How the omnibus energy bill will cut costs to consumers

By John Cleveland, Barry Hobbins and Kenneth Fredette
Posted June 03, 2013, at 10:42 a.m.

Our historic, bipartisan omnibus energy legislation directly attacks one of the biggest problems facing the Maine economy: We pay too much for energy in Maine.

For too long, the cost of energy has hindered growth, closed mills and made our citizens face difficult choices between heating, eating and other necessities. Gov. Paul LePage correctly says our electricity costs are too high, our oil costs are among the highest in the nation, and our natural gas costs are the very highest in the continental United States.

Rather than curse the darkness, we and scores of other Maine legislators from all parties seek to change every aspect of this problem that we can. First, we want to eliminate the current “energy tax” of more than $200 million per year that Maine electricity and gas consumers already pay simply because natural gas pipelines are inadequate to supply New England’s gas demand during winter. This situation is so severe that ISO-New England, which manages our electric grid, feared rolling blackouts would occur throughout New England this January and February.

To protect against the same risk next winter, ISO-New England will pay oil-fired generators to burn 1.8 million barrels (990 million gallons) of oil in place of the natural gas we ought to be burning in available power plants. This outcome is unacceptable, as it harms both our economy and our environment. It can be solved by the private and public sectors working together to expand natural gas pipeline capacity into New England.

Our legislation would enable the Maine Public Utilities Commission, with the consent of the governor, after exhausting all other reasonable options in the private sector, to purchase capacity on one or more new natural gas pipelines into New England. This ability has already stimulated one pipeline developer to contact the governor and the PUC. The actual purchase of pipeline capacity, not the purchase of natural gas, but the purchase of the right to transmit natural gas, will occur only if absolutely necessary to protect the public interest.

Contrary to the suggestion of the Conservation Law Foundation, this is not an unprecedented exercise of state authority. Our PUC routinely orders Maine utilities to purchase more than $500 million of electricity each year to serve homes and businesses through what’s called the standard offer. With the insistent support of CLF, the PUC recently awarded a $200 million bid to Statoil to develop a wind farm off the Maine coast.

In states and Canadian provinces all around us, sovereign governments play an increasing role in energy policy and development. These entities often do so at the urging of CLF, such as when CLF strongly supported approval of CMP’s $1.45 billion dollar Maine Power Reliability Project to build electric transmission across Maine. One difference, of course, is that the projects CLF has supported each cost ratepayers large sums; our historic energy legislation could reduce ratepayer costs by more than $200 million per year.

Our legislation also maintains effective levels of energy efficiency funding without increasing costs to ratepayers. This will sustain programs for fuel switching, heating efficiency and electric efficiency programs, including major new initiatives suggested by LePage to help consumers.

The bill will encourage use of lower cost alternatives to electric transmission and, for the first time, open municipal street lighting to cost-cutting competition. The bill extends innovative utility pilot heat pump projects and, at LePage’s request, extends Maine’s involvement in the Regional Greenhouse Gas Initiative, which has contributed to spectacular reductions in New England’s greenhouse gas emissions. Further, funds from RGGI will be allocated for fuel switching and for innovative programs at commercial and industrial facilities to reduce fossil fuel inefficiencies, again as suggested by LePage.

Finally, as also requested by LePage, the bill provides more than $15 million in electricity rate reductions. This, along with the bill’s many other features, will go a long way to relieve Maine of high electricity and gas rates and the $200 million “energy tax” which now burdens our economy.

We urge all Maine citizens to join in supporting this legislation. Seventy percent of Maine homes heat with oil, nearly 10 times the national average. LePage’s Energy Director Patrick Woodcock says Mainers spend an average of $3,300 per year to heat and light their homes, compared with $2,000 nationally. It is time to lift this burden from the backs of Maine’s people.

Sen. John Cleveland, D-Auburn, and Rep. Barry Hobbins, D-Saco, serve on the Joint Standing Committee on Energy, Utilities and Technology. Kenneth Fredette, R-Newport, is the House minority leader.

http://bangordailynews.com/2013/06/03/opinion/contributors/how-the-omnibus-energy-bill-will-cut-costs-to-consumers/ printed on September 20, 2014