Energy watchers hope LePage's natural gas push doesn't forsake renewables

AUGUSTA — This past summer, Gov. Paul LePage addressed lawmakers to evaluate the hits and misses of the legislative session.

The LePage administration has indicated that it's weighing public-private partnerships to entice gas companies into expanding pipelines to serve industrial users — a move that could lure manufacturers turned off by Maine's energy prices.

A significant failure, in the governor's opinion, was the Legislature's inability to lower the state's energy costs.

At the time, LePage blamed lawmakers for balking at his proposal to scrap a state mandate to increase power derived from renewable energy sources. Lawmakers countered that doing so would jeopardize a forward-thinking energy policy, cost jobs and do little to lower electricity prices.

Now LePage is advancing a policy that lawmakers might be more willing to embrace: the expansion of natural gas.

The administration has indicated that it's weighing public-private partnerships — that is, taxpayer investment — to entice gas companies into expanding pipelines to serve industrial users. The administration believes the plan could lure manufacturers turned off by the state's energy prices while eventually providing greater access to more affordable heating fuel for people dependent on high-priced oil.

Republicans and Democrats say the plan could be a big win for Mainers. But they caution against over-promising on natural gas, a finite resource priced by volatile commodity markets.

Pittsfield Rep. Stacey Fitts, the Republican co-chairman of the Legislature's Energy Committee, said the state should remain wary of swapping dependence on one fossil fuel for dependence on another.

"When you lay out energy policy, you look longer-term," Fitts said. "I don’t think you can look at it on a day-by-day basis, flavor of the month. When we do that, we get into bad decisions."

The discovery of abundant domestic reserves and new, if controversial, methods of extraction have held down the price of natural gas.

Between 2000 and 2005, natural gas and oil prices ran parallel. In 2006, the price of oil spiked. Today, oil is nearly three times more expensive per unit than natural gas.

The split has been good for states that use natural gas to heat or cool their homes or industrial facilities. However, oil-dependent Maine remains at a disadvantage. The state's rural geography has made it less appealing for gas companies to expand infrastructure.

Only recently have gas companies begun entering the state's southern population centers.

The administration hopes to change that. LePage has established a working group to determine so-called anchor customers, high-energy users that would make infrastructure investment by gas companies profitable.

Paper mills have already been identified. Converting the mills to natural gas, along with other anchor customers like universities, hospitals and state buildings are considered prerequisites to getting natural gas into homes.

"You need a sufficient volume to make (expansion) economically sustainable," said Ken Fletcher, commissioner of the Office of Energy Independence and Security.

That's where the state comes in. Fletcher said converting mills from propane or oil could require public investment in the form of a state-backed loan or access to the low-interest bond market. Without that public investment or guarantee, the economically fragile mills in the state could have a difficult time securing private loans.

Fletcher said the state could also use revolving loans for pipeline expansion. Doing so would allow the state to reinvest tariffs collected on gas use for additional projects.

Proponents note that the state is not new to public-private partnerships for energy projects.

Earlier this year, the Finance Authority of Maine backed a $5.2 million loan to assist Woodland Pulp LLC convert from oil to gas. The state could be asked to invest in larger projects, including an 80-mile proposal advanced by Kennebec Valley Gas Co.

Municipalities also are considering partnerships. Voters in Madison next month  will be asked to approve a $72 million bond to fund a pipeline running through 12 communities.

Leveraging public investment has its risks, particularly when a private partner is a paper mill. Fletcher said due diligence is required before putting taxpayers on the hook.

Lawmakers could be asked to consider how deeply the state should get involved when the governor unveils his energy proposal sometime in January.

Gorham's Sen. Phil Bartlett, a ranking Democrat on the Energy Committee, said natural gas expansion was a good opportunity. However, he said, the administration should not expect natural gas expansion to yield lower electricity prices.

LePage has often railed against the state's electricity rate, which at 13.09 cents per kilowatt-hour is about 4 cents above the national average. However, Maine has the second-lowest rate in New England, a region with some of the highest electricity prices in the country.

According to ISO New England, which operates much of the New England power grid, natural gas plants supply more than 60 percent of the region's electricity and about 42 percent in Maine.

The popularity of natural gas has steadily increased. Ten years ago, oil-fueled generators produced 20 percent of the region's electricity. It's now less than 1 percent.

Bartlett and others believe the region's reliance on natural gas is driving up electricity costs. They say the only way to lower and stabilize prices is to diversify the state's energy portfolio with renewable sources.

Renewables also face challenges, specifically getting the power to the grid. A recent report by ISO New England noted that less than 1 percent of the region's renewable capacity has been integrated into the power supply.

Still, advocates for renewable energy believe those sources are the only way to lower Maine's electricity prices.

Jeremy Payne, with the Maine Renewable Energy Association, said the reason some states sport low electricity prices is because they're sitting on coal, natural gas or oil reserves. Maine, he said, is sitting on different resources: wind, hydropower and biomass.

Payne believes natural gas and fossil fuels aren't going to leave the marketplace any time soon. However, he and others hope LePage recognizes the value of renewables in the state's energy policy.

"Lowering electricity costs is a laudable goal," Payne said. "But we’re never going to get there by standing in the way of renewable energy investment and  inflation-proof fuels."

For now, it appears the administration is weighing all of its energy options.

"The administration's position is that we really need a diversity of choices," Fletcher said. "I don’t think there’s any one solution. It’s a combination of solutions."

smistler@sunjournal.com

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Comments

Alice Barnett's picture

Stacy Fitts

Why is it that Rep Stacey Fitts can be one of the biggest wind cheerleaders in the state, making decisions on wind and shaping legislation - all of which will benefit his employer, Kleinschmidt Associates.

CLAIRE GAMACHE's picture

Wind farms

The problem with wind and solar farms as I see it is that they are farms. They produce too little electricity for the amount of money spent on equipement to build them and to transport the electricity to where it is needed as well as the cost to the environment. Years ago someone came up with a wind device built in the shape of a double helix which was intended to harness wind power on top of skyscrapers in large cities. I thought this was a promising idea because it had the advantages of collecting the power where it was needed, had little effect on the environment and was fairly cheap to put up since the structures were already there. Same with the roofing tiles that are also solar collectors. Somehow these ideas disappeared soon after they came into being. I'm assuming someone who is against cheap renewable power has bought up the patents and will hold on to them until they can figure out a way to make them profitable.

Penny Gray's picture

Saving 300% on heating costs

Saving 300% on heating costs would be a big boon to most Mainers. Natural gas is a viable resource that should be used to help reduce our energy costs. Iberdrola, the huge Spanish company that now owns CMP, is tickled pink with our governments renewable mandates. Iberdrola's push for industrial wind in Spain raised energy costs by 300% and drove businesses and jobs out, bankrupting the country. When Spain's renewable subsidies ran out, Iberdrola looked to the United States, a country that willingly subsidizes foreign companies getting in on the "renewables" rush. Beware the promises of cheap power from renewables. Wind might blow free, but the infrastructure required to turn that wind into grid scale electricity is staggeringly expensive, and wind has zero capacity factor. It cannot provide base load electrical power and certainly can't heat our homes and businesses.

Frank Heller's picture

Natural Gas is a RENEWABLE....Europe & Canada make bio-gas from.

Europe, esp. Ireland and Germany, make bio-gas from organic waste and poop.

Canada, especially Ontario, have made the conversion of sewerage treatment plants, land fills and large dairy/beef farms into bio-gas producers a major policy initiative.

In one year, under Ontario's sustainable energy program, nearly 40 bio-refineries have been built or started.

The impact on the environment is enormous since all the methane created through natural decomposition is captured and processed into 'pipeline' quality natural gas which is blended with gas from fossilized sources.

Because these are localized bio-gas refineries, the gas is being immediately converted into fuel for public vehicle fleets. Public works departments are buying and converting trucks to burn the natural gas they produce from organic materials they would landfill.

Even composting facilities(Toronto) are being abandoned to make the gas; since one byproduct are liquid fertilizers and soil conditioners.

Even more important, formerly toxic sludge is being neutralized and meet the EPA class 'A' biosolids criteria for field spreading.

Ontario's renewable's program could be a model for Maine; if people will only look beyond wind farms and adapting natural gas as a fuel for home heating and even vehicles.

CLAIRE GAMACHE's picture

A progressive idea

Finally this administration has come up with a progressive idea. Public-private partnerships have a history of being win-win with companies making a profit and taxpayers getting better service. This one,however, has a down side. Natural gas is cheaper than oil but the supply is not limitless, it is again a far away source of fuel and the price is determined by Texas oil companies, who are not much easier on prices than OPEC, and the extraction process is brutal to the environment, and changing your furnace is not free either. I have wondered for years why Maine does not get its electricity from Canadian hydro where it is bountiful, cheap, clean, available now and forever and locally produced. I would seem more forward looking to me to upgrade our electrical grid and to look for a longer lasting solution.

Alice Barnett's picture

upgrade grid from canada?

Please let us buy power from hydro. Allow Canada to pipe down turnpike. Leave the mountains to the wildlife.

Frank Heller's picture

Canadian Hydro Power generation continues to expand

from HYDRO REVIEW:

"Quebec eyes potential for medium-sized hydro totaling 5,000 MW

MONTREAL, Quebec, Canada 10/12/11 (PennWell) --
The Montreal Economic Institute (MEI) reports Quebec could develop medium-sized hydroelectric projects that would generate 5,000 MW and several million dollars worth of private investment.

MEI, an independent non-profit research and education organization, issued an Economic Note, saying that while giant hydropower projects have been pursued by Hydro-Quebec and small hydro has been developed by the private sector, the medium-scale niche of projects from 50 to 125 MW has been neglected.

In May, the government of Quebec launched Plan Nord, a multi-billion-dollar program to open northern reaches of the Canadian province to mining and energy development including an estimated 2,000 MW of hydropower.

"When we think of hydroelectric dams, the first things that spring to mind are gigantic projects like the ones in James Bay, which are Hydro-Quebec's specialty," F. Pierre Gingras, MEI's industrial engineering specialist said in the Economic Note. "But there are many projects of a more modest scale that could be put forward by local communities, whose economic impact analyses would take into account tourist and recreational as well as real estate considerations."

The note said there are about 50 potential medium-sized hydro sites that could produce from 3,000 to 5,000 MW. However, it said the development of the promising multi-purpose sites is constantly being postponed."

What's missing is an electrical 'pipeline' that connects all of Maine to this supply of inexpensive power...6 cents/KwH and lower!

Quebec's booming economy in the midst of a world wide recession is largely due to abundant, cheap electricity.

Gerald Weinand's picture

Much better is to push Peter

Much better is to push Peter Vigue's idea to convert most buildings with hot water heating systems to ground source heat pumps. Running natural gas lines to homes throughout the state is simply too expensive. What LePage is really pushing is for the State to subsidize bringing natural gas to large, industrial consumers, not the average Mainer.

Frank Heller's picture

Geothermal heat 'mining' uses fracking.

The new middle school in Brunswick is partially heated with 72 geothermal wells that use a small version of 'fracking' to expose the drill holes to more rock surface.

Admittedly, a small impact; but still it's 'fracking' and the overall impact on the ground water---this was once a large wet land before getting filled in in the 1930's for a high school.

A hole here, a hole there and pretty soon you have a measurable impact. But will we know what it is?

Terry Donald's picture

Millions

A million dollars a mile, that's what the pipeline will cost. How many residenttial hookups will happen to justify that cost?? None! this is a move that will be financed by the state that will not benefit you and me one bit.
It will however continue our addiction to fossil fuels, and the costs associated with them. For those who think we will be saving big bucks by shifting to more use of natural gas should look at the massive costs, and environmental damage done by fracking, the way the "huge" amounts of natural gas in the US is being extracted from the ground.
The Baldacci administration put into effect state mandated levels, increasing each year, for use of renewables by electric suppliers in our state. You just need to look at the numbers. Maine has the lowest overall electric rates in New England, that is because of our use of hydro, bio mass and other renewables. LePage wants to eliminate that mandate and shift us back to the fruitless use of fossil fuels. The only ones to benefit from that are the big gas and oil producers apparently own our Governor.

Frank Heller's picture

Hydropower is a major renewable

Not only is the LePage administration favorably disposed to restoring and expanding hydro-power; but so is the Obama administration.

This is testimony given two weeks ago by a spokesperson for the Administration, David Murillo, Deputy Commissioner of Operations at the Bureau of Reclamation, Department of Interior.

"I am pleased to provide the views of the Department of the Interior (Department) on HR 2842, the Bureau of Reclamation Small Conduit Hydropower Development and Rural Jobs Act of 2011.

The Department supports the goals of HR 2842, which aims to increase the generation of clean, renewable hydroelectric power ... .

As noted in previous hearings, the Department has an AGGRESSIVE SUSTAINABLE HYDRO-POWER AGENDA (emp. added), which we continue to implement under existing authorities. My testimony today will summarize the areas where the Administration supports the objectives of HR 2842 ... ."

GARY SAVARD's picture

At least it's better than

At least it's better than wind power. We are crapping all over our environment to put up wind farms that taxpayers are subsidizing, and their power production capabilities are inconsistant and marginal, at best. If we can spend a million dollars a mile to expand passenger rail service , I would think it makes at least as much sense to expand natural gas availability. In the long run, more people and businesses will utilize the natural gas than will ride the rails. Hydro power is still the best deal for Maine, but somewhere along the line, it was decided that dams are not a good thing. Gotta love those wind farms, though!

Gerald Weinand's picture

Hydro-power is more than just

Hydro-power is more than just damming rivers. Pumped storage is one alternative, and can be used as a battery for other renewable electrical generators such as wind, tidal and wave.

The million dollar a mile figure is just for natural gas trunk lines. From there it will need to be run to towns, and then down each street and into each building. The costs ramp up considerably when buildings in outlying or rural areas are added in.

I grew up with natural gas, but in a subdivision that was built in the 1960's with the piping laid at the time. Retrofitting is not an inexpensive endeavor.

Frank Heller's picture

Wiscasset's proposed pumped storage plant abandoned

A very large pumped storage facility was proposed two years ago for Wiscasset. The 'profit' was the difference between the cost of off-peak power which was used to run the pumps; and the price of the power produced for sale during peak periods. There were concerns about an underwater conduit to Boston as well.

Rather than a 'battery' for the unreliable and problem-some wind farms; hydro electric plants are as close to a perpetual motion machine as we have invented(Richard Silkman quote). The name plate on the CMP generators at the outfall of Damariscotta lake are dated 1934! Wind turbine maintenance, operational, and replacement costs will eventually lead to their obsolescence and abandonment; while the CMP generators will continue to produce electricity.

Hydro-power must be restored as Maine's primary mode of generating electricity; and once you begin to factor in restoring the hundreds tidal power plants, the power produced dwarfs the wind farms while the tidal ponds expand our fisheries and other benefits flow from these restorations.

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