Senator David Woodsome, Representative Seth Berry, and members of the Joint Standing Committee on Energy, Utilities & Technology,
My name is Dylan Voorhees and I am the Clean Energy Director for the Natural Resources Council of Maine (NRCM). Thank you for allowing us to present this testimony. NRCM strongly opposes this legislation because it weakens and distorts the purpose of the Renewable Portfolio Standard (RPS), and because the committee should consider all changes to the RPS in a more comprehensive fashion than can be accomplished this year. The bill would result in ratepayers paying more to existing renewable generators for doing what they are already doing.
We appreciate that the bill’s sponsor, Rep. Rykerson, has been a strong supporter of clean energy policies during his tenure. Nonetheless, this bill is not good policy with regard to increasing renewable power and addressing climate change.
The purpose of an RPS is to stimulate market demand for new investments in renewable energy, in order to diversify our portfolio mix and reduce our reliance on fossil fuels for power. Fossil fuels are used to generate roughly half of our electricity. Maintaining this mix is undesirable for many reasons, from pollution and public health impacts, to costs for businesses and families, to overdependence on fuels that we must import at great expense and insecurity. In 2007, NRCM supported the bill that became Maine’s Class I RPS, sponsored by Representative Ken Fletcher, a Republican who served on this committee for eight years. Mr. Fletcher wanted policies that really resulted in new renewable capacity – he famously stated that he wanted “steel put in the ground.”
Nearly 30 U.S. states have an RPS. In the past, it appeared to some that Maine had a relatively high RPS standard, because of the 30% Class II standard for existing generation. When the Class II standard was put in place during restructuring, Maine had already exceeded it. The RPS in most states is for “new” renewables, analogous to our 10% Class I standard. By any measure, several states have more ambitious standards, including Vermont, California, Oregon and Hawaii. Comparing standards for “new” renewables, Maine is among the least ambitious, (even setting aside the fact that we have fulfilled this “new” standard through a loophole allowance for “refurbished” biomass plants.)
This bill would further and significantly weaken Maine’s Class I RPS by declaring well over 100 MW of existing renewable generation “new” by a sweep of the legislative pen. Because the RPS is a market-based initiative, the impact of adding so much existing supply of renewable energy is equivalent to reducing demand for renewables. The bill is like reducing Maine’s Class I RPS from 10% to 7%.
Furthermore, this bill would result in additional ratepayer funds being paid to existing generators without any clear, specific benefit. These hydropower facilities are already generating and earning revenue. They earn money for selling power, and by participating in the capacity market. What additional benefit do ratepayers get by giving them access to the more lucrative Class I system? Make no mistake: we believe it can be beneficial to give investors an incentive get over the barrier of upfront investment in renewables—most of which have zero fuel cost. This bill goes well beyond that.
FERC licensure is indeed an intricate process. It is also part of the societal deal for using the public resource that is our rivers and therefore a cost of business. Getting a renewed FERC license does not increase renewable energy generation or capacity availability. We believe most, if not all, of the hydro facilities eventually needing a FERC renewal will pursue it regardless of this legislation. The only thing that would change is the revenue generators receive.
Maine already has a policy meant to preserve existing renewable generating capacity; it is the Class II RPS. The reason Class II RECs are so inexpensive is because those existing power plants were paid off long ago and their power is relatively cheap. If they start going away for some reason—and there is no evidence they are—the Class II RPS will do its thing and the market will respond.
Maine’s Class I RPS reached maturity in 2017 when we achieved the 10% standard. Last year, this committee unanimously passed a bill to clarify that the 10% standard continued past that year, giving us five years to determine the next step. We agree with those who have stated Maine’s RPS could be more effective, including the Governor’s Energy Office and former Public Advocate. The loophole that allowed refurbished plants to qualify has made Maine’s RPS the weakest and least relevant renewable policy in New England. Some have raised the question of the role for very large Canadian hydropower. Others think we should add a carve-out for non-electrical renewable resources (i.e. thermal RECs).
These are complex and largely interrelated issues. We urge the committee to prepare for a thorough conversation about Maine’s RPS next year, with all policy ideas on the table. (Indubitably stakeholders will be doing the same ahead of next session.) Otherwise Maine is in danger of undermining its renewable energy objectives and risk ratepayer funds being spent unwisely and unnecessarily.
We urge you to vote Ought Not to Pass on this bill.