HALLOWELL — Maine utility regulators gave initial approval to the University of Maine and its partner companies’ proposal to build two wind turbines off the coast of Maine on Tuesday, clearing a major hurdle in their effort to supply power to 7,000 homes and eventually create a larger project that could transform Maine into a hub for offshore wind development.

In a 2-1 vote, the Maine Public Utilities Commission approved the terms of an agreement between the state and Maine Aqua Ventus, which will be ironed out before a final 20-year contract is reached.

The decision is vital in helping Maine Aqua Ventus win a $50 million federal energy grant in May and move the project forward, which will produce significant economic and environmental benefits for the state, said Habib Dagher, director of the Advanced Structures and Composite Center at UMaine.

“We appreciate that the PUC has seen the benefits of this project, long-term, not only for Maine but … the impact it can have on the U.S. as a whole,” he said.

The vote comes nearly a year after the utilities board gave the first nod to Norwegian company Statoil’s plan to put four, three-megawatt wind turbines 12 miles off Maine’s coast. Statoil’s proposal was spiked following maneuvering by Republican Gov. Paul LePage’s administration, which was concerned about the cost on ratepayers and the lack of economic benefits for the state.

UMaine’s wind project is expected to generate enough power for as many as 7,000 Maine homes and at 23 cents per kilowatt hour, will cost ratepayers roughly $9 more a year on their utility bills. If successful, the 12-megawatt pilot project could be the first step toward eventually creating a larger wind farm generating up to 500 megawatts in the Gulf of Maine.

Commissioner Mark Vannoy, voting against the proposal, said he’s worried about the long-term impact of the project on ratepayers. He said concerned private capital won’t invest in the larger project and that developers will seek another expensive contract from the state in several years.

The decision to grant approval is “the first step down the path of ever-increasing demand on the commission for long-term contracts to support a Maine-centric energy development that will result in higher prices and a continued erosion of our manufacturing and industrial base,” he said.

But while the high cost will have a dampening effect on the economy by taking money out of customer’s pockets, the project shows a commitment to reinvest in Maine, said Chairman Thomas Welch. Unlike Statoil, which had no stake in Maine besides its proposal, the Maine Aqua Ventus project has strong Maine ties, Welch said.

“Thus there is reason to believe that for the pilot and follow-up project, the knowledge, experience and investment will stay close to home,” he said

Maine Aqua Ventus officials have estimated that the project could create 340 full- and part-time jobs during the three years of planning and construction and $120 million in investments, half of which would be paid to Maine-based entities. The larger 500-megwatt project could create more than 3,000 jobs, $338 million in economic output and attract businesses to the state.

The Maine Aqua Ventus project entered consideration after LePage’s administration pushed legislation to reopen the competitive bidding process, even though the commission had already granted initial approval to Statoil. That followed behind-the-scenes effort by the administration to explicitly void Statoil’s project by limiting the amount that customers would pay for the project to about half of what Statoil had proposed, according to documents obtained by The Associated Press.

The administration says it supports UMaine’s proposal and will help developers secure more state and federal funding to move development forward and help bring down costs for ratepayers. Developers say they’re working to eventually lower the price to 10 cents per kilowatt hour.

“The Maine Aqua Ventus technology was developed by Maine students and Maine companies, and has attributes designed to bring offshore wind to economically competitive levels,” Energy Director Patrick Woodcock said in a statement. “We will continue to support advancing the research and development of this Maine-grown technology.”

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