LePage continues effort to lower energy costs for Maine ratepayers

AUGUSTA — For the fourth year in a row, Republican Gov. Paul LePage's administration is pushing to roll back or significantly change portions of Maine law aimed at boosting in-state renewable energy production.

Maine Gov. Paul LePage

Clarke Canfield

U.S. Rep. Mike Michaud

Eliot Cutler

Coal and federally funded hydro still king

According to the Electric Power Annual Report published by the federal Energy Information Administration, states that offer the lowest-priced electricity have one of two key things in common:

1. They are coal-mining states (or are next to coal-mining states) such as Kentucky, which generates about 94 percent of its electricity from coal-fired plants.

Based on June 2013 information from the EIA, Kentucky's average kilowatt-hour price was 7.17 cents.

2. They benefit from huge, federally constructed and subsidized hydropower, such as Washington state, which makes 70 percent of its electricity with dammed water.

Last year, Washington's average price for a kWh was 6.78 cents.

Maine, ranked 40th nationally for energy, got 0.04 percent of its electricity from coal. Maine's average price per kWh in June 2013 was nearly double that of Washington's, at 12.58 cents.

Wind factor

Other states with lower electricity costs, such as Iowa, which gets about 66 percent of its electricity from coal, and Texas, which gets about 40 percent from coal, also have some of the largest installed wind-generating capacity in the nation.

Texas, ranked No. 1 for wind in the U.S., made 32,000 megawatt-hours of electricity from wind in 2012. Its average price per kWh in June 2013 was 9 cents.

Iowa, ranked No. 2  for wind, generated about 14,000 megawatt-hours from wind. Its average price per kWh was 7.56 cents.

Maine generated 887 megawatt-hours from wind in 2012, according to the EIA report.

LePage says he wants to level the state's energy-production playing field and open the door to cheap, renewable hydropower from Quebec and maritime Canada, an idea to which Canada seems lukewarm.

The governor and his top energy adviser, Patrick Woodcock, believe expensive electricity is among the key obstacles keeping manufacturing companies from expanding or relocating to the Pine Tree State.

The state's electricity costs, consistently among the highest in the nation but the lowest in New England, are holding back job creation and the economy, LePage says.

But supporters of current policy say that even if the governor were successful in reforming Maine law, the changes would amount to only a few dollars of savings per year for most homeowners and a few thousand dollars a year for the largest industrial consumers.

They argue the advantages — in both capital investment and jobs — of supporting a burgeoning renewable-power industry in Maine far outstrip any disadvantages of slightly higher-priced power for ratepayers.

Supporters of current policy say Maine's readily available natural resources, including an abundance of space, onshore and offshore wind and biomass from the state's forest products industries, put the state in an enviable position in New England.

What is the reality of the debate?

Investment figures from the renewables industry and a recent report from the state's Public Advocate's Office give some perspective.

In the past decade, renewable power producers have invested more than $2.5 billion in taxable infrastructure in Maine. That's a figure no other industry has come close to, said Jeremy Payne, executive director of the Maine Renewable Energy Association.

The association includes companies that make electricity from wind, hydro, biomass and tidal currents, including Casella Waste Systems, Patriot Renewables and the nonprofit, Boston-based Citizens Energy Corp.

Meanwhile, a November review by the Office of the Maine Public Advocate shows an average homeowner pays an extra 60 cents per month for Maine's current bundle of renewable policies, which in many cases essentially pay renewable power generators a slightly higher amount for their power or give them exclusive access to limited markets.

Other Maine policies supported by ratepayers include those that help develop community-based, renewable power generation and those that pay small, solar-electric generators for surplus power they return to the grid. A smaller amount of the cost of renewables is embedded in the guaranteed rates small producers are allowed to lock into for the long term.

For the biggest industrial consumers, the monthly cost of Maine's renewable policies is $663 in the areas covered by Central Maine Power.

Differences in the mix of community-based generators in the Bangor Hydro coverage area mean renewable policies add 65 cents to the average monthly residential bill, and $707 to the average industrial bill.

"The numbers are the numbers, and you can decide whether you think that is significant or not," Maine Public Advocate Timothy Schneider said.

Schneider said the review was meant to show which renewable policies add to consumers' energy bills. It also projects how those costs would grow if Maine doesn't readjust its energy policy moving forward.

According to Schneider's report, if Maine's current renewable policies were fully implemented — some policies have yet to take effect — the charges for those in the CMP service areas would shoot up by another 21 cents, to an average of 81 cents a month for residential customers and an average of $881 a month for industrial consumers.

Schneider's forecast shows Bangor Hydro customers' renewable costs would go up even more: another $1.27 a month for residential users and another $1,325 for industrial consumers.

The policy that makes up the largest portion of that cost is Maine's Renewable Portfolio Standard, which requires more electricity in Maine to come from renewable sources, such as wind power and solar energy. That type of power costs more to provide.

The standard also limits eligibility based on the size of a facility's generation capacity. Those that generate more than 100 megawatts are ineligible to sell their power to Maine's renewable portfolio, including the largest hydro dams in Quebec. Key to LePage's reforms is the removal of the 100-megawatt cap on renewable sources.

Maine policy also exempts wind energy from the 100-megawatt cap, an issue LePage says creates unfairness in the market.

And, while electricity distributors can satisfy the Renewable Portfolio Standard by purchasing renewable energy credits from renewable producers, the value of those credits can vary from state to state depending on the specifics of each state's portfolio.

The bottom-line price of electricity is driven by a complex and not-always-neat interlacing of New England states' energy policies, coupled with the demands of the Regional Greenhouse Gas Initiative, an effort by Northeast states and eastern Canadian provinces to reduce greenhouse gas emissions.

The cost of electricity in New England is further compounded by a constrained supply of fuel — namely natural gas — that's needed to produce electricity. The Midwest, for instance, has ready coal for its plants.

Low-cost natural gas is a promising option for the Northeast, and LePage, as well as Democratic and Republican lawmakers in the Legislature, are working to address the constrained access currently limiting its flow to Maine.

"What has transformed the energy markets is this natural-gas revolution," said Woodcock, director of the Governor's Energy Office. He referred to a December report of the federal Energy Information Administration that shows natural gas will eventually surpass coal as the nation's top fuel for generating electricity.

"Natural gas has been displacing coal as that low-cost energy source and it just so happens that that energy resource is in Pennsylvania," Woodcock said. "We are actually in an enviable geographical position to access the lowest-cost natural resource in the world."

Woodcock said the LePage administration has a multi-pronged strategy for lowering energy rates, including finding ways to increase the inflow of natural gas to New England and opening Maine's energy markets to Canadian hydropower.

Helping to build a natural gas pipeline to increase supplies to New England while developing long-term contracts for lower-priced Canadian power are key objectives, Woodcock said.

"This is something that the rest of the New England governors have identified as a way to get competitive and also move forward with our environmental objectives," he said.

He said other New England states are beginning to amend their renewable portfolio standards. Connecticut, one of New England's top consumers of energy, recently lifted some of its restrictions on power from large hydro.

"As a result, Hydro Quebec is moving forward with a New England model of identifying specific resources that they could sell in the (Renewable Portfolio Standard) markets," Woodcock said.

Canadians have never approached

LePage says Maine's 100-megawatt cap on renewables gives industrial wind power an advantage, but because wind power's renewable energy credits have become more valuable in southern New England, lifting the cap on hydro may cause wind energy little immediate damage.

State Sen. John Cleveland, D-Auburn, co-chairman of the Legislature's Energy, Utilities and Technology Committee, said LePage sees the lifting of the cap as a symbolic gesture to Canadian power generators.

Cleveland and committee co-chairman Rep. Barry Hobbins, D-Saco, met with LePage recently to set ground rules for the upcoming lawmaking session. Cleveland said the meeting was cordial and relatively productive, but no specifics evolved.

He said the Canadian power producers have never approached the Maine Legislature about providing low-cost energy to Maine. The most likely negotiation, according to Cleveland, would be for the Canadians to offer Maine long-term low rates on electricity in exchange for some access to New England's energy grid via a transmission corridor through the Pine Tree State.

Cleveland, who with Hobbins ushered through a landmark law in 2013 that put Maine in a leadership role on natural-gas expansion, including $75 million for pipeline construction in southern New England, said the likely focus for the energy arena in 2014 will be on small compromises. He said he and Hobbins and others have offered to meet with Canadian energy officials and see what might be possible.

But despite any changes around renewable policies that lower rates slightly, for the foreseeable future Maine is likely to remain among the states with the highest-priced electricity, Cleveland said.

That's not solely a result of Maine's renewable policies, but also because of other states' access to lower-cost fuel sources, such as coal and natural gas or federally subsidized hydropower.

Large federal hydropower projects in the northwestern U.S. and access to an abundant supply of low-priced coal in the Midwest and the South mean Maine likely will remain among the states with more pricey energy, most experts agree.

More important is the state's ability to continue to produce the lowest-priced electricity in New England, said Cleveland and others. Even states such as Vermont, which has tapped into Canadian hydropower, are paying more for electricity than Maine.

Meanwhile, advocates for preserving Maine's existing policies, which help biomass, wind, tidal and hydro producers, said damage to existing in-state businesses wouldn't be worth the lower rates for energy, according to Payne of the Maine Renewable Energy Association.

The recent announcement that a Maine company — Pittsfield-based Cianbro — won a contract worth $100 million to help build the Cape Wind offshore wind project in Massachusetts is proof of the long-term viability of the renewable sector in Maine, Payne said.

"That's one of the benefits of developing a supply chain and that's the ability to not just build the projects in Maine but also elsewhere," Payne said. "We've become known in the Northeast for Maine's workforce and its capabilities. That's something we ought to be selling."

Payne said the net effect of doing everything around renewables, which LePage would like to do, wouldn't reduce the cost of electricity significantly.  

"I would say it wouldn't even reduce it modestly," Payne said.

"Somebody needs to do some additional calculations to show the administration exactly what the price impact is and what that would do," he said.

"We are allegedly the 12th highest," he said. "My understanding is we would probably go to the 13th highest and in the process we would destroy one of the burgeoning industries we have as a state. So I don't get it. I don't see what the benefit is."


Associated Press file photo

Wind turbines line a ridge on Stetson Mountain in Stetson in 2009. The state now has 11 operational wind farms.  Maine's renewable policies and what they add to the bottom line of ratepayers' bills is the subject of an ongoing debate between Maine's Republican Gov. Paul LePage and the state Legislature.

Michaud, Cutler critical of LePage's stance on renewables

The leading candidates running against Republican Gov. Paul LePage said he is off course with his stance toward renewables.

"Renewable energy is a strategic asset that Maine should look to expand, not undermine," said Democratic challenger U.S. Rep. Mike Michaud. "Gov. LePage's efforts on energy move us backward and threaten a growing industry in our state while also hurting our efforts to combat climate change."

Michaud said "smart policy" would help businesses reduce energy costs without jeopardizing renewable-energy development and the state's economy.

"The benefits of renewable energy are undeniable," Michaud said. "Right now, there are thousands of renewable-energy jobs just waiting to be created, and as governor I'll make sure that they are. We should support renewable-energy resources like wind, solar, biomass and tidal. They're good for the environment, good for our economy and good for ratepayers."

And, Michaud said, "Our homegrown renewable-energy sector creates jobs, reduces the impact of global warming, protects us from price spikes and keep prices down so small businesses and Maine families can keep more money in their pockets."

Independent candidate Eliot Cutler said LePage's stance on renewable policies was an example of how misguided the governor is on an issue critical to Maine's economy.

"It's just one more demonstration that Gov. LePage doesn't have a plan for Maine's economy and, in this case, he doesn't have a plan about how to expand Maine energy production," Cutler said.

He laid out five key points for a state energy policy he believes would move the state forward in a productive way.

- Eliminate the natural-gas bottleneck in southern New England.

- Increase the state's electricity-transmission capacity to southern New England, both for Maine-produced energy and for Canadian power.

- Increase renewable-production capacity in Maine from all sectors, including wind, solar and tidal.

- Work collaboratively with other states and Canada to reduce carbon emissions in Maine and southern New England.

- Build more distributive-power generation — onsite electricity generation for industry — as a means to reduce the cost of industrial energy rates by eliminating distribution costs.

Cutler said there was "a lot of know-nothingness embedded in LePage's view on energy."

"First and foremost on our agenda ought to be gaining more investment in Maine, creating more jobs in Maine and bolstering Maine's economy," Cutler said. "And the way to do that is to focus on a whole lot more than this red herring of the 100-megawatt cap." 

Brent Littlefield, a spokesman for LePage's re-election campaign, rebuffed the criticism.

"Gov. LePage believes people should come before politics," Littlefield said. "He is not a Washington-trained politician. He is a businessman who has created jobs."

Littlefield said while others focus on policies to appeal to "liberal special interests, Gov. LePage's focus is on lowering electricity bills for senior citizens, families and small businesses."

LePage knows job creators will move businesses to states where costs are low, Littlefield said.

"Maine has not been competitive when compared to all 50 states," Littlefield said. "Gov. LePage will not cave to the special interests who want Maine to be uncompetitive."


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Special interests

That can mean a lot of things. From what I'm reading most of the states that have lower rates are either benefitting from large federally financed power projects or using coal. Here in Maine we don't have coal. We have to import it and we do have a higher than normal rate of asthma due to being downwind from those coal burning states. We do have three things that can be used to produce energy and we have them in abundance. We have wood, wind and tides. When the governor talks about expanding those sources of energy he refers to them as special interests. When, however, he refers to the coal and gas industry he refers to them as cheap energy. It seems to me that investing in local energy is cheaper in the long run than paying for Texas Koch gas or Appalachian coal, or even Texas, Massachusetts and Idaho wind power or Canadian tidal power. Those folks have invested in local energy and are not looking to give it away. They want to sell it to us for all they can get. The governor should be looking for ways to finance Maine energy development and stop working to put money in the pockets of those folks "from away".


Quite a bias in that headline

I guess the Sun Journal stands with the 39% .

FRANK EARLEY's picture

I have a couple of questions..............

First of all, I'm a huge fan of Natural Gas. This being my first year with oil, is raising concerns for me.
First question, what is the future outlook for wind power? Is the cost both infrastructure as well as the energy itself going to eventually go down? Will this take the same path as most new endeavors? As the new technology becomes more streamlines and functional, the cost will decrease. Basically are we just going through the growing pains of a new industry? If we are, and the outlook is good, I can't see shutting it down just to save money now. I'm wondering if in the future this new technology will have a huge benefit to the cost of electricity.
My second question, I've been reading about the Natural Gas lines now being installed into Kennebec County. How long, realistically will it be before my house here in Litchfield will have access to NG? It seems like they are running it to all the big consumers but there isn't much being said about the average resident. I feel that if the burden of buying oil for heat were replaced by much more affordable gas, the actual cost of electicity wouldn't be such a big issue.
I really think that if Natural Gas could be utilized in as many homes and businesses as possible, the over all savings would be astronomical, and the cost of wind and solar power could then be refined to add to the savings.............


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