Maine energy bill is ‘ill-advised gamble’

By Greg Cunningham, Special to the BDN
Posted May 27, 2013, at 2:03 p.m.

The Maine Legislature is in sausage-making mode, and a proposed energy bill would be right at home outside Fenway Park. Like any sausage, the first bite is inviting, but the aftertaste is a recipe for heartburn. The centerpiece of the bill would have Maine ratepayers committed to funding an expansion of natural gas infrastructure that the private sector has decided doesn’t make economic sense, that would exceed the amount of gas Maine would ever use and would replace one addiction — oil — with another — natural gas.

This bill would commit Maine to a course of action that no other state in the country has endorsed. Repeat: No other state has invested ratepayer money in the gas markets as this bill would have Maine do. The proponents of the bill do not hide their intent. They want Maine to make a commitment to fund the construction of more pipeline not even located in Maine in order to anchor that construction and entice other states to step in, provide additional funding and eventually “flood the New England gas market.”

Once flooded, the reasoning goes that there will be a gas glut that drives down prices. Lower prices for gas will mean lower-priced electricity from gas-fired generators, thereby saving Maine ratepayers money. But that is a risky bet, and Maine doesn’t have the best track record when it comes to bets on the energy market. It’s also counter to our collective goal to end our addiction to fossil fuels, which natural gas surely is.

There is a reason that the private market is not investing in gas expansion and why no state has ever invested directly in the gas markets like this. It is speculation on a volatile commodity that presents more risk of loss than gain. Saddling ratepayers with a cost that the private sector is not willing to bear is not a solution that any of us should accept.

And those are real costs. First, as the anchor tenant, Maine will pay more than its fair share of pipeline costs. The bill would require Maine to purchase up to 20 percent of New England’s share of pipeline capacity (at a cost of no less than $200 million) even though we represent only 8 percent of its electricity load and far less than that of its natural gas demand.

Second, since the goal of this investment is to oversupply the New England gas market, the effect of achieving that goal will necessarily be to devalue Maine’s natural gas investment, increasing the risk of loss.

Maine and New England can address energy problems without building lots of new and expensive infrastructure by first ensuring that existing infrastructure — gas lines and storage tanks — are used to their maximum efficiency. The New England states have commissioned a study that is currently analyzing just this question. At a minimum, Maine should wait to have those answers in hand.

One solution involves adjusting gas tariffs and energy markets to free up gas that is owned but not used. Thus, it sits idle in pipelines at times of critical need. This is the type of market fix that will ensure an efficient balance of supply and demand and that should be pursued by our Maine Public Utilities Commission and regional power manager, ISO-New England.

Equally important are the unfortunate messages that passage of this bill will send. It will signal to the other New England states and ISO-NE that Maine is willing to help subsidize other states’ cost of gas expansion. It would also signal that we support flooding the market with gas irrespective of need and climate consequence. And for an administration nominally in favor of getting government out of the business of business, it would explicitly require Maine state government to put its thumb on the energy market scale in favor of petroleum-based resources and the already wealthy and established industries associated with them. Seeing momentum for its natural gas flood solution, ISO-NE will entirely abandon short- and long-term market fixes and make its pitch for massive gas expansion as the long-term solution to another energy-vulnerable state

For all the harm that the economic and political implications of this proposed natural gas investment would heap upon Maine, they are nothing relative to its environmental implications. A major natural gas build out in New England will commit our region for the rest of this century to an economy and lifestyle driven substantially by natural gas akin to our reliance on coal and oil in the past century. There will be no opportunity to achieve the needed balance between clean and fossil resources, and thus Maine’s 80 percent greenhouse gas reduction by 2050 goal will be rendered moot. Maine simply cannot afford the many consequences of this ill-advised gamble.

Greg Cunningham is a senior attorney with the Conservation Law Foundation.

http://bangordailynews.com/2013/05/27/opinion/contributors/maine-energy-bill-is-ill-advised-gamble/ printed on August 1, 2014