Lawmakers hope they have an energy bill LePage, Democrats can agree on

Posted May 15, 2013, at 5:44 a.m.
Last modified May 15, 2013, at 8:42 a.m.

AUGUSTA, Maine — The Legislature’s Energy Committee unveiled a multipronged bill Tuesday that incorporates elements from nine different measures aimed at expanding Maine’s natural gas infrastructure, boosting funding for energy efficiency, directly lowering businesses’ electricity costs and making it more affordable for residents to abandon oil heat.

The combined bill includes provisions from legislation proposed by Gov. Paul LePage and Democratic and Republican members of the Legislature. It has elements designed to appeal to LePage, who has emphasized policies that directly reduce energy costs, and Democrats and environmental groups, who have advocated for investments in energy efficiency.

“It’s a fairly significant piece of work,” said Sen. John Cleveland, D-Auburn, the committee’s Senate chairman.

The bill includes an overarching focus on reducing energy costs while directing more funding to the Efficiency Maine Trust over the next two years for programs that would help industrial facilities cut back on greenhouse gas emissions. Efficiency Maine, under the newly crafted bill, would also be charged with administering a program suggested in legislation from LePage that offers homeowners rebates to help them convert to more efficient home heating systems.

“We know many people are paying heating costs that are high and that, for many people, it’s not affordable,” Cleveland said. “We recognize that efficiency is important to do.”

With natural gas, the committee’s legislation incorporates pieces from two bills sponsored by House Republican Leader Rep. Kenneth Fredette of Newport that could lead to the state partially financing a buildout of pipeline infrastructure in southern New England so more natural gas can make its way into the regional electric grid and reduce electricity costs in Maine.

The Energy Committee bill would allow the state to issue bonds — through the Finance Authority of Maine — to buy natural gas pipeline capacity for the state and assist other states in pipeline projects that could benefit Maine. The bill would also let the state enter into energy cost-reduction contracts with natural gas generators by selling state-owned pipeline capacity in exchange for rates that reduce electricity costs.

In addition, the bill would let the Maine Public Utilities Commission order natural gas utilities to connect their pipelines — and pay them to do it — when those additional connections could expand the availability of natural gas in the state.

Cleveland said those measures are designed to compensate for a marketplace that has been slow to make infrastructure investments that allow more natural gas to flow Maine’s way.

“We believe there’s a market failure,” he said. “Our preference is that the marketplace will come forward to address this need and the failure in the marketplace, but currently because of the nature of the market, that is not occurring.”

About a third of Maine’s electricity today comes from natural gas, according to the U.S. Energy Information Administration. If additional pipeline capacity allows more natural gas to flow toward Maine and New England from the Marcellus Shale rock formation — which covers much of New York, Pennsylvania and West Virginia — Maine could be better insulated from electricity price swings that occur when pipeline capacity is nearly maxed out, said Public Utilities Commission Chairman Thomas Welch.

Maine wouldn’t be assuming full responsibility for building pipeline infrastructure, Welch said, but the state’s participation would help spur pipeline construction.

“There are a lot of people looking at that gas, and we’re putting ourselves at a competitive disadvantage if we don’t get it,” Welch told lawmakers.

The Energy Committee bill is the result of a collaboration that has involved Cleveland; Rep. Barry Hobbins, D-Saco, the Energy Committee’s House chairman; Republican committee members Sen. Edward Youngblood of Brewer and Rep. Larry Dunphy of Embden; Welch; Patrick Woodcock, who directs LePage’s energy office; and representatives from industry and environmental groups.

The bill addresses how the state divvies up two major energy-related revenue streams: funds Maine receives from carbon emission allowance auctions through the Regional Greenhouse Gas Initiative, or RGGI, and $82 million the federal government has paid Maine for failing to remove 550 metric tons of spent nuclear fuel that’s been sitting at the defunct Maine Yankee nuclear plant since the Wiscasset facility closed in 1996.

LePage had proposed using RGGI auction revenues to directly reduce electricity rates for businesses and to lower residential heating costs by offering homeowners rebates to convert their oil heating systems to more efficient wood pellet, natural gas and propane systems. The funds have traditionally paid for energy efficiency programs run by the Efficiency Maine Trust.

The Energy Committee’s bill instead uses half of the RGGI funds for LePage’s priorities: 35 percent for the home heating rebate program and 15 percent for electricity rate reductions. The remaining half would be used for electricity efficiency projects at commercial and industrial facilities.

The bill sends 55 percent of Maine Yankee-related lawsuit funds to the Efficiency Maine Trust and uses 45 percent for direct electricity rate reductions. That funding would replace the money Efficiency Maine loses through the proposed elimination of the system benefit charge, which is assessed on businesses to fund conservation and efficiency programs. LePage had proposed eliminating the benefit charge from businesses’ electric bill.

Woodcock, LePage’s energy director, said the committee bill included “significant improvements” over current state energy policy. But he said the legislation needs to focus more on policies that make it easier for homeowners to switch to more affordable heating systems. In addition, LePage would prefer relying on the market rather than the state to expand natural gas pipeline infrastructure, Woodcock said.

Michael Stoddard, executive director of the Efficiency Maine Trust, said increased funding from the bill would free up Efficiency Maine to expand its focus beyond projects focused solely on electricity conservation.

The Energy Committee expects to make amendments to its bill and send it to the full Legislature in the coming days.

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