Senator Cleveland and Representative Hobbins,
NRCM has been a steady supporter of Maine’s Renewable Portfolio Standard as it has evolved over the last decade, especially in 2007 when then Representative Ken Fletcher (among others) proposed what became the Class I RPS. As such, we oppose this bill which would weaken the RPS and provide no significant benefits to the increased production of renewable energy.
The purpose of an RPS, which today exist in most states, is to stimulate market demand for new investments in renewable energy, in order to diversify our portfolio mix and transition away from our reliance on fossil fuels for power. Fossil fuels make up nearly 40% of Maine’s energy mix, and over 55% in New England. Maintaining this mix for energy is undesirable for many reasons, from pollution and public heath impacts, to costs for businesses and families, to overdependence on fuels that we must import at great expense and insecurity. Renewable energy includes different sources of generation, but as a whole they are far less polluting, sustainable and stable over the long-term, and perhaps most importantly “made in Maine.”
Renewable energy generation faces several market barriers, many stemming from the fact that our entire energy infrastructureâfrom policies to markets to physical infrastructureâhas been oriented for many decades towards on oil, gas and coal. For example, the federal government has spent hundreds of billions of dollars over the decades to subsidize oil, gas and coal extraction, processing and generation, while spending a small fraction on renewables. Even if renewables now enjoy a higher rate of subsidy per kilowatt-hour, the cumulative effect of decades of lopsided subsidies has left the playing field very unequal.
Interestingly, there have been similar government subsidies for large scale hydro by our Canadian neighbor to the north. This bill would allow a large, government-backed foreign utility, such as Hydro Quebec (HQ), to become eligible for our Renewable Portfolio Standard. HQ does not need to receive benefits from Maine ratepayers any more than big oil or big coal do in the U.S. Nor would Maine’s economy benefit from providing them.
As the committee is probably aware, in recent years London Economics International was hired by the Maine PUC to conduct a cost-benefit analysis of Maine’s RPS. Their objective analysis found that our RPS, in combination with those of the other New England states, will continue to provide major economic and employment benefits to the state. For example, the benefits are projected to lead to 11,700 new jobs, increase annual tax revenues by $6.3 million, and a $1.14 billion increase to the Gross State Product. Compare this to the estimated job loss of 32-129 jobs and there is no question that the RPS is a tremendous success story for the State of Maine. If the purpose of this bill is the lower the cost of the RPS in Maine, then it directly follows that it will correspondingly lower the benefit to our economy that comes from investments in renewable energy. And in doing so, it could increase our dependence on a foreign source of power.
Because of some of the confusing rhetoric around hydro power and this RPS issue in Maine it is important to set some facts straight. First, this bill is about Canadian mega-hydro and has nothing to do with existing or possible Maine hydropower. There are no and are very unlikely to be any dams in Maine or New England greater than 100 MW.
Second, nothing would prevent HydroQuebec—or any other generator—from selling power into Maine today for the 60% of Maine electricity demand not covered by the RPS. The only reason the Public Utilities Commission hasn’t signed a contract with them is because they haven’t bid on any offers or indicated any real intent to offer Maine low cost power.
Some have suggested or implied that we should provide this benefit to Canadian hydro power utilities in order to entice them to offer us some benefit in return. There is no evidence whatsoever to suggest this would happen, meaning this bill gives away the store before any offer to buy it is even made.
We also cannot fail to mention that massive hydro power projects in Canada often have significant environmental impacts—in some river ecosystems, truly massive impacts. No source of power is without impacts, including renewables, but we should not imagine those impacts are small or unimportant just because they are out of sight here in Maine.
In conclusion, we suggest that if you are looking to make a change to the RPS law to be responsive to market conditions, you should modify the definition of Class I refurbished renewables to better reflect the original intent to stimulate genuinely new investments in renewable generation. Currently the threshold for an existing generator to make changes to the facility and qualify as “new” is very low. This further weakens the market and sends precious ratepayer dollars toward, essentially, existing resources instead of genuinely new resources that are bringing needed new renewable capacity online. For example, Massachusetts has some specific language (as do other states, such as Rhode Island) that limit eligibility to:
incremental generation capacity—only giving REC eligibility to the additional and documented increment of new generation;
repowered units that switch from a non-eligible “fuel” to an eligible “fuel”; or
replacement generation units — only units that were mothballed or decommissioned for at least five years and are replaced with newly manufactured equipment.