Despite ‘low probability’ of success, offshore wind project could be Maine’s ‘bonanza,’ PUC chairman says

Posted Feb. 12, 2013, at 5:47 p.m.

AUGUSTA, Maine — The chairman of the Maine Public Utilities Commission defended his decision Tuesday to support a pilot wind energy project in the Gulf of Maine despite what he called a low probability of success.

Thomas Welch said he changed his position to support Statoil North America’s offshore wind energy pilot project in federal waters off the coast of Maine largely because of the potential for future economic development benefits for the state, even if those benefits aren’t guaranteed.

“I wouldn’t say there’s an expectation of success, but there’s a deep interest in seeing whether this works,” Welch told members of the Legislature’s Energy, Utilities and Technology Committee. “It’s probably a low probability … but if the big part develops with the expertise gained here, that’s a bonanza for Maine.”

Welch cast the deciding vote last month when the three-member PUC made its divided decision to allow the Norwegian company to moor four floating turbines in federal waters off the coast to generate 12 megawatts of energy. Electricity generated by the test project is expected to cost significantly more than current market prices, which caused Gov. Paul LePage and others to label it too great a risk to be subsidized by Maine utility ratepayers.

Noting that electricity rates in Maine already exceed the national average, LePage singled out the project for criticism last week in his State of the State address.

“I think everyone is looking for the day when this kind of technology will be able to provide significant amounts of low-cost energy into the New England and other markets,” Welch said. “It’s an experiment on their part that we’re funding to see if that commercial scale can ever emerge.”

In October, Welch voiced reservations with Statoil’s plan, saying he hoped for stronger assurances that Maine would benefit economically following the company’s pilot project.

Statoil returned to the PUC in mid-January with revisions to its plan that cut the energy cost from $290 per megawatt-hour to $270 per megawatt-hour and added 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.

Welch acknowledged a “good faith” commitment didn’t guarantee economic benefits for Maine, but said he ultimately backed the project due to support from businesses and due to the potential for Maine to become a hub for an evolving industry that attracts educated young people to the state.

“On an issue that has generated a certain amount of excitement in that generation, bringing that focus to Maine could have a significant benefit,” he told lawmakers. “If you ask me to put an exact dollar value on that , I would be unable to do so, but I think it is significant.”

Rep. Larry Dunphy of Embden, the ranking Republican on the energy panel, questioned whether the PUC put too much emphasis on economic development in making its decision.

“My gut feeling is the Public Utilities Commission’s job is to deal with electric rates and not with job development,” he said. “I don’t see that as your function.”

Democrats on the panel, meanwhile, applauded the PUC for its economic development considerations.

The governor’s former energy director, Ken Fletcher, calculated those electricity prices would raise Maine ratepayers ’ costs by $203 million over the 20-year contract term of the project. In comments submitted to the PUC, the Conservation Law Foundation estimated that electricity from the project would add 65 to 75 cents to an average monthly electric bill.

Dunphy on Tuesday also questioned whether Statoil’s pilot project would endanger a project in the works at the University of Maine’s Advanced Structures and Composites Center to develop and deploy another floating turbine technology off the coast of Maine. Perhaps the state should have prioritized a project under development locally rather than a European company’s pilot project, he said.

“It seems like we’re perhaps allowing [the University of Maine] to be alienated,” he said. “It seems a little bit warm and fuzzy to me and not well defined. I’m wondering if we’re allowing somebody to rough us up a little bit.”

The Statoil and University of Maine projects do compete to an extent, Welch said. But he noted university officials submitted comments supporting the Statoil pilot project, and he said the University of Maine could end up playing a key role in supporting both projects.

“The ownership of this project isn’t going to determine whether the University of Maine becomes a center of excellence in this,” Welch said. “I don’t think this is going to be that different in terms of the University of Maine’s interests.”

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