Economist: Cheap, dirty coal key cause of Maine’s energy woes

Exhaust rises from smokestacks in front of piles of coal at NRG Energy's W.A. Parish Electric Generating Station in Thompsons, Texas.
David J. Phillip | AP
Exhaust rises from smokestacks in front of piles of coal at NRG Energy's W.A. Parish Electric Generating Station in Thompsons, Texas. Buy Photo
By Scott Thistle, Sun Journal
Posted Oct. 19, 2012, at 12:49 p.m.

LEWISTON, Maine — A former Maine state economist said late Wednesday that cheap, dirty coal and the federal government’s unwillingness to enact a carbon pollution tax are the primary reasons Mainers pay more for power than most other Americans.

Charles Colgan, associate director of the University of Southern Maine’s Center for Business and Economic Research, was responding to a new video by Maine Gov. Paul LePage calling for reform that would open Maine up to more electricity imports from Canada.

“The biggest subsidy of all is the government’s refusal to price coal (and oil) to include their social costs on the environment and health,” Colgan said via email.

Maine has a disadvantage on electricity prices not because it uses renewable energy like hydro and wind power, but mainly because 42 percent of the U.S. gets its power from coal, which is among the cheapest sources of fuel, Colgan said.

He said Maine power would look very inexpensive if the true costs of coal energy were compensated.

“Maine’s cost disadvantage on electricity could be wiped out or even become an advantage if the federal government were to impose a realistic carbon tax,” Colgan said. “This is, of course very unpopular, but Maine’s opposition to a carbon tax means that we are allowing other regions like the South to be more competitive than us on electricity costs while we are still getting the costs in the form of air pollution, climate change, etc. Not a really good deal.”

LePage said renewables, mainly wind power, are too heavily subsidized by ratepayers and the federal government.

Colgan said several of the governor’s statements in the video were off track.

“There were several comments he made that were odd (natural gas is not a renewable) or gratuitous (the implied rebuke to Angus King misses the point that wind power development was well under way in Maine before Angus got into the business; he was something of a late-comer),” Colgan said.

LePage also suggested opening up the state’s electrical market to free market forces, but Colgan rejected the notion.

” . . . there are federal subsidies, direct and indirect, to all major energy sources and to many energy efficiency technologies,” Colgan said. “Seeking a ‘free market’ in energy is one of the more futile things one could do.”

Colgan said LePage’s basic point, that Maine should consider importing more power from Quebec and New Brunswick, does deserve careful evaluation.

“Maine has several times in the past considered signing contracts with (Hydro-Quebec) and decided not to do it for various reasons,” Colgan said.

In the 1980s, Maine opted to build biomass plants instead of joining with Quebec to beat the escalating price of oil-fired electricity at the time. He said the state of Vermont did decide to go with Quebec and now gets a large amount of its power from the province. He said that state’s dependence on Canadian power could increase if Vermont Yankee, the state’s nuclear plant, goes offline.

The wholesale electricity market in New England is complicated and while Maine might benefit from importing more power from Quebec, it would depend on several other important factors, Colgan said.

He said several questions need to be answered:

* What price will the Canadians charge?

* What will be the basis of changes in the price?

* What are the transmission-line-construction costs and where will they have to be built?

* Will southern New England want Canadian power in sufficient quantity to justify the transmission line costs?

“We can’t just say we’ll piggyback off Hydro-Quebec going to southern New England if they don’t want the power,” Colgan said. “I’m also uncertain how much Hydro-Quebec wants to sell to New England.”

Colgan noted that Hydro-Quebec, a socialized company, has been growing its supply of wind energy, particularly in the Gaspe Peninsula of northern Quebec.

Maine should carefully assess what role natural gas will play because new sources and lower prices are making it the most affordable form of energy, Colgan said.

“None of these questions imply that (Hydro-Quebec) is not a possible source: They only suggest that the governor’s proposal deserves careful evaluation to see what roles it could play in Maine’s energy mix,” Colgan said.

http://bangordailynews.com/2012/10/19/business/economist-cheap-dirty-coal-key-cause-of-maines-energy-woes/ printed on April 21, 2014