In 2007, Maine households used less electricity, on average, than homeowners in every state across the country. Yet Mainers paid the nation’s fourth-highest electricity rates.
Unfortunately, any Maine business owner can tell you this incongruity isn’t restricted to the residential sector.
Commercial users in Maine ranked No. 48 in average electricity consumption that year yet shelled out more than businesses in all but six states. Large industrial users in Maine use considerably more electricity — ranking 26th in total consumption in 2007 — but also pay dearly. Only Hawaii’s industrial sector paid more for power than Maine’s sector two years ago.
Those alarming statistics, courtesy of the U.S. government’s Energy Information Administration, are enough by themselves to fuel a constant chorus of discontent among home and business owners. Factor in last summer’s oil crisis and its disproportionate impact on oil-dependent Maine, and it’s little wonder that energy reform is on top of seemingly everybody’s agenda this year.
That certainly has been true in Augusta, where lawmakers on a new committee created specifically to filter through the stack of far-reaching energy proposals have been busy all session.
But while the committee recently endorsed an omnibus energy bill that sets ambitious goals for weatherizing all Maine homes and weaning the state from its oil dependence, the members failed to reach consensus on a key issue: how to pay for those programs over the long term. Some have suggested a heating oil tax, while others are more enthusiastic about a plan to lease Maine’s interstate corridors to energy companies for transmission lines or pipelines.
The focus on Maine’s energy future also has prompted serious soul-searching about the state’s relationship with ISO New England, the not-for-profit corporation that operates the region’s electricity transmission system.
Maine’s future with ISO-NE remains unclear, however, after nearly a year of debate. But the issue will be on the agenda June 10 when the Public Utilities Commission hears oral arguments about Maine’s involvement in the organization.
Critics contend that ISO routinely puts the interests of power generators above those of consumers, resulting in inflated rates and massive cost overruns on projects that the public finances.
Should Maine go it alone?
While the largest utilities and representatives from the PUC continue to press for reform, some lawmakers and leading business groups are pushing hard for Maine to withdraw and form its own ISO, or “independent system operator.”
Anthony Buxton, an attorney for the Industrial Energy Consumer Group and an influential voice on Maine energy issues, told lawmakers earlier this session that the ISO is “an entrenched bureaucracy that is not going to change unless we make it.”
“The Maine commission tried very hard to reform ISO New England,” Buxton said last week during an interview. “It worked with other commissions around New England, and when push came to shove, the determining weight that killed the reform was the ISO itself.”
Members of the PUC and Maine’s largest utilities — Central Maine Power Co. and Bangor Hydro-Electric Co. — proposed a number of reforms aimed at making the ISO more responsive to consumers.
First and foremost, Maine’s delegation in negotiations with the ISO proposed that its mission statement be amended to require that the system serve customers “at the lowest reasonable cost.” But at a meeting earlier this year, the ISO opposed such stand-alone language and instead proposed that the system would strive to serve customers in a “cost-effective manner.”
Maine’s delegation to date also has failed to persuade the ISO to get a consumer advocate appointed to the board and to require that board meetings be held in open session.
But representatives of CMP and Bangor Hydro have urged lawmakers to give the reform efforts more time before ordering them to essentially withdraw from the system.
Sara Burns, president of CMP, acknowledged to members of the Legislature’s Utilities and Energy Committee that Maine’s delegation has not succeeded with several of its requests, most notably the consumer advocate board member and the “lowest reasonable cost” language. But she said the group has made progress in other areas and that ISO leadership continues to listen on increasing transparency and other issues.
“I am clearly saying we need to keep pushing, keep reforming and keep working on this,” Burns said.
Maine’s withdrawal from the regional grid could have significant implications.
Right now, Maine ratepayers have subsidized construction of billions of dollars of transmission lines and power plants throughout New England as part of ISO’s “socialization” of costs.
The impact has been decidedly negative for Maine so far. But should Maine remain within the grid, residents to the south would help foot the bill for more than $2 billion worth of transmission line projects proposed in Maine.
Utility officials insist those projects within both the CMP and Bangor Hydro areas, as well as connecting northern Maine’s electricity infrastructure to the rest of the state, are critical to ensuring reliability.
Should Maine leave ISO, state ratepayers would have to shoulder the entire financial burden of those projects.
“If we decide to stay, it will balance itself out because we need to invest in transmission in Maine,” Burns told lawmakers.
Nor are rates guaranteed to go down should Maine choose to go it alone.
The study prepared for the Utilities and Energy Committee forecasts that Maine’s electricity rates would go up over the long term because smaller markets mean lower competition and less efficiency.
Dick Davies, Maine’s public advocate, who is charged by statute with representing consumers’ interests, said recent decisions by the Federal Energy Regulatory Commission likely have made withdrawal from ISO even more difficult.
Instead, Davies said he believes the state needs to continue pushing hard for reform while focusing on energy efficiency and conservation and expanding homegrown energy sources, such as wind and tidal energy.
Energy prices in New England are so high in large part because they are directly tied to the price of natural gas, Davies pointed out. While not as volatile as that of oil, natural gas prices have risen considerably in recent years, thereby helping to drive up electricity prices.
The more renewable energy that is pumped into the grid at any one time, the more you can hypothetically offset the higher price of natural gas, Davies said. But such a transition will take place gradually — over years — nor can Maine do it alone, he said,
“It is going to take a lot of work from all six New England states increasing the amount of renewable energy that they can bring to market,” Davies said.
Wind and tidal power
The stormy waters off the coast of Maine have been touted as one of the most promising solutions to the crisis both locally and throughout the energy-hungry Northeast. The Gulf of Maine has enough wind energy potential to meet roughly 10 percent of the entire nation’s electricity needs.
Researchers at the University of Maine and other institutions, as well as several private corporations, are working feverishly to develop the technology needed to deploy massive wind turbines amid the deep waters and brutal weather found in the Gulf of Maine.
But that technology is likely a decade or so from commercial reality. In the meantime, wind power development companies continue to eye interior Maine for potential projects. First Wind of Massachusetts, alone, has three projects totaling more than 130 megawatts under development.
Three tidal power projects proposed for Down East Maine, meanwhile, are also at various stages of development.
Construction of renewable energy sources and the new transmission lines to feed them into the grid creates jobs and helps reduce greenhouse gas emissions linked to global warming, Davies noted.
“So even if we did nothing about the price of electricity, we would still see a benefit of replacing 12-cent [per kilowatt-hour] of natural gas-generated electricity with 12-cent renewables-generated energy,” Davies said.
Earlier this year, Gov. John Baldacci sought to open another front on Maine’s battle for greater energy independence and security by announcing plans to explore opening up highway corridors to energy companies looking to build new transmission lines or other infrastructure.
Those transmission lines would also help alleviate the transmission line congestion that is inhibiting renewable energy development in Maine.
The companies would benefit from not having to fight as many battles with landowners and environmental groups while attempting to secure the right of way. In turn, the companies would funnel potentially tens of millions of dollars into state coffers for weatherization and energy efficiency.
Peter G. Vigue, the Cianbro Corp. CEO who proposed the “energy corridor” idea to Baldacci and legislative leaders last year, has said many Mainers are convinced that they are too far from major metropolitan areas to enjoy cheap energy.
But Vigue argues that Maine’s location between the energy-hungry megalopolises to the south and energy-rich Canada, as well as the state’s own renewable energy resources, put the state in an enviable and potentially powerful position.
“It’s incumbent on us to understand what resources are available to us, to understand our proximity to the market,” Vigue told lawmakers. “When you look at this state and where we are located, we have a huge advantage.”
But talk of energy corridors extending through Maine from Canada to southern New England has stirred up some political dust. Down East residents and politicians say that before Maine allows Canadian energy companies to lease the interstate corridors, the Canadian government should agree to allow liquefied natural gas tankers access to several LNG terminals proposed for the Calais area.
Responding to those concerns and others, members of the Legislature’s Energy Futures Committee voted to effectively block completion of any energy corridor lease agreements until a commission studies how Maine can reap the most benefits from the deal.
The Legislature is slated to take up the omnibus energy bill that deals with the energy corridors in coming weeks.