Expert: LePage intervention in offshore wind deal may hurt Maine’s image in global energy market

Posted Sept. 23, 2013, at 3:29 p.m.
Last modified Sept. 24, 2013, at 8:53 a.m.

AUGUSTA, Maine — New revelations about how Gov. Paul LePage’s administration worked behind the scenes to stymie Statoil’s offshore energy project are renewing worries about the state’s image in the eyes of the international business community.

Prior to pushing legislation in June that essentially put the Norwegian company’s project on hold while the University of Maine could prepare a competing proposal, the LePage administration initially attempted “a much more aggressive effort to explicitly void” the state’s agreement with Statoil, according to a report published Sunday by the Associated Press, which obtained emails and documents regarding Statoil’s project in Maine through a Freedom of Access Act request.

If true, the revelations further hurt Maine’s image in the eyes of the international business community, according to Annette Bossler, an international business consultant based in Bremen.

“That Associated Press article is in every major U.S. national newspaper and it’s only a matter of days until it will get picked up by the international media,” Bossler told the Bangor Daily News on Monday. “It does not do much to improve Maine’s image, neither in the offshore wind energy industry or in general, because let’s face it — Statoil is not just in wind, their main business is oil and gas.”

Bossler, who consults for a German company that is developing a pilot offshore wind energy project in the Baltic Sea, warns that the bad publicity and Statoil’s prominence in the oil and gas industry could have ripple effects in Maine, where companies such as Cianbro supply oil and gas companies.

“Even if the administration doesn’t like offshore wind, this goes beyond the offshore wind industry,” she said. “They should think about this.”

Attempts to contact Adrienne Bennett, LePage’s press secretary, were unsuccessful on Monday.

In June, the Legislature, at the behest of LePage, passed a law that forced the Maine Public Utilities Commission to reopen the process it had begun in 2010 to select an offshore wind development project to receive state support in the form of a favorable power purchase agreement.

Despite the fact the PUC had closed this process in January 2013, having finalized a deal with Statoil (though no contract had been signed), LePage wanted UMaine to be able to compete for that ratepayer support.

UMaine is developing an offshore wind energy project — its pilot project in Castine Harbor recently became the first offshore wind turbine in the Americas to provide electricity to the power grid — but it was not prepared to submit a proposal for ratepayer support when the PUC originally opened the bidding process in 2010.

When the law passed in June, LePage said that, “the hardworking citizens who fund the university every year would be pleased to see that their ratepayer dollars are going to a project that will benefit Mainers, rather than subsidizing a foreign oil company.”

While Bossler believes this is a unique situation and doesn’t reveal an administration that is thwarting other already negotiated deals, she said the message is clear to the international business community: “If you’re a foreign investor, you always rely on state government support. You need a reliable partner. This [AP] article puts a certain image out there…”

Meanwhile, the law passed in June cleared the way for a proposal using UMaine’s offshore wind technology to be submitted to the PUC, which it was on Aug. 30.

The entity that submitted the proposal, however, is not UMaine. It’s a company called Maine Aqua Ventus, which is a collaboration between Cianbro; Emera, owner of Bangor Hydro Electric Power Co.; and Maine Prime Technologies, a for-profit startup the university created to represent its interests in the technology, according to Jake Ward, UMaine’s vice president of innovation and economic development.

The PUC before the end of the year will determine whether the project meets criteria to receive state ratepayer support, as it was determined that Statoil’s project did.

There are three scenarios facing the PUC as Tom Welch, the commission’s chairman, sees it.

The PUC could determine the Maine Aqua Ventus proposal does not meet the necessary criteria for ratepayer support, such as providing short- and long-term benefits for Maine ratepayers. If it is determined to meet the criteria, then Welch says the PUC faces a dilemma.

“As the law now stands, I don’t think you could go ahead with both because there aren’t enough megawatts in the statute,” he said, referring to Maine’s Wind Energy Act, which was passed in 2008 and provides for a certain amount of ratepayer support to increase the state’s wind energy capacity over the next two decades. Splitting the available support between two projects would not provide enough for either to be successful, Welch said.

In that case, Welch said that it could be determined, once the PUC receives guidance on the interpretation of the law, that it’s “a jump ball” and the PUC would select one to receive the full amount of ratepayer support.

However, it’s not just Maine ratepayer support that Statoil and Maine Aqua Ventus are competing for.

The U.S. Department of Energy will also be providing $46.6 million to three offshore wind projects to take their pilot projects to commercial scale. Both Statoil and UMaine were among seven projects nationwide that received earlier DOE grants to start pilot projects. Ward at UMaine said the DOE is expected to start doing interviews regarding the grant funds in April 2014, but he’s not aware of a timeline beyond that.

As far as whether the revelations contained in the AP article would affect the PUC’s job to determine whether Maine Aqua Ventus’ proposal meets the criteria to receive state ratepayer support, Welch said he would be surprised if it did.

“The issue of how particular legislation came into being is almost never a consideration in how we interpret what legislation says,” he said. “Frankly, as you can imagine, if judges try to figure out what the motives are of people writing the laws, I suspect the cases would never end.”

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