Retiring PUC head says there are no sources of cheap power

Posted Jan. 30, 2011, at 7:11 p.m.

AUGUSTA, Maine — One of the big complaints at the red tape meetings held by Gov. Paul LePage is the cost of electricity. But the retiring chairman of the Public Utilities Commission, Jack Cashman, says there are no quick and easy ways to reduce power costs, and key lawmakers from both parties agree.

“Any source of energy that can provide 6-cent power to the state of Maine is on my table,” LePage told reporters last week. But Cashman said there is no such source on the horizon.

“There isn’t a source for electricity that I know of that is going to be developed that is going to be tremendously lower than the going rate for electricity,” he said. “If you are looking for a magic bullet of a new development for electricity that we can sign a contract with, I don’t know what it will be.”

Cashman said Maine consumers, both residential and business customers, are benefiting from the relatively low cost of natural gas, which is the source for most electricity sold in the state. He said other sources of power that have been discussed will take a long time to build and are more expensive than today’s cost.

“If you look at nuclear, it will take 20 years or longer to get a plant permitted and licensed and built,” he said, “and it will not be cheap power.”

Cashman said many residents still do not realize that electricity prices are not regulated by the PUC; it regulates the distribution of the electricity. He said the PUC’s role is to seek bids for the “standard offer,” the default price a consumer pays for electricity if they do not negotiate a price on their own. That is around 7 cents a kilowatt-hour statewide.

While there is electricity being produced at relatively low cost by Hydro Quebec and other hydropower facilities, Cashman said those companies and producers are not selling the electricity at a low price.

“Hydro Quebec and NB Power both have ability to produce power at reasonable rates. They also are not philanthropic,” Cashman said. “They understand what profit is and sell their power at going rates.”

He told members of the Legislature’s Energy, Utilities and Technology Committee that he is not seeking to be reappointed when his term runs out in the spring and wants to return to the private sector. He served as commissioner of the Department of Economic and Community Development and as a senior policy adviser in the administration of Gov. John Baldacci.

Rep. Stacy Fitts, R-Pittsfield, co-chairman of the panel, agrees there is no source of electricity in the near term that will reduce power costs, and development of new power generation facilities will take “decades” to site, permit and start producing power.

“There is no supply that you can immediately site that is going to turn this around,” he said. “Commissioner Cashman is right on target with his comments on what is available and at what cost, and there is no cheap power out there.”

Sen. Mike Thibodeau, R-Winterport, the Senate co-chairman of the panel agreed. He said there may be some options that could help stabilize prices, but doubted low price sources can be found.

“The other thing that is still on the table is the possibility of an LNG terminal facility someplace in Washington County,” he said. “That potentially could have a real positive effect on the price of electricity.”

Thibodeau said that adding to the supply of natural gas flowing through the state at least would stabilize the price for electricity. He hopes the increased supply might reduce prices.

Rep. Jon Hinck, D-Portland, the ranking minority member of the panel, chaired the committee last session. He said Cashman’s presentation to the panel was a clear evaluation of the current situation, but did not address how consumers might reduce their bills by decreasing their demand.

“You can also work on the demand side of the equation,” he said. “If we lower the demand curve, we can lower the cost.”

Hinck said Efficiency Maine provides efficiency programs for both residential and business customers. He said efforts to hold down electric bills need to include efforts to reduce demand through better insulation and more energy-efficient lighting and other conservation efforts.

The three lawmakers all expect the committee will deal with several bills aimed at trying to find a solution to electricity costs.

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