July 20, 2018
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Costly infrastructure is driving up Maine’s electricity costs

George Danby | BDN
George Danby | BDN
By Barry Hobbins and Ken Fletcher, Special to the BDN
Updated:

High energy costs are a challenge for Maine residents and businesses. We can tell you from our daily interactions with colleagues that there is increased frustration with electric utilities on issues ranging from storm response costs to the effectiveness of so-called smart meters. One source of frustration we share is the continuous increase in the rates electric utilities charge.

For most homes and businesses, roughly half of the price we pay for electricity is the rate utilities charge for “delivery” over their transmission and distribution grid. (The other half is for the electricity produced by non-utility generators.) Central Maine Power’s delivery rate for medium-sized businesses has increased 80 percent over the last decade.

The increase has been driven by more and more costly wires, poles and substations. This is a burden on Maine’s economy and households, and plans for further grid build-out at ratepayers’ expense keep coming, with CMP announcing a $214 million expansion for electricity infrastructure in Greater Portland in March.

Under state and federal regulations, monopoly utilities like CMP earn a guaranteed rate of return for spending ratepayer money on new wires and poles, creating a clear financial interest in making sure we have plenty of wires and poles to keep lights on but discouraging creative and cheaper alternatives to wires and poles.

The electricity grid of the future won’t be — or shouldn’t be — the same as the grid of the past. New and exciting technologies provide a powerful collection of alternatives to new wires, from the latest versions of well-known technologies like energy efficiency to rapidly emerging technologies like battery storage, distributed generation and sophisticated information tools to monitor and control demand for power. Many of these technologies give consumers more control and choice, and they can have a lower cost than new wires and poles.

A pilot project in Boothbay Harbor is Maine’s most successful and recognized example of a alternative to new wires. In 2008, CMP proposed an $18 million transmission upgrade down the Boothbay peninsula as part of a much larger grid upgrade. The transmission line would have been paid for by all their customers, and its $18 million price tag would have cost their customers $75 million over the life of the transmission line. (Remember guaranteed utility earnings?) Other parties came forward with an alternative, and the Maine Public Utilities Commission ultimately approved a $6 million combination of energy efficiency, distributed solar, storage and other alternatives to new wires. Depending on how you count it, that’s a 65 percent to 90 percent savings.

There may be many more opportunities to capture this kind of savings, but they face big barriers, including those stemming from utilities’ financial interests.

In 2009, the Legislature adopted a smart-grid policy framework, and the utilities commission has spent years considering whether and how to put it into practice. Last year, the commission made the rather stunning decision to put utilities like CMP in charge of alternatives to wires.

That is the wrong decision for consumers. It sets the fox guarding the henhouse, relies on the same basic formula that has given us 80 percent increases in utility rates, and will not achieve lower utility rates for Maine homes and business.

A better approach can be found in the formal recommendation of the commission’s professional staff to designate an independent coordinator to identify and propose lower cost alternatives to more wires and poles. This was generally supported by all parties — including the Office of the Public Advocate and Efficiency Maine.

There are many complex open questions that need to be answered as we move toward a smarter grid, but one thing should be clear: we should have an independent party with no financial interest in wires and poles to analyze and develop lower-cost alternatives to wires and poles.

LD 1487, An Act to Control Electricity Transmission Costs through the Development of Nontransmission Alternatives, is before Maine’s Energy, Utilities and Technology Committee. This bill could establish the policy of independence and assign a group of stakeholders, including utilities and Efficiency Maine, to recommend how the details should work. This proposal would provide a bit more competition in an otherwise monopolistic arena.

If you are part of the chorus of voices seeking to reduce energy costs, and specifically electricity rates, you should support this direction for Maine.

Barry Hobbins is Maine’s public advocate. Until 2016, he served in the Maine Legislature as a Democrat from Saco and was co-chair of the Energy, Utilities and Technology Committee for four years. Ken Fletcher is retired from his career in the paper industry and as the director of the Governor’s Energy Office under Gov. Paul LePage. He now serves as the chairman of the board for the Efficiency Maine Trust. Until 2010, he served in the Legislature as a Republican from Winslow, sitting on the energy committee for eight years.

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