AUGUSTA — Gov. Paul LePage’s controversial proposal to eliminate a requirement that Maine power companies increase the amount of electricity they deliver from renewable resources by 2017 is on hold.
At least for now.
The Legislature’s Energy and Utilities Committee voted unanimously this week to essentially delay the governor’s plan, which would cap electricity derived from renewable energy sources at its current level, 34 percent.
A law passed in 2007 requires electricity providers to increase the amount by an additional 10 percent by 2017. Proponents of LePage’s plan, including Central Maine Power Co., argued that the mandate drives up electricity prices through a taxpayer subsidy pocketed by renewable energy providers.
The committee’s decision to study the impacts of LePage’s proposal was applauded by environmentalists and the renewable energy industry, which feared the governor’s plan would stifle further development and diversification of Maine’s alternative energy portfolio while eliminating jobs created by more than $1 billion of investment by wind energy developers.
Other renewable energy producers also opposed the plan, saying it would stall the development of tidal, biomass and offshore wind.
Rep. Stacey Fitts, R-Pittsfield, co-chairman of the committee, said the panel’s decision was appropriate given the potential impact the governor’s plan could have on energy companies that have structured their business models around Maine’s renewable energy program.
That includes Verso Paper, which last year invested $40 million to convert to a biomass boiler in Bucksport to generate electricity. Biomass is a significant market for timber-harvest residuals.
The Industrial Energy Consumer Group, speaking on behalf of Verso, said the governor’s proposal could have “harmful consequences,” adding that it undercut job growth and investment without resulting in energy savings.
Fitts, who does part-time contract work for Kleinschmidt Associates, a company involved in renewable energy projects, said the entire industry was worried that the bill would be a job-killer.
“The problem with the governor’s bill, the way it came in, is that it took action without studying what the effect of the action would be,” Fitts said.
He added, “For the state to put a wet blanket on something that is looking like it could save the Bucksport and even the Jay mill … that’s an action that we should be really careful with and analyze to make sure that the cause and effect are right.”
Fitts acknowledged that the committee decision to form a study commission through the Public Utilities Commission is work that the regulatory agency already does. However, he said, the new analysis would hone its focus to review the positive and negative effects of the renewable energy mandate.
The LePage administration argued that scrapping the renewable requirement would save consumers $42 million by 2017 through a reduction in electricity costs.
Utilities sometimes achieve the annual mandate by purchasing renewable energy credits from power producers. The cost of the credits are passed on to consumers.
The governor has consistently argued that Maine pays the 12th-highest rate in the country. The administration said the high rates discourage businesses from locating here.
According to the Energy Information Administration, Maine homeowners and businesses pay the lowest electricity rates in New England.
Opponents also counter that LePage’s plan would produce minimal savings — about $5 per year (40 cents per month) — at the expense of jobs created by the state’s quest to expand its renewable portfolio.
Fitts said the committee received an independent analysis showing that the ratepayer savings were even less than what the administration projected.
The governor’s proposal was supported by opponents fighting the state’s proliferation of industrial wind projects.
The PUC, which testified neither for nor against the bill, said the proposal would have other consequences, including the state’s offshore wind development.
The PUC said Maine’s solicitation of offshore wind and tidal development had attracted “national and international” interest. The agency said the long-term contracting changes included in the governor’s proposal could jeopardize the state’s attempt to lure offshore wind and tidal producers.
That analysis was supported by Paul Williamson, director of the Maine Wind Industry Initiative. Williamson said the manufacturing of wind power components was the growing manufacturing sector in the U.S. over the past two years.
Williamson said LePage’s proposal would amount to putting a “big X” over the governor’s recently installed “Open for Business” sign on the New Hampshire-Maine border of I-95.
Fitts said the committee’s decision also included potential changes for long-term contracting to ensure that Maine ratepayers were insulated from above-market prices.
This article was updated to note that Fitts does part-time work for a company that does work in renewable energy.