LePage unveils initiatives he says will lower electricity rates

By Kevin Miller, BDN Staff
Posted March 09, 2012, at 1:47 p.m.

AUGUSTA, Maine — Gov. Paul LePage announced a series of legislative initiatives Friday that the administration says are aimed at reducing electricity rates in Maine and providing homeowners with more options to lower their energy costs.

But several major policy shifts in the governor’s proposals are likely to encounter opposition from groups who question the administration’s commitment to developing Maine’s renewable energy industry and investing in energy conservation.

The four energy-related bills were among several major policy initiatives that LePage has introduced late in the legislative session, a gubernatorial prerogative also employed by his predecessors. Only two of the four energy bills were made available on the Legislature’s website Friday, but key provisions of the four bills include:

  1. Changing state policy to allow large-scale hydropower projects to count toward the state’s renewable energy requirements, thereby encouraging long-term contracts with large-scale hydropower producers.
  2. Creating a rebate program for the purchase of efficient home heating systems.
  3. Making substantial structural changes to Efficiency Maine Trust — the independent agency that distributes money for energy initiatives — in a way that the administration says will enhance accountability but that critics worry could undermine the agency.
  4. Creating new programs to encourage homeowners to invest in efficient electric heating systems.

“One of the largest inhibitors, if not the biggest obstacle to job creation is Maine’s high energy costs,” LePage said in a statement. “The number one focus of my administration is jobs, and if we want economic prosperity in Maine, we need to focus on reducing the cost of electricity and energy for Maine’s job creators.”

Groups involved in the energy debate in Maine were slow to respond to the governor’s proposals on Friday, in part because they were still analyzing the two bills that were released and had yet to see the two other measures.

But several organizations expressed concerns over one aspect of the plan that could turn into the next round in a battle between LePage and environmental groups over state policies that seek to encourage the development of renewable energy.

“Altogether, I think these bills that have been introduced [late] in the legislative session are anti-consumer, anti-long-term economic development and are pro-utilities,” said Dylan Voorhees, who oversees the Natural Resources Council of Maine’s clean energy program.

Maine’s renewable energy portfolio standards currently require power companies to increase the amount of electricity derived from renewable sources by 1 percent a year through 2017. That policy is regarded as a key incentive for the development of new wind power, biomass and tidal power in Maine because utilities often meet the mandate by purchasing renewable energy credits from “green” projects.

The administration tried unsuccessfully last year to eliminate that requirement, arguing that it was inflating the price of electricity. A coalition of environmental and renewable energy groups, in turn, failed to gather enough petition signatures for a referendum question that would have expanded that requirement by an additional 10 percent.

This time around, the LePage administration wants to allow power generators that generate more than 100 megawatts to qualify as a source under the state’s renewable energy portfolio. That change is primarily intended to benefit large-scale hydropower producers.

Such a move could also provide an additional incentive for negotiations on long-term contracts with large, Canadian power producers such as Hydro Quebec.

Ken Fletcher, who heads the Governor’s Office of Energy Independence and Security, called the current 100-megawatt cap “artificial.” While electricity prices have declined recently due to the low price of natural gas, Fletcher said the administration wants to add as many “cost-effective renewables” into Maine’s energy mix as possible as a hedge.

“Why have artificial constraints” on hydropower? Fletcher said. “If it’s renewable, it’s renewable.”

Others predicted the change could harm Maine’s burgeoning renewable energy industry, including a wind power industry that has invested more than $1 billion in the state in recent years.

Beth Nagusky, who formerly held Fletcher’s position in the Baldacci administration and now serves as Maine director of Environment Northeast, said she believes the proposal is just another attempt to eliminate the renewable energy portfolio standard.

Nagusky said the standard is a function of supply and demand. Pointing out that there are no hydropower plants in Maine pumping out 100 megawatts, Nagusky said the proposal would flood the market with credits from large, Canadian hydropower producers. As a result, the value of credits needed by renewable energy projects developers in Maine would decline.

“That would effectively gut the Maine renewable energy portfolio standard,” Nagusky said.

But Sen. Michael Thibodeau, the Winterport Republican who is lead sponsor on the bills, said the question is, “What is the best way to lower electricity costs for Maine ratepayers, whether they be homeowners or energy-intensive industries?”

“I think the governor just wants to deliver the lowest-priced electron,” Thibodeau said. “If that lowest-priced electron happens to be from wind power, that is great. But the governor’s position is he doesn’t want to pay extra.”

LePage’s proposals to restructure Efficiency Maine Trust also are likely to encounter push-back from groups. The governor’s bill would require that the trust submit its budget for legislative review, similar to other parts of the state budget. It also would allow the governor to appoint the trust’s chairman and would require the trust to create new programs.

Thibodeau and Fletcher said those provisions are simply aimed at strengthening oversight and accountability. But Voorhees with NRCM suggested the changes were unnecessary for a program that, during the past year alone, helped Mainers make improvements that will save an estimated $450 million in energy costs over the lifetime of the projects.

“This is really problematic,” Voorhees said. “I think the bill creates unnecessary bureaucracy and opens the door for efficiency funds to be raided in the budget process … and I think it politicizes efficiency.”

The governor has repeatedly stated that he believes Maine’s existing renewable energy policies were designed to funnel money to “special interest groups,” a suggestion he reiterated on Friday.

“My energy policy will focus on all forms of energy, providing Mainers the freedom to choose which sources to buy from,” LePage said. “I do not support Augusta being in the business of increasing costs of Maine people to pad the pockets of special interest groups. We need to empower Maine people to take control of their energy fate.”

Thibodeau, who is chairman of the Legislature’s Energy, Utilities and Technology Committee that will review the bills, said he expected public hearings to be held the week after next.

http://bangordailynews.com/2012/03/09/news/state/lepage-unveils-initiatives-he-says-will-lower-electricity-rates/ printed on April 16, 2014