way into Maine.
“The state of Maine is moving like a turtle. We need to start moving like a rabbit and unless we get going and move forward and lower this [energy] cost, Maine is going to be stuck in the same place it’s been for 40 years,” he said.
LePage made the remarks in South Portland at a full-day seminar titled “Natural gas: The best path forward for Maine?” Two Portland-based law firms — Verrill Dana and Pierce Atwood — co-sponsored the event, which had a sold-out crowd of 100, with 20 or so people on a waiting list.
“Our energy policy is broken. It’s helping a few make a lot of money, and a whole lot of people are paying too much money and that concerns me a great deal,” LePage said. “It concerns me when manufacturing companies can’t be competitive so they turn to making electricity because that’s the most lucrative industry we have.”
He did hint at new legislation his administration would introduce in January to “break the impasse” between the Legislature and the executive branch to move the state’s energy policy forward.
LePage’s remarks followed a series of panels at which energy industry players and stakeholders discussed the state of the natural gas industry, and what efforts are underway that will allow Maine businesses and residents to take advantage of natural gas’ historically low costs.
Maine has the 11th highest average cost of electricity for residential users in the country, according to the U.S. Energy Information Administration. In addition, the northeastern United States is the region with the highest electricity costs.
Natural gas prices may be at historic lows, but the challenge for Maine, and the region, is that demand from industrial users, businesses and residents exceeds the supply that’s able to enter the state via existing infrastructure, especially during the high-demand months like January and February.
During the first six months of 2013, the price of natural gas rose twice as fast in New England as it did in the rest of the country compared to first six months of 2012, according to William Harwood, a partner at Verrill Dana. Case in point: Verso Paper reportedly paid fees to transport natural gas to its paper mills in Jay and Bucksport that were eight to 10 times higher than the cost of the gas itself.
As to how to solve the pipeline capacity problems, several solutions have been floated. Representatives of pipeline companies such as Portland Natural Gas Transmission System and Spectra Energy were at the event discussing their companies’ plans to increase the capacity of natural gas entering New England and Maine.
The capacity challenge is not a problem Maine can solve unilaterally. The pipeline infrastructure throughout New England is to blame, and the bottleneck is in the New York City area.
That’s why there’s discussion among the state governments in New England about how to solve the problem. LePage’s administration is trying to enlist other New England states in a plan that would try to get ISO-New England, the organization that manages the New England power grid, to purchase capacity on natural gas pipelines. Pipeline companies are prohibited by federal law from building pipelines on speculation, so they need contracts to ensure that demand for the natural gas is there before they invest in building a new pipeline or expanding an existing one.
“Without added capacity from Marcellus fields or Canada or whatever, the price of natural gas is going to stay high,” LePage said. “Patrick [Woodcock, head of the governor’s energy office] is working with other energy people to convince them we need to be partnering on a natural gas pipeline. Is it going to happen? I think it will, but I don’t know if it will happen soon enough — it can’t happen soon enough for me.”
Woodcock said those discussions are going well.
“I think the conversations have been constructive thus far in New England, yet the details are obviously hugely important,” Woodcock told the Bangor Daily News on Thursday. “And we hope to have an agreement with our counterparts in the coming months of a real new initiative to start talking about competitiveness and seizing these world-class resources, whether it be natural gas in Pennsylvania, which is the best natural gas supplies in the world, and secondly whether we can use expanded low greenhouse gas renewables to comply with some of the targets in southern New England.”
There’s no one clear stumbling block to consensus among New England states, Woodcock said.
“There are priorities between each state, whether it be competitiveness to greenhouse gas goals to infrastructure and sensitivities associated with that,” he said. “New Hampshire is the prime example with infrastructure challenges. I’d say Massachusetts is a prime example with environmental considerations, but the question is can we do both and combine efforts where we both improve competitiveness and lower emissions in the New England region.”
Addressing the audience directly, LePage said, “If there’s anything that state government can do to help you move natural gas forward, please call us. We are very, very interested. I do not want our administration or agencies to be the inhibitors of the good work you’re trying to do.”
Nothing LePage said surprised Tony Buxton, chair of PretiFlaherty’s energy and utilities practice group.
“He’s been saying the same thing for years,” Buxton said.
However, what did surprise him is that LePage is not taking more credit for the good news that is happening — namely the hundreds of millions of dollars being invested in natural gas infrastructure in the Kennebec Valley by Summit Natural Gas and Maine Natural Gas.
As for LePage’s hint at new energy legislation, Buxton guesses it will be related to eliminating Maine’s renewable portfolio standard and removing the cap on hydropower generators that prevents those with capacities of more than 100 megawatts from selling renewable energy credits.
LePage reiterated his energy agnostic approach.
“I don’t like to pick winners and losers,” he said. “What I like to do is pick the low-cost producers. and to me the future of Maine is only in two areas — I mean there might be more, nuclear has a place, but not in my lifetime — right now I think natural gas and hydro, big hydro, are the two options.”