Maine’s LePage withholding support for energy bill, wants wind rules changed

Source: By Matthew Stone, Bangor Daily News • Posted: Thursday, May 23, 2013

AUGUSTA, Maine — Gov. Paul LePage is withholding support for a compromise bill being worked out by the Legislature’s Energy Committee that’s aimed at expanding Maine’s natural gas infrastructure, boosting funding for energy efficiency, directly lowering businesses’ electricity costs and making it more affordable for residents to abandon oil heat.

LePage won’t support the bill unless it also requires wind developers prove their projects will lower electricity costs in order to receive state approval and raises the 100-megawatt limit energy generation facilities must meet so they can count toward the state’s renewable energy goals, according to Patrick Woodcock, who directs LePage’s energy office.

The bill includes provisions from legislation proposed by LePage and Democratic and Republican legislators. It has elements designed to appeal to LePage, who has emphasized policies that directly reduce energy costs, and Democrats and environmental groups, who have advocated for investments in energy efficiency.

Woodcock said the legislation includes parts that LePage supports. “There’s a lot of consensus once and for all around developing a law that addresses heating costs,” he said.

But the governor objects to other parts of the law, including a provision that would allow the Maine Public Utilities Commission rather than the Legislature to set the system benefit charge that’s added to all electric bills to fund conservation and efficiency programs.

“That is not consistent with the governor’s view of basic government,” Woodcock said. “He has very strong concerns about that provision.”

Republicans on the Energy Committee have suggested setting a cap on the system benefit charge the Public Utilities Commission can levy, but the committee hasn’t reached an accord on that issue.

Woodcock has previously raised concerns about measures in the bill that would let the state purchase capacity in natural gas pipelines that would make it more economically feasible for developers to build pipelines that reach southern New England. If more natural gas can make its way into the regional electric grid, the bill’s proponents say, Maine’s electricity costs could fall.

Since the bill has a chance to attract support from members of both parties, a lack of support from LePage isn’t necessarily an impediment to its passage.

“We will consider any item that the governor has proposed that improves the bill or benefits the people of Maine,” said Sen. John Cleveland, D-Auburn, the Energy Committee’s Senate chairman. “We’re going to produce the best bill we can produce.”

LePage has long advocated for changes to Maine’s Wind Energy Act. Woodcock recently told Energy Committee members that the law should no longer set goals for increasing the state’s wind energy capacity. Instead, he said, the law’s goals should focus on lowering electricity costs.

LePage has also repeatedly called for raising the 100-megawatt limit renewable energy sources must meet in order to count toward the state’s Renewable Portfolio Standard, which requires at least 40 percent of the state’s energy come from renewable sources like solar and wind by 2017. The change would allow energy from large Canadian hydro projects to count toward the state’s renewable energy requirements.

The Energy Committee bill is the product of work that has involved Cleveland; Rep. Barry Hobbins, D-Saco, the Energy Committee’s House chairman; Republican committee members Sen. Edward Youngblood of Brewer and Rep. Larry Dunphy of Embden; Woodcock; Thomas Welch, the Public Utilities Commission chairman; the Industrial Energy Consumers’ Group, which represents many of the state’s paper mills; the Natural Resources Council of Maine; and others.

The bill incorporates pieces from two bills sponsored by House Republican Leader Rep. Kenneth Fredette of Newport that could lead to the state’s ratepayers partially financing a buildout of pipeline infrastructure in southern New England so more natural gas can make its way from the Marcellus Shale rock formation — which covers much of New York, Pennsylvania and West Virginia — to New England.

With more pipeline capacity flowing into New England, Maine could be better insulated from electricity price swings that occur when pipeline capacity is nearly maxed out, Welch, the Public Utilities Commission chairman, has told Energy Committee members.

If the state purchases capacity in a pipeline that’s ultimately built, the Energy Committee bill would let the state enter into energy cost-reduction contracts with natural gas generators by selling capacity in exchange for rates that reduce electricity costs.

Committee members have recently amended the bill to limit the utilities commission’s authority to craft those contracts by requiring the commission hire a consultant to negotiate the contract, working with the state’s public advocate and the governor’s energy office. The governor would have ultimate authority over whether Maine enters into such a contract.

The revised bill also installs a sunset provision that ends the state’s authority to enter into a cost reduction contract in 2019, and it would require the Public Utilities Commission report back to the Legislature in two years on its progress negotiating cost reduction contracts.

“It’s inappropriately putting the state of Maine in the position of investing speculatively in the gas markets,” said Greg Cunningham, a senior attorney with the Conservation Law Foundation of Maine. “It assumes that natural gas prices remain at low levels. It assumes that there are not other supplies of gas that become available. It assumes that there are not other demands for the gas, such as an international market that might drive the price of that investment up.”

Dylan Voorhees, clean energy project director with the Natural Resources Council of Maine, said his group has signed onto the Energy Committee bill because it proposes additional funding for energy efficiency and conservation projects and it allows Maine to sign onto a reduced cap on carbon emissions for power-generating facilities recently agreed to by the nine northeastern states that belong to the Regional Greenhouse Gas Initiative.

Those benefits, Voorhees said, outweigh the council’s concerns about the provisions that allow the state to purchase natural gas pipeline capacity to compensate for a marketplace that has been slow to make infrastructure investments that allow more natural gas to flow Maine’s way.

“This bill has a chance of passing in a bipartisan way,” Voorhees said.