Lawmakers are sharply divided on whether subsidies that promote investments in solar, wind and other forms of renewable energy are good energy policy or a drag on the Maine economy.
By Tux Turkel, Staff Writer
Portland Press Herald news story
The sun was glinting off 415 solar-electric panels atop the South Portland Day’s Inn as small-business owners and clean-energy activists gathered two months ago in front of television news cameras. They came to praise solar power’s potential, and to call for policies to drive similar investments in Maine.
Those goals are inspirational for Rep. Sara Gideon, D-Freeport, who serves as the assistant House majority leader. She’s among lawmakers preparing bills this legislative session to offer rebates and other incentives for solar power. Gideon sees renewable energy as a way to back off fossil fuels and limit electricity price spikes, while fighting pollution and climate change.
“Individuals and businesses who want solar with fewer barriers, and small businesses who have worked tirelessly to create a solar industry, all inspire me,” she said. “That and a world, and Maine, my children can inherit.”
But Gideon’s view isn’t shared by Sen. Mike Thibodeau, R-Winterport, who serves as Senate president. Appearing last month on a local cable television show, he asserted that subsidies for renewable energy account for “hundreds of millions of dollars that are sucking the very life out of Maine’s economy.”
Thibodeau is preparing a bill to cap the subsidies available to renewable energy projects. These incentives increase electricity costs, he said, which drives away businesses and burdens ratepayers. On the television show, he said the bill was his top priority for the legislative session.
Thibodeau also says some renewable energy generators, such as wind farms and biomass plants, can compete now in the market without help from electric customers or taxpayers.
“Why should these companies be taking money from my grandmother’s Social Security check?” he asked.
Renewable energy. It’s either creating a brighter future for Maine’s children or robbing Grandma.
The opinion gulf between Gideon and Thibodeau, two legislative leaders who can help shape public policy, illustrates the deep divide on renewable energy, and why it’s shaping up as a big topic of debate this year at the State House.
Maine is already a leader in renewables. With its rivers and vast forests, the state is ranked fifth per capita among the 50 states in energy production. Remote mountain ridges and laws that identify where turbines can best be located help make Maine the top wind generator in New England. The country’s first tidal-power generator went on line near Eastport in 2012.
To leaders such as Gideon, that’s a good start. For Thibodeau, it’s more than enough. And on some level, these reactions are rooted in philosophy and symbolism.
RENEWABLE PORTFOLIO STANDARD
Take the Renewable Portfolio Standard: Maine is among three dozen or so states that have a law requiring electricity suppliers to make up a percentage of their output from renewable generation, which can receive a premium over market prices. Recent figures show the RPS is costing ratepayers roughly $12 million a year. That breaks down to 50 cents or so on a monthly home electric bill.
Fifty cents doesn’t seem like a deal breaker to Jeremy Payne. Head of the Maine Renewable Energy Association, Payne also stresses that Maine’s RPS incentives are so low that they don’t really drive investment here. Other states, notably Massachusetts and Connecticut, offer higher payments, and the big wind projects in Maine actually are being built for those states.
Still, Payne said, Maine’s RPS sends an important signal to developers. It shows the state is welcoming to renewable energy.
A recent study done for his group, which includes wind, hydro and biomass companies, identified $1.28 billion in wind investment and an average of 1,560 jobs per year, from 2006 to 2018. Most of the spending is in rural Maine. Payne also points out that more than 80 percent of the RPS incentives are going to biomass plants, including boilers in Maine’s struggling paper mills.
But Thibodeau flips the argument around. If Maine’s RPS isn’t driving investment, he asks, why maintain the incentives at their current levels? Especially for wind, which he says can now compete in the regional market without subsidies from Mainers.
Reminded that more than 80 percent of the money is going to biomass, Thibodeau said that didn’t change his opinion.
Thibodeau also was asked about a plan before the Maine Public Utilities Commission to have electric customers pay up to $75 million a year for 20 years to expand natural gas pipeline capacity. The plan is strongly supported by Republican Gov. Paul LePage. It aims to cut electric rates by providing cheaper fuel to the region’s gas-fired power plants, which generate half of all electricity.
Thibodeau said he considers the plan “an indirect subsidy,” and different from direct payments to wind developers. But he added that “maybe we should take a look” at the gas pipeline plan.
“The government needs to get off this subsidy merry-go-round,” he said.
WINNERS AND LOSERS
Slashing government subsidies sounds good, but it’s hard not to create winners or losers. If a broader regional effort is revived this year for New England ratepayers to underwrite new gas pipeline capacity, then fossil fuels could win and the region’s renewables industry could lose. That’s because natural gas would continue to be the dominant fuel source for electricity, stunting the potential for wind, biomass, solar and ocean energy, according to environmental activists.
That would be fine with Le-Page, who has made no secret over the past four years of his distaste for state policies that provide incentives for renewables. In this legislative session, though, he may be taking a more nuanced approach to his opposition.
Last month, LePage’s energy director, Patrick Woodcock, made a presentation at a conference that attracted lawmakers and key businesses and representatives from Maine’s energy industries. Woodcock asked participants to take a hard look at the costs and benefits of some key laws, such as the RPS, that have been enacted over the years to support renewables.
“I was trying to start a conversation about what’s working, what’s not working and whether we can make some of these policies more effective,” Woodcock said of his presentation.
Despite its cold climate, Maine has enough sunshine to make solar power viable. What it lacks is the policies and rebates available in many states that supplement federal incentives.
But LePage has made his opposition to solar subsidies clear. Last year, he vetoed a bill that would have reinstated a $1 million solar rebate program for homeowners and small businesses. The rebate came from a tiny surcharge on power bills and was very popular, until the money ran out.
Meanwhile, the Maine PUC is finishing a study for the Legislature on the value of solar energy. Woodcock said lawmakers should wait for the results, expected next month.
“I get it,” he said. “People are hungry for solar. But is $1 million in ratepayer subsidies the right amount? What about $5 million? Some advocates just seem to want more.”
LePage does like one form of renewable energy – hydroelectricity. One of his priorities is to change language in an existing law that limits the capacity of hydroelectric generation to 100 megawatts, in order for developers to qualify for renewable incentives. The law effectively protects smaller Maine generators from competition from giant, government-backed Canadian producers, such as Hydro Quebec.
LePage has failed repeatedly to get this change through the Legislature. This session, it’s being introduced by some Republican lawmakers.
But the perennial fight over the 100-megawatt cap, as it is called, is a prime example of how symbolism, subsidies and substance run together.
LePage has consistently implied that power from Hydro Quebec could lower electric bills in Maine. It’s a tempting thought, because the overall cost of electricity in Montreal is one-third what it is in Boston, according to Hydro Quebec figures.
But there’s no evidence to suggest Maine can enjoy any discount. In fact, the provincial utility is required by law to sell power at reduced rates to Quebec residents from what’s called a heritage pool. It then exports surplus power at higher prices.
A prime export market is Vermont, where Hydro Quebec supplies a quarter of the state’s power. Despite that, Vermont’s electric rates are higher than they are in Maine.
LePage also talks up the potential of in-state hydro to blunt power prices. Hydro now accounts for roughly one-quarter of the state’s electric output. Some people think it could do much more.
But that hope also suffered a reality check this month, after a study commissioned by the governor’s office found limited potential for new hydro power in Maine.
A survey of existing dams determined only a small percentage could be upgraded, when economics and permitting issues were considered. At best, existing capacity could be boosted by roughly 7 percent.
Environmental advocates say they’re waiting for the governor’s energy bills to assess whether the administration wants to start a conversation about renewables, as Woodcock maintains, or if the real motive is to further gut green energy.
Dylan Voorhees, clean energy director at the Natural Resources Council of Maine, said it’s easier to identify and criticize the costs of renewable energy policy than it is to quantify the benefits.
Voorhees contends that the price spikes hurting Mainers would be worse, if not for the contributions of wind and biomass. He also pointed out that Maine’s overall electric rates are the lowest in New England, despite the fact that the six states share a common electric grid.
“Why is that?” he asked. “The reason is, we have more supply, including lots of renewable generation. I think an honest assessment shows we’re better off with renewables than our neighbors.”