AUGUSTA — Gov. Paul LePage's plans to reduce Mainers' reliance on heating oil and expand natural gas is creating push-back from the state's consortium of oil dealers.
The Maine Energy Marketers Association, formerly known as the Maine Oil Dealers Association, recently met with the governor to discuss his suggestion that the state could back natural gas expansion. During the Nov. 15 meeting, the group also questioned the governor's remarks to the Capitol News Service when he said his goal was to cut Mainers' reliance on home heating oil in half by 2014.
Lawmakers and energy analysts believe both initiatives face long odds. However, MEMA President and CEO Jamie Py said his group was concerned that LePage was favoring an in-vogue energy source at the expense of oil dealers.
Shortly after the meeting, MEMA issued a statement saying it had taken "offense that our free-market governor would be encouraging the state to pick winners and losers in the energy market."
The statement also noted that the group "pointedly asked the governor to be careful about messaging," especially his remarks about converting homes and businesses from oil to natural gas. Such rhetoric, the group said, was "detrimental to our businesses and our customers."
Adrienne Bennett, a spokeswoman for LePage, said the oil dealers' concerns were understandable. She said the governor was encouraged that MEMA wanted to play a role in promoting energy efficiency.
However, she said, the governor was committed to giving consumers more energy choices.
She added that the governor believes the market will move away from oil because it's too costly. Bennett noted that Mainers sought alternatives to heating oil when the price of oil spiked between 2004 and 2009.
"Consumers made a choice when they had an option," Bennett said.
That point wasn't disputed by Py. He said the goal of the meeting was to reiterate the oil dealers' role in the governor's energy-policy discussion.
"We just wanted to say, 'Look, let’s not have the state get involved in picking winners and losers,' " Py said. "The state has a horrible record of choosing businesses over other businesses, especially in the energy field."
Py added that the governor should be wary of betting too heavily on natural-gas expansion.
"We understand that natural gas is less expensive at the moment," Py said. "But those commodities bets are wrought with risk."
According to Py, LePage told MEMA that he doesn't support subsidies for any energy source. His previous comments have suggested the state could become involved in natural-gas pipeline expansion by backing loans to so-called anchor users, such as hospitals, mills and colleges.
The administration has said that converting anchor users is the only financially viable way to bring natural gas to residences.
LePage told MEMA that the administration would only back loans to bring natural-gas lines to the paper mill in East Millinocket.
The administration confirmed as accurate most statements in the MEMA account of the meeting. That includes a comment by LePage, who told the group that the oil-natural gas debate would be moot in 10 years because by then, all Mainers would be heating their homes with electricity.
Py said the governor's comment appeared to be off the cuff.
Nonetheless, the LePage administration is undoubtedly working to lower electricity costs. During the governor's official visit to Quebec in October, he met with Hydro-Quebec President Thierry Vandal.
Hydro-Quebec is a major electricity provider. Over the years, Augusta lawmakers have floated the idea of purchasing hydro electricity from Canada because it's cheaper. Doing so could be complicated, given Maine's relationship with ISO New England, the group that distributes electricity to New England states.
Bennett declined to elaborate on plans to bring Canadian electricity to Maine, but it appears that the administration is considering it.
Ken Fletcher, the governor's energy commissioner, wrote in a statement that heating homes with electricity should be among the options for Mainers.
"These (electricity) options can replace oil or reduce usage as ancillary systems," Fletcher wrote. "These are proven technologies that are in use in other parts of the U.S. and other countries."
He added, "Using Canadian power is one way to increase the supply of lower-priced electricity since they have an abundance of hydropower."
Introducing electricity into the mix would also affect MEMA. Py acknowledged that was the reason the governor's comment was included in the statement.
"I'm not trying to bash the governor," Py said. "I was just trying to wake up our membership."
Asked whether MEMA was satisfied with its meeting with LePage, Py offered a measured response.
"He understands where we’re coming from and we understand where he’s coming from," Py said. "I wouldn’t say it was a great big group hug, but it really came out as we’re really working with the same purpose."
Drafting a new energy policy has been a priority for the governor, who believes lowering costs is critical to luring businesses to Maine.
LePage has said he hopes to unveil an energy bill next session.
The governor has spoken frequently about natural gas. A move in that direction faces logistical obstacles, such as pipeline development and home conversions.
It could also come at the expense of an oil industry that has dominated the energy landscape in Maine.
The oil dealers have a voice in Augusta. During the 2010 election, MEMA's political action committee made $11,500 in contributions to candidates and PACs, including a $750 donation to LePage.
All but $500 of the 2010 donations went to Republican candidates or PACs.