September 3, 2007
Commentary
A powerful opportunity | Maine can reap the rewards of the green energy boom and a surplus of electricity
By Kurt Adams
Maine business owners know New England's energy prices are some of the highest in the nation. And recent decisions by federal and regional policy makers threaten to tip the scales even further against Maine.
In 2006 the Federal Energy Regulatory Commission approved a "capacity" charge on rates that could take $300 million out of the pockets of Maine electricity consumers over the next four years. By 2010 the surcharge would add 10% to electricity bills for Maine businesses -- an enormous hit to the state's economy.
Maine is fighting back. In August the Maine Public Utilities Commission filed a brief in federal court challenging the charge. We want federal regulators to force the regional players back to the drawing board.
Fighting unfair federal mandates is only one element of a winning strategy, however. As a state, we must use energy more wisely and carefully consider increasing energy output within our borders. Energy efficiency, for example, is a common sense technique that's succeeding in Maine. Education and cash incentives provided to residents and businesses by our Efficiency Maine program since 2003 have helped install state-of-the art electric equipment like compact fluorescent lighting and variable speed motors that will save consumers more than $86 million in energy costs. In 2006 alone, more than 400 Maine businesses will save a total of over $23 million from Efficiency Maine conversions. This is money that is reinvested in Maine businesses instead of going out of state to energy companies.
It's worth noting here that while Maine's electricity rates are high, they are better than the regional average. The prices that large- and medium-sized Maine businesses pay for electricity, for instance, are on average the lowest of any state north of Pennsylvania. As of May, medium-sized businesses paid 12.17 cents per kilowatt hour, compared to a regional average of 13.84 cents.
Why is this? Maine's rates are lower primarily because we generate more power than we need; even at peak hours we have a surplus of electricity, which keeps prices down in the state.
This power surplus is partly the result of a fleet of new power plants built here at the end of the last decade, when Maine deregulated its electricity industry. The advantages of this situation are substantial: Maine consumers pay between four percent and eight percent less for electricity supply than the rest of New England. We can build on that advantage by considering new opportunities in an energy marketplace that's increasingly influenced by global warming. As governments and consumers ramp up demand for "green" energy produced from renewable resources like hydroelectric facilities and wind turbines, Maine is uniquely positioned to benefit.
We are strategically located within a large area that abounds with power sources that do not burn fossil fuels and so do not create excess levels of carbon-dioxide gas, the prime human contributor to global warming. Maine currently has over 1,000 megawatts of wind generation projects pending. A task force appointed by Gov. John Baldacci and New Brunswick Premier Shawn Graham estimates that Maine and Maritime Canada could generate up to 8,000 megawatts of low or carbon-dioxide free power by 2015.
The question for Maine will be whether we can develop these resources in a way that benefits our consumers without threatening Maine's quality of place.
We already have a high proportion of renewable power generation in our state. If Maine became a green energy corridor for New England, it is possible that our energy rates would sink even lower and our businesses would become even more competitive.
The development of new renewable resources could be a source of 21st century jobs for Maine. If Maine expands its "energy cluster" by hosting appropriate energy infrastructure, the capacity and know-how Maine businesses develop from working in this evolving industry will pay substantial dividends to the Maine economy.
The results of several current studies and proceedings will drive Maine's role in this emerging regional marketplace. The Legislature has directed the PUC to consider several issues: Should Maine stay part of the New England regional transmission system or should it formally join forces with the Canadian Maritimes? Should Maine's utilities be allowed to build new generation facilities, and resume activities banned since deregulation in 2000? And Maine's siting boards like the Land Use Regulation Commission and the Board of Environmental Protection must rule on major renewable projects in the works, like grid-scale wind power stations.
These are among the several huge decisions on energy policy facing Mainers. Some forces are beyond our control, but the right combination of investment, regulation, and efficiency can be found. Instead of being a drag on Maine's economy, the energy industry could become its engine.
In 2006 the Federal Energy Regulatory Commission approved a "capacity" charge on rates that could take $300 million out of the pockets of Maine electricity consumers over the next four years. By 2010 the surcharge would add 10% to electricity bills for Maine businesses -- an enormous hit to the state's economy.
Maine is fighting back. In August the Maine Public Utilities Commission filed a brief in federal court challenging the charge. We want federal regulators to force the regional players back to the drawing board.
Fighting unfair federal mandates is only one element of a winning strategy, however. As a state, we must use energy more wisely and carefully consider increasing energy output within our borders. Energy efficiency, for example, is a common sense technique that's succeeding in Maine. Education and cash incentives provided to residents and businesses by our Efficiency Maine program since 2003 have helped install state-of-the art electric equipment like compact fluorescent lighting and variable speed motors that will save consumers more than $86 million in energy costs. In 2006 alone, more than 400 Maine businesses will save a total of over $23 million from Efficiency Maine conversions. This is money that is reinvested in Maine businesses instead of going out of state to energy companies.
It's worth noting here that while Maine's electricity rates are high, they are better than the regional average. The prices that large- and medium-sized Maine businesses pay for electricity, for instance, are on average the lowest of any state north of Pennsylvania. As of May, medium-sized businesses paid 12.17 cents per kilowatt hour, compared to a regional average of 13.84 cents.
Why is this? Maine's rates are lower primarily because we generate more power than we need; even at peak hours we have a surplus of electricity, which keeps prices down in the state.
This power surplus is partly the result of a fleet of new power plants built here at the end of the last decade, when Maine deregulated its electricity industry. The advantages of this situation are substantial: Maine consumers pay between four percent and eight percent less for electricity supply than the rest of New England. We can build on that advantage by considering new opportunities in an energy marketplace that's increasingly influenced by global warming. As governments and consumers ramp up demand for "green" energy produced from renewable resources like hydroelectric facilities and wind turbines, Maine is uniquely positioned to benefit.
We are strategically located within a large area that abounds with power sources that do not burn fossil fuels and so do not create excess levels of carbon-dioxide gas, the prime human contributor to global warming. Maine currently has over 1,000 megawatts of wind generation projects pending. A task force appointed by Gov. John Baldacci and New Brunswick Premier Shawn Graham estimates that Maine and Maritime Canada could generate up to 8,000 megawatts of low or carbon-dioxide free power by 2015.
The question for Maine will be whether we can develop these resources in a way that benefits our consumers without threatening Maine's quality of place.
We already have a high proportion of renewable power generation in our state. If Maine became a green energy corridor for New England, it is possible that our energy rates would sink even lower and our businesses would become even more competitive.
The development of new renewable resources could be a source of 21st century jobs for Maine. If Maine expands its "energy cluster" by hosting appropriate energy infrastructure, the capacity and know-how Maine businesses develop from working in this evolving industry will pay substantial dividends to the Maine economy.
The results of several current studies and proceedings will drive Maine's role in this emerging regional marketplace. The Legislature has directed the PUC to consider several issues: Should Maine stay part of the New England regional transmission system or should it formally join forces with the Canadian Maritimes? Should Maine's utilities be allowed to build new generation facilities, and resume activities banned since deregulation in 2000? And Maine's siting boards like the Land Use Regulation Commission and the Board of Environmental Protection must rule on major renewable projects in the works, like grid-scale wind power stations.
These are among the several huge decisions on energy policy facing Mainers. Some forces are beyond our control, but the right combination of investment, regulation, and efficiency can be found. Instead of being a drag on Maine's economy, the energy industry could become its engine.
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