POLL QUESTION

Central Maine Power cool to Hywind Maine offshore wind project; King backs plan

Posted Jan. 23, 2013, at 2:31 p.m.
Last modified Jan. 23, 2013, at 5:02 p.m.

Poll Question

AUGUSTA, Maine — Central Maine Power, a utility company that could be compelled by the Maine Public Utilities Commission to buy electricity generated by Statoil North America’s proposed offshore wind energy pilot project, and Gov. Paul LePage’s new energy chief continue to harbor reservations about the Norway-based firm’s plans despite recent revisions.

But U.S. Sen. Angus King, I-Maine, Democrats in the Maine Legislature and others offered strong endorsements of the Hywind Maine project that will go back to the PUC for a vote Thursday.

CMP laid out its concerns in public comments posted Tuesday by the PUC. Along with objections expressed by a group representing industrial electricity consumers, CMP’s comment stood out among more than a dozen filed in support of the revised offer sheet Statoil submitted Jan. 14.

Patrick Woodcock, the new director of the Maine Governor’s Energy Office, weighed in Wednesday, offering his opinion that Statoil’s revisions don’t go far enough to ensure the project’s value to Maine’s economy and shield utility ratepayers from risk.

“While the supplier certainly indicates the intention of supporting Maine jobs, this office does not believe the supplier has demonstrated clear investments in the state of Maine,” Woodcock wrote in comments submitted to the PUC. He questioned whether the revisions meet the 2010 Ocean Energy Act’s call for a “demonstrated” commitment to invest in Maine manufacturing.

King, Maine’s recently elected U.S. senator, offered a counterpoint to Woodcock, in comments posted later Wednesday on the PUC website. Writing as a “citizen” and based on his service in 2008 and 2009 on the Ocean Energy Task Force, he heartily endorsed Statoil’s proposal.

“Put simply, I believe this is a once-in-a-hundred-years opportunity for Maine — comparable to the founding of the pulp and paper industry in its long-term economic significance to the state,” wrote King, who in 2007 co-founded Independence Wind, an onshore wind energy company. He transferred his stake of the firm to a business partner when he decided to run for the U.S. Senate last year.

In his three-page correspondence to the PUC, King touted the financial and environmental benefits of the Statoil proposal. “I haven’t the slightest doubt that if we reject this proposal, Statoil and their competitors will simply go elsewhere, and we will read with regret of great projects, thousands of jobs and renewed coastal economies in Scotland, Portugal or (worse yet!) Massachusetts,” he wrote.

As a pilot project for more extensive development of offshore wind energy production, Statoil North America proposes to moor four floating turbines in federal waters off the coast of Maine to generate 12 megawatts of energy. On May 2, 2011, Statoil submitted a proposal for the project, called Hywind Maine, to the PUC, which had issued a request for proposals after the Legislature passed the 2010 Ocean Energy Act.

Statoil must gain PUC approval for a 20-year contract to sell electricity from its offshore wind experiment to one or more of Maine’s investor-owned utilities — Bangor Hydro, Central Maine Power or Maine Public Service Co.

The PUC’s three commissioners are scheduled to review Statoil’s revised term sheet for the project on Thursday. On Oct. 4, 2012, the commissioners tabled action on the offer, with PUC Chairman Thomas Welch urging Statoil to revise its terms to address questions about the price of electricity generated by Hywind Maine and the economic benefits it would yield for Maine. Otherwise, Welch said he would join Commissioner Mark Vannoy in opposing the term sheet. Commissioner David Littell supports it.

Statoil’s revised term sheet cuts the energy cost from $290 a megawatt-hour to $270 a megawatt-hour and adds a “good faith” commitment to involve Maine contractors in any commercial wind farm Statoil develops along the Atlantic Coast from Maine to Maryland before 2025. The PUC accepted public comments on the revised proposal through Tuesday.

In five pages of comments, CMP senior counsel Richard Hevey highlighted six aspects of Statoil’s terms that remain troublesome to the utility. Among them are that Statoil’s revised offer still proposes to sell electricity from the pilot project at prices 4.5 times higher than current market prices. That translates to a $190 million ratepayer subsidy to Statoil, with annual stranded costs of between $9 million and $10 million, according to Hevey.

Hevey also cautions that the revised term sheet “does not address how project costs would be adjusted if market prices decline and the rate impact exceeds the $0.00145/kWh statutory cap.”

CMP’s comments also raise technical and business questions about how Statoil would deliver electricity from Hywind Maine to a utility and suggest that Statoil redirect any U.S. Department of Energy grants it receives to the utility to help offset stranded costs associated with a long-term contract. Hevey argues that any contract between Statoil and a utility should not require the utility to “monitor or enforce” provisions such as job creation, capital investment or use of Maine contractors.

In its revised term sheet, Statoil states that it will make “commercially reasonable efforts” to direct at least 40 percent of its capital expenditures for the pilot project to Maine companies, employ at least 150 people during its construction phase, place the operations center in Maine and contract with Maine consultants.

The comments filed Tuesday also reiterate CMP’s assertion that the PUC’s process related to requesting proposals for long-term contracts lacked transparency.

“The utilities’ only involvement in this process has been to provide comments on the completed term sheet,” Hevey wrote.

In separate comments filed Tuesday, Bradford Borman, senior regulatory attorney for Bangor Hydro and Maine Public Utility Co., stated that the utilities take no position on the revised Statoil term sheet. However, Borman notes that a Dec. 31 contract in which the two utilities agreed to accept the entire obligation for a tidal power project in Washington County reflects “an understanding that it would not be responsible for any obligation under the Statoil contract.”

Writing on behalf of the Industrial Energy Consumer Group, which represents businesses that use large amounts of electricity, attorney Steven Hudson cited high costs to ratepayers, vague language about intellectual property rights and questions about compliance with federal law to argue that “the substantial costs of the proposed term sheet clearly outweigh the speculative benefits that it may offer, and therefore violates the requirements of the Ocean Energy Act.”

The majority of comments filed in response to the revised term sheet support the project. Environmental groups, representatives of alternative energy businesses, Belfast’s city manager and Democrats in the Legislature, including Senate Majority Leader Seth Goodall, D-Richmond, submitted comments endorsing the project. Sen. Emily Cain, D-Orono, who served eight years in the Maine House before moving to the Senate in 2012, described Hywind Maine as “precisely the type of project that the Legislature envisioned when it passed the 2010 Ocean Energy Act. Our goal was to spark innovation and energy development in the waters off Maine’s coast, and this project sets us on that path.”

The commissioners’ meeting begins at 10 a.m. Thursday at the PUC office in Hallowell.

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