by Andy O’Brien
On Thursday, March 21, legislators, academics, renewable energy businesses and environmentalists gathered for a discussion on clean energy policy in Augusta, sponsored by the Environmental and Energy Technology Council of Maine (E2 Tech). The conference featured committee co-chairs Rep. Barry Hobbins (D-Saco) of the Energy, Utilities and Technology Committee and Sen. Jim Boyle (D-Cumberland) of the Environment and Natural Resources Committee.
Natural Gas in the Legislative Pipeline
“Many of us are beginning to rethink our positions on natural gas,” said Hobbins in his opening remarks.
A lobbyist from the powerful Augusta firm Preti Flaherty Beliveau & Pachios asked him for specifics.
Well, Hobbins replied, “Our committee is still waiting for several bills relating to natural gas. In fact, one of the bills has been drafted by your law firm.”
According to the US Energy Information Administration, Maine has the lowest utility costs in New England, but they are 27 percent higher than in the rest of the US, which cuts into the profits of local businesses, making them less competitive with other states.
Current legislation aims to change that by taking advantage of natural gas resources in New York, Pennsylvania and West Virginia, as the price of the fuel has plummeted in recent years. However, Hobbins added that investments in natural gas are already happening in Maine without legislative action. Falmouth, Yarmouth and Cumberland have already started reaching out to gas companies to expand pipelines into their towns.
Rep. Fredette’s Proposal to Subsidize Gas Pipeline Expansion
Hobbins said the most notable of natural gas bills before his committee is the legislation sponsored by House Republican Leader Rep. Ken Fredette (R-Newport). LD 1262, An Act to Reduce Energy Costs, would allow the state to issue bonds to finance natural gas pipeline expansion and give the Public Utilities Commission (PUC) the authority to direct transmission and distribution utilities to assess ratepayers “for the cost of an energy cost-reduction contract.” Fredette’s other natural gas bill, LD 1187, would set up the Maine Energy Cost Reduction Authority for the purpose of entering into energy cost-reduction contracts with natural gas generators by selling capacity in natural gas pipelines. The bill would also allow the seizure of land within the natural gas corridor by eminent domain.
At a public hearing on April 11, supporters argued that since a third of Maine electricity comes from natural gas powered generators, the legislation has the potential to lower electrical and heating costs for all Mainers. Several large manufacturers strongly supported Fredette’s bills, but others – including utilities, oil dealers, environmental groups, and Democratic committee members – were skeptical of subsidizing gas pipeline expansion.
“There are times when, even on our conservative Republican principles, we realize that there are imperfect markets,” Fredette said, defending his bill. “And if there are going to be imperfect markets, there are times and places where government intervention is appropriate,” said Fredette in defense of his bill.
Dylan Voorhees of the Natural Resources Council of Maine was cautious about the proposals.
“The fact is that natural gas is not going to provide a solution for most Maine people,” said Voorhees. “Long term, we don’t know what the price of gas will be, not everyone is going to be on a gas pipeline, and it’s very expensive to convert [to natural gas].”
Also speaking against the measure, the Maine Energy Marketers Association (MEMA), which represents oil dealers, argued for a more holistic approach to lowering energy costs. “lf socializing the costs in order to reduce … prices is the objective, we respectfully suggest that the state socialize proven cost-reduction strategies that benefit all Mainers regardless of fuel types and fund weatherization and efficiency upgrades,” said MEMA President Jamie Py.
Investing in Efficiency
“When you invest in energy efficiency, you avoid having to buy more production energy, production capacity, transmission capacity, distribution capacity, emissions, and avoid having to pay for new scrubbers on power plants. Rate payers and everyone gets benefits,” said Doug Farnsworth, senior associate for the Regulatory Assistance Project (RAP), a non-profit focused on economic and environmental sustainability.
“No matter what fuel switch we do, we must look at energy efficiency and conservation as part of it,” said Hobbins. “Anyone who doesn’t is fooling themselves. Even [Governor LePage] is moving reluctantly on it,” Hobbins said.
The Efficiency Maine trust, a public program funded through charges to electric ratepayers and the Regional Greenhouse Gas Initiative (RGGI) as well as some federal money, provides energy-saving programs to residents and businesses. That includes cash incentives and rebates, free energy audits, low-cost loans and educational training.
According to Efficiency Maine, efficiency programs have saved $400 million a year in energy costs since 2002. From 2010 to 2011, the trust’s benefit-to-cost ratio was 2.58, meaning that every dollar spent generated 2.58 in lifetime economic benefits.
But as Doug Baston of North Atlantic Energy Advisors told the conference participants, the American Council for an Energy Efficient Economy dropped Maine from 12th in the nation in energy-efficiency investment to 25th in 2012, behind all other states in New England.
Baston, who was a program manager at Central Maine Power (CMP) in the 1980s, said that CMP used to have one of the most effective energy-efficiency programs in the country, but changed course during the late 1990s during Maine’s deregulation of the electrical energy market. He said in most states, energy-efficiency programs are administered by the utilities, but since CMP and Bangor Hydro have shown little interest in such policies, Maine is one of only two states that runs it through a public program.
As a result, Baston said that energ- efficiency debates have become unnecessarily partisan, most notably when Governor LePage famously referred to some of Efficiency Maine’s energy conservation programs as “another word for Ponzi scheme” in 2011.
“The problem in Maine is that because utilities don’t run the programs, the link between programs and benefits are less clear,” explained Baston. “Policymakers tend to view the programs as subsidies to businesses and homeowners and not the acquisition of a resource, leading to an impulse to design programs through legislation.”
CMP spokesman John Carroll said he did not know the history of CMP’s policy on energy efficiency, but he said that the company is sensitive to increased charges on ratepayers to fund these programs. The state might mandate the charges, but the company has to answer to complaints from customers. He also noted that some of the funding does not specifically go to fund electricity conservation programs.
“When those rates are collected by electricity providers from customers, they may go for reducing heating oil use or natural gas use,” said Carroll. “Not that it’s not a good public policy goal to weatherize a home, but you question the fairness of adding the fee to an electric bill but not necessarily a heating bill.”
PUC Plan to More than Double Maine’s Energy- Efficiency Investments
In March, the PUC approved a plan to more than double Maine’s energy-efficiency investments by increasing the System Benefit Charge to ratepayers, which would raise funding from $13 million a year to $30 million over a three-year period. According to Environment Northeast, a non-profit focused on clean energy and climate change issues, the plan would drop Maine electricity rates 6 percent by 2025 and boost Gross State Product by $1.4 billion. The PUC estimates the plan will save $500 million in energy costs over the life of its efficiency investments.
However, Governor LePage criticized the PUC plan in his April 6 radio address, stating that it would add $8 to $20 more a year for individual ratepayers and will pose a financial burden on businesses. Citing high electricity costs and even higher heating costs in Maine, the governor said he intends to switch the funding from electricity programs to increase incentives for consumers to purchase heat pumps, wood pellet furnaces, natural gas systems and high-efficiency oil burners. He said he also would like to eliminate the Systems Benefit Charge for industrial users in an effort to spur economic growth.
The Governor’s Energy Office said that the administration is also interested in increased funding for weatherization projects, but offered no details on the plan.
According to the US Department of Energy, sealing, insulating and tightening up homes can save 32 percent on fuel consumption. Hobbins pointed out that Maine has set a goal to weatherize 100 percent of the state’s homes and 50 percent of businesses by 2030. In 2009, a surcharge on barrels of oil was proposed to generate funding to weatherize half of Maine homes by 2020, but the proposal was defeated after strong conservative opposition.
Statewide Efficiency Standard for All New Buildings
Also on the Legislature’s efficiency agenda is a measure to return Maine to a statewide energy-efficiency standard for all new buildings, outlined in the Maine Uniform Building and Energy Code (MUBEC). Originally adopted in 2010, in 2011 the Republican-controlled Legislature rolled back requirements to exempt municipalities with populations under 4,000, which amounted to roughly half the state. LD 977, sponsored by Rep. Anne Graham (D-North Yarmouth) would make MUBEC a statewide code again. However, Governor LePage is opposed to the measure, as he believes it constitutes a mandate on towns and cities.
On Tuesday, April 23, the Energy and Utilities Committee will consider two bills to provide increased funding for efficiency programs. Senator Boyle has also recently submitted LD 1426 An Act to Improve Maine’s Economy and Lower Energy Costs through Energy Efficiency to address long-term funding of energy-efficiency and weatherization projects in the Efficiency Maine Trust.
Incentivizing Local Production & Distribution “Unlikely to Be a Priority”
A number of bills to expand net energy billing for small electrical generators will be heard by the Energy and Utilities Committee on Tuesday, April 24. Under current law, homes and businesses with small solar or wind generators can receive credits for excess energy sold back to the grid. They can then redeem the credits for grid power when they are not generating electricity. A 2009 law expanded allowable capacity of these projects to 660 kilowatts and allowed shared ownership of the generator with up to 10 meters. For instance, if you own 20 percent of a project generating 300 kilowatts, 60 kilowatts will be taken off of your electric bill for the year.
LD 1146, sponsored by Ann Dorney (D-Norridgewock), would expand the allowable capacity of alternative energy projects to 2 megawatts, which she says is the equivalent of 10 acres of solar panels or one large wind turbine. According to Ben Axleman of Massachusetts-based Citizen Energy Corporation, this would generate enough capacity to power 300 homes. Under current law, energy credits expire after one year from the month they are generated. Rep. Dorney’s bill would not let energy credits expire and would let people who don’t own the project use those energy credits. That would allow people who can’t install alternative energy generators for various reasons to purchase that energy from other small generators, such as a neighbor.
Testifying in support of the bill, Axleman noted that under Maine’s current law, an individual, company, or group of individuals or companies can only qualify for net metering if they own the project themselves and use all of the energy that the project produces. He said that this law makes renewables less accessible for average people due to installation costs and the time it takes to get a payback, which can often be up to 10 years.
“Opening up net energy billing to allow other ownership models would allow individuals and companies to recoup some of their investment by selling a portion of the credits they generate to other interested parties,” said Axleman. “lt would also allow renewable energy companies to build, own and operate projects and assign their credits to customers who would like to buy renewable energy but do not have the wherewithal to build projects themselves.”
Axleman noted that under Massachusetts’s 2008 Green Communities Act, which is similar to Dorney’s proposal, projects owned by third parties often sell their net billing credits to customers at a discount to remain competitive.
“Three solar energy projects that my company recently built are selling net metering credits to a town, a dairy business, and a governmental agency, and providing them significant savings on their electric bills,” Axleman said.
The Green Communities Act is the law that has facilitated the creation of community solar farms mentioned in a previous Free Press story, “Solar Turns Mainstream.”
LD 1146 was not supported by the Governor’s Office or the major utilities, Bangor Hydro and CMP, who argued that the policy would require ratepayers to subsidize these small renewable projects. They argued that not letting the credits expire and expanding the allowable generator capacity would permit renewable energy users to bypass transmission and distribution charges and sell power directly to customers, with ratepayers picking up the tab.
“All of these provisions would significantly expand the number of customers who are exempt from paying electric transmission and distribution costs – costs that are fixed, and have to be paid by some entity,” said Patrick Woodcock of the Governor’s Energy Office. “The policy question before the committee is to what degree should ordinary ratepayers be asked to subsidize net energy billing customers?”
Defending the bill, Axleman argued that current law states that if these small generators reach one percent of the utility’s peak demand, they will come under review by the PUC. He said the proposal would not increase costs for other ratepayers, but suggested that a tiered system should be implemented in which small, household-sized projects receive close to retail rate for their generated power and larger projects receive wholesale rates.
Other bills concerning net billing for small renewable projects will be heard on Wednesday, April 24, in the Energy and Utilities Committee.
Speaking at the E2 Tech conference, Rep. Hobbins said he didn’t think net billing legislation would gather much traction in the Legislature. He said he supported the intent of incentivizing local production and distribution of energy, but that it was unlikely to be a priority.