Mill officials say LePage’s efforts to change renewable energy policy could hurt paper industry

Posted Jan. 10, 2013, at 10:04 a.m.

LEWISTON, Maine — Representatives of Maine’s pulp and paper industry said Wednesday that efforts by Gov. Paul LePage’s administration to change the state’s renewable energy policies are likely to do more harm than good when it comes to the price of electricity.

They may also hurt the paper industry, which employs 7,500 workers statewide, according to Bill Cohen, Verso Paper Corp.’s manager for mill communications and regional government affairs.

Cohen said his company is hoping to refocus the energy debate at the Legislature in 2013 and is encouraging lawmakers and LePage to rethink changes they might have in mind for how to reduce the final price a consumer pays for a kilowatt-hour.

“Last session it got quite contentious because he was very specifically concerned about the renewable portfolio standard and that has a tremendous impact on Verso,” Cohen said. “Basically, we hadn’t even finished a $42 million investment and he was trying to take away some of the rules by which we had made that investment.”

Cohen was talking about Verso’s decision to install a biomass power plant that produces electricity and steam for its paper mill in Bucksport. That plant, which can produce 25 megawatts of energy, is allowed to sell its excess electricity to Maine’s power market and make a profit because of the renewable portfolio standard.

The standard allows all renewable energy facilities that generate less than 100 megawatts of energy to be eligible for inclusion in the portfolio. The standard also carves out an exemption that allows all wind projects, even those over 100 megawatts, to be eligible.

LePage proposed a bill last legislative session that would have changed the standard by removing the 100-megawatt cap. That would have the effect, according to Cohen and Verso, of flooding Maine’s market with power from large hydropower facilities in Quebec. It could make Verso’s recent investment a moot point, Cohen said.

But Patrick Woodcock, the newest director of the Governor’s Office of Energy Independence, said LePage simply wants to level the energy playing field in Maine. The governor wants all producers of renewable energy, big and small, to have a fair shot at the market, Woodcock said.

He said that lowering the cost of electricity in Maine has been a key focal point for the LePage administration because it is one of the biggest concerns for businesses here and businesses considering moving here.

“We are very clearly focused on lowering manufacturing costs,” Woodcock said. “The fact of the matter is, Maine has the 12th-highest electricity prices in the country, and that is an uncompetitive statistic when you look at bringing new businesses in.”

But because the renewable portfolio standard only accounts for about 3 percent of the total price of a kilowatt-hour in Maine, Cohen said the governor is misguided.

The real issue, according to Cohen and a group of industry executives, is the shortage of natural gas pipeline capacity into New England.

Even if Maine could expand its capacity to move natural gas around the state, that wouldn’t ultimately help the price of natural gas if the state couldn’t bring in the volume it needs to fill a growing demand, Cohen said.

Natural gas pipeline systems across New England must be upgraded and expanded. Cohen said that investment has been estimated to be in the $2 billion range, but it’s difficult to convince Maine lawmakers and policymakers that infrastructure investments in other New England states will help our economy, he said.

Cohen said any legislation that attempts to tackle the costs of electricity by simply carving out parts of a complex policy based on a misconception won’t advance more affordable power.

“First of all, you have the whole policy around the renewable portfolio,” Cohen said. “You can’t just take a piece of it; you’ve got to understand the whole policy, but let’s debate the whole policy and not just one little part of it.”

Woodcock said the governor agrees with Cohen and Verso on the natural gas issue and has worked toward expanding access to that fuel resource to both industries and residents.

“It is absolutely critical that we increase our natural gas infrastructure, absolutely critical,” Woodcock said. “There are low-cost options to natural gas in the United States and Maine industries need to have access to this new resource that can power Maine jobs.”

Woodcock said the state still needs to take a holistic approach.

“It is not one single aspect of Maine’s energy situation that is causing this, but we need to look at every single aspect and that’s what the governor has been doing and looks forward to doing with the new Legislature,” Woodcock said.

State Sen. John Cleveland, D-Auburn, the Senate chairman of the Legislature’s Energy, Utilities and Technology Committee, said Wednesday he was not aware of any bills that would be coming before his committee, but that bill drafts were not due until Jan. 18.

Cleveland said part of the rationale behind the renewable portfolio standard was to ensure that Maine had a diverse mix of renewable energy sources. He said the 100-megawatt cap was meant to keep any one source from being able to flood the Maine market and hold it captive.

“The idea was to try and encourage a variety of diverse power-generating sources and not be overly dependent on any one particular source,” Cleveland said.

He said any proposals, from the governor or lawmakers, on energy would be given fair and careful consideration by his committee.

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