An initial public hearing looks at a number of issues that could make for a tough fight.
AUGUSTA — Maine electric utilities could offer low-interest loans to customers who want to buy super-efficient electric heaters if a proposal introduced Wednesday on behalf of Gov. Paul LePage gains traction in the Legislature.
But the plan would shift ratepayer money away from programs currently run by Efficiency Maine Trust, the state’s quasi-independent conservation agency. And although supporters say the heaters could cut residential electric bills in half, critics question whether promoting electric heat is truly cost effective, and whether it’s fair to other energy vendors, such as oil dealers.
These and other issues highlight one point of controversy in a mounting fight over the governor’s energy package, which got its first public hearing Wednesday before the Energy, Utilities and Technology Committee.
Another part of LePage’s package will be debated in a committee hearing today.
That proposal would remove a 100-megawatt cap for power generators to qualify for the state’s renewable energy portfolio standard. Supporters say it would open the door to buying cheap hydro power from Canada, but critics say the power won’t be any less expensive.
LePage has been saying since last year that lowering energy costs is a top priority of his administration. He has repeatedly said high energy costs are perhaps the biggest obstacle to job creation in Maine.
But LePage waited until the legislative session was winding down to introduce the cornerstones of his energy proposals, a four-bill package that he says will reduce costs and provide more options for Mainers. The timing makes it unclear whether lawmakers will have time to consider the bills before the session ends.
“My energy policy will focus on all forms of energy, providing Mainers with the freedom to choose which sources to buy from,” the governor said last week in a statement.
That point was echoed Wednesday by Ken Fletcher, the governor’s energy director, who testified in support of the Efficiency Maine Trust bill. It’s not the role of government to “pick winners and losers” in the energy field, Fletcher said.
But Sen. Philip Bartlett, D-Gorham, countered that the proposed law would favor Maine’s electric utilities, which would be defacto winners.
“That’s exactly what this bill does,” Bartlett said.
Efficiency Maine Trust was created by the Legislature in 2009. It uses a fractional surcharge on electric bills to help fund conservation and efficiency programs. Work done last year alone, through installing efficient lighting and other measures, is projected to save homes and businesses $450 million over time.
But the rise in oil prices has convinced LePage that the agency needs to do more to help Mainers move to alternative heating systems. A program developed with input from utilities including Central Maine Power Co., Bangor Hydro-Electric Co. and Maine Public Service Co. aims to do that.
The governor’s proposal would have Efficiency Maine Trust administer a revolving loan program through which residents could buy high-efficiency electric heating systems. These could include a new generation of air-type heat pumps, which produce more energy than they use and work in cold climates; and thermal storage heaters, which power up with less-costly electricity generated overnight.
This plan is strongly supported by Bangor Hydro and Maine Public Service. The loan program could be profitable for the companies, acknowledged Gerry Chasse, president of the companies, but that’s not the prime motivation. The goal is to get customers moving to more efficient forms of energy, which will reduce consumption.
“Conservation is important, but it’s not enough,” Chasse said.
CMP supported the proposal at the hearing. But it broke ranks with Bangor Hydro by saying it would not participate in the loan program idea, which it considers too risky and hard to administer. Instead, it expressed interest in a pilot program to test storage heaters in perhaps 300 homes.
Oil and propane dealers strongly oppose any program that uses ratepayer money to convert their customers to electric heat. They criticized the potential benefits for CMP and Bangor Hydro’s parent companies.
“This bill is a windfall for the Spanish energy giant Iberdrola, one of the largest energy companies in the world; and Emera, another large energy company based in Canada,” said Jamie Py, president of the Maine Energy Marketers Association. “This is a major policy change. The nonregulated energy marketers — oil, propane, wood, pellets — are at a major disadvantage to monopolistic utilities already. This bill is completely the opposite of a free market approach.”
Other opponents raised technical questions about the proposal.
Beth Nagusky, Maine director of Environment Northeast, noted that heat pumps also operate as air conditioners. That could put pressure on the power grid during the summer and lead to higher electricity prices, she said. She and others also raised questions about whether the air-type heat pumps have been on the market long enough to prove their reliability.
The Efficiency Maine proposal will be debated further in upcoming committee work sessions.
The proposal to remove a 100-megawatt cap on power generators that qualify for the state’s renewable energy portfolio standard has also generated controversy. Qualifying generators now get a premium price for their power, as a way to encourage development of Maine-based renewable energy, such as wind and water resources.
Maine doesn’t have any hydroelectric dams producing more than 100 megawatts, but Canada does. The administration believes this change in the law could open the door for cheaper power from Canada, notably from Hydro Quebec.
But there’s no indication Canada will sell cheap power to Maine.
Vermont gets one-quarter of its electricity from Hydro Quebec. Last year, the provincial power developer signed a long-term contract with that state’s biggest utilities with a starting rate of 5.8 cents per kilowatt hour. That’s actually a bit higher than the current standard offer rate for commercial and industrial customers in Maine, negotiated earlier this year with the Maine PUC.
Richard Davies, the state’s public advocate, said Maine shouldn’t expect to receive bargain-priced power from Canada.
“Hydro Quebec has been very clear with my office,” he said. “They’re glad to sell us all the power we want, but at market prices.”
A third bill proposed by the governor would change the name of the state’s energy office.
Another bill would require the Public Utilities Commission to submit “zero-based budgets” that reflect the current year’s financial projections.