Senator Woodsome, Representative 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 supports the development of policies that increase availability of renewable energy, including increased use of highly efficient combined heat and power facilities. With due respect to Senator Dill for presenting the bill, this legislation is not well designed to meet those objectives at the lowest cost for consumers.
We are also profoundly puzzled by this legislation coming from the governor. The bill singles out a single form of energy technology to reward with long-term contracts that can be at above-market rates. Attached to this testimony are just a few of the words of the governor and his energy office from the past two years, expressing clear, loud opposition to the very policies contained in this bill. It seems the height of hypocrisy.
The bill not only singles out one form of energy production to promote, it singles out one form of jobs—manufacturing jobs—by which to measure progress. Please ask yourself if manufacturing jobs are more important to promote than other kinds of jobs. In answering that, if you think this committee should not be in the business of promoting one narrow form of jobs through energy policy, we would tend to agree.
Using estimates of associated job creation as a way to value electricity contracts is a slippery slope and one that has caused the Public Utilities Commission to struggle in the past. First of all, it is very, very hard for anyone to even determine what factor led to the creation of a specific new job, and I suspect the Commission will agree that it does not possess the expertise to do this well.
Second, the bill instructs the Commission to pay a rate for contracts that is reasonable “considering… the purposes of the manufacturing jobs energy program.” The vast, open discretion this language implies provides no certainty to potential generators and no protections to consumers.
Job creation, whether energy jobs or manufacturing jobs or others, may be a valued outcome of sound energy policy, but it should not be used to set electricity rates.
This bill expands the Community-Based Renewable Program, a program Governor LePage has repeatedly and specifically attacked. The original program allowed electricity contracts with renewable generators above current market rates—up to 10 cents/kwh. This bill would expand the program by 60%, keep the 10-cent limit for wind and solar, and apply no specific limit on contract prices for biomass cogeneration. Beyond that, the bill instructs the Commission to set rates based on the cost to generate power, plus a rate of return. This is a major departure from how the Commission has approached long-term contracting for renewables in the post-restructuring environment.
There are better ways to encourage combined heat and power, such as: adding resources or authorization for Efficiency Maine to expand what it is already doing in this area; ensuring manufacturers (and other energy consumers) can utilize power behind the meter without penalty; or making Renewable Energy Credits for biomass combustion contingent on the use of combined heat and power.
For all of these reasons we urge you to vote ought not to pass on this legislation.
Governor’s Weekly Radio Messages
“The bad decisions continue today. In 2009, the Legislature created a requirement to sign contracts for 10-cents a kilowatt—which was double the market price—for community renewable projects. This is expected to cost $300 million over the lifetime of the contracts… Instead of admitting this pilot program was incredibly expensive and a massive failure, the Legislature determined the State should try to get even more above-market contracts. They expanded the program in 2015 over my veto… I favor all forms of energy, including natural gas, hydro, wind, solar and nuclear—but only at market rates. August 8, 2016
“They force you to buy electricity at high rates and then hide the football in your electric bill… The lobbyists say we can save the world and grow jobs if we just pass more mandates and hide more fees on your electric bill, all while encouraging above-market rates.” October 25, 2016
“We outright reject signing above market contracts to enrich the large renewable industry… There is a legacy of above-market costs from decades of corruption, poor decision-making and wealthy special interests controlling Augusta. It’s time for this era to end. It is time to completely reject above-market contracts, reform Maine’s expensive energy mandates and put more money in your pocket.” November 29, 2016
Testimony in Opposition from the Governor’s Energy Office
“This legislation would expand the Community Renewable Energy Program, a pilot project designed to encourage the deployment of small, local, renewable electricity generators. The PUC approves above market contracts for electricity generated by these projects. The original legislation capped the size of the program at 50 megawatts of installed capacity, and for a limited time, thus limiting the amount of above market electricity ratepayers would be asked to subsidize. The program is fully subscribed, although most of the approved projects are not yet in operation. The bill would increase the program cap from 50 to 60 megawatts.” —In Opposition to L.D. 558 “An Act To Amend the Community-based Renewable Energy Project Laws for Purposes of the Mayo Mill Project,” 2016
This legislation would make permanent a pilot program that awards above market rates for electricity generated from certain community-based renewable energy projects. The original legislation, aimed at assisting smaller, locally owned generators, capped the size of the program, thus limiting the amount of above market electricity ratepayers would be asked to subsidize, as well as the length of time the subsidy would be in effect…. Operating an expanded version of this pilot moves the state further away from the Energy Office’s recommendation of an integrated, streamlined, statewide renewable energy policy that is aligned with the state’s energy challenges. First, the bill changes the pilot to a program operating in perpetuity. It eliminates any limit on the price of the electricity that all T&D utilities, including small consumer owned utilities, must purchase from these generators for the 20 year duration of each contract. The bill also removes the requirement that the project be locally owned, one of the original premises for the pilot. —In Opposition to LD 1310, “An Act To Amend the Community-based Renewable Energy Program,” 2016