AUGUSTA, Maine — Gov. Paul LePage says Maine will sign on to a new regional plan to lower carbon emissions from power plants if lawmakers agree to a forthcoming proposal from his administration to use funding from carbon auctions to lower residential and business energy bills.
Maine and the eight other northeastern states that belong to the Regional Greenhouse Gas Initiative, or RGGI, this week agreed to reduce the cap on carbon emissions from power-generating facilities by 45 percent between 2014 and 2017. The states’ plan lowers the cap to 91 million tons annually from the current 165 million-ton level. Maine’s portion of the carbon emissions allowance is 3.6 percent of the total, said Patricia Aho, commissioner of the Maine Department of Environmental Protection.
The reduction in the emissions cap is the result of a RGGI program review that found the region’s actual emissions are far below the current cap.
The participating states — which include all six New England states, New York, Delaware and Maryland — are expected to use the cooperative’s model rule as the basis for state-level policies.
RGGI started in 2005 with a goal of capping and reducing carbon dioxide emissions from power plants by 10 percent before 2018. The cooperative holds regular auctions that allow power generators to bid for carbon emission allowances. Participating states have generally invested their auction revenues in energy efficiency programs and renewable energy technologies.
LePage has never embraced RGGI, and the Republican-led 125th Legislature in 2011 passed a law that would withdraw the state from RGGI if a “sufficient” number of other participating states withdrew. Only New Jersey has withdrawn, and Maine has remained a participant.
The LePage administration now wants to use revenues from RGGI auctions to reduce electricity rates for businesses and lower residential heating costs. The administration plans to introduce legislation that would create a rebate program that helps low-income residents convert their oil heating systems to more efficient wood pellet, natural gas and propane systems, said Patrick Woodcock, director of the Governor’s Energy Office.
The legislation would propose funneling the other portion of the state’s RGGI revenues directly into electricity rate reductions for businesses, Woodcock said. The state’s Public Utilities Commission would be charged with implementing the rate reduction, he said.
“When companies look at investing in the state of Maine, they look at labor costs and they look at energy costs,” Woodcock said. “We will never be able to have the least expensive electricity in the country, but the margins are important. We are trying to push Maine closer to the average.”
Maine has received about $4.5 million annually from RGGI auctions in recent years, according to Woodcock. With the lower emissions cap, that total would likely double, he said.
Another element in the legislation would eliminate the “system benefit charge” from all businesses’ electricity bills, Woodcock said. That would save Maine businesses $5 million total, Woodcock said. But it would mean a $5 million loss for the Efficiency Maine Trust, which currently receives the revenue from the system benefit charge.
Environmental advocates praised the action by RGGI participants to lower the carbon emission cap, but voiced concerns about the LePage administration’s plan for reinvesting auction revenues.
“Strengthening RGGI is one of the best ways we can reduce the pollution that causes global warming,” Emily Figdor, director of Environment Maine, said in a statement. “However, it’s critical that the revenue from the program is invested in energy efficiency, and that’s what Maine is doing right now. Energy efficiency locks in energy savings that lower bills not just today but year after year.”
LePage has consistently said he wants to lower the state’s energy costs in an effort to attract more business to Maine. He devoted a portion of his State of the State address Tuesday night to discussing the state’s energy costs. While Maine’s average retail electricity price is the lowest in New England, according to the U.S. Energy Information Administration, it’s 27 percent above the national average. In the industrial sector, Maine’s average retail prices are 30 percent above the national average.
In his address, LePage said he plans to propose legislation to streamline the construction of natural gas delivery infrastructure in hopes of making the cheaper energy source more widely available in Maine.
“Maine’s energy costs are too high, and it’s killing economic opportunity,” LePage said in the prepared version of his State of the State address.