Heat exchange | A sometimes contentious six-plus years at the PUC leaves its former head pragmatic about Maine's energy future

Sharon Reishus was a surprise choice when Gov. John Baldacci made her his first nominee to the Public Utilities Commission. She had worked briefly for Central Maine Power, and was then an analyst for Cambridge Energy Research Associates, a consulting firm in Cambridge, Mass., with an international client base among businesses and governments. Also unexpected was Baldacci’s public announcement one year ago that he was less than confident in her skills as chair of the three-member panel. After serving a full six-year term and a brief portion of a second, she is returning to Cambridge Associates in its national policy division. Mainebiz caught up with her near her summer home in the Augusta area. The following is an edited transcript of that conversation.

Mainebiz: Since you came onto the PUC in 2003, and you left in July almost seven years later, let’s talk about how you arrived and departed. The PUC has a significant effect on daily life in Maine and how businesses operate. Were you recruited for the position?

Reishus: I was. I got a surprising call from the governor’s office one day, asking me to consider the opportunity. And I said no. Then they called back and said, “No, really.” And so I did come and meet the governor and his staff, and realized it was a wonderful opportunity to be a policymaker, as opposed to just being a consultant, which I had been doing quite happily in the Boston area.

You had some interest in staying on for another six-year term, but in the end didn’t. What happened?

Well, I considered staying on and explored that option for awhile, but I came to the realization, ultimately, that it had been a good run in a very interesting time, but it was probably a good time for me to leave. I had a lot of conflicts along the way, and I just wasn’t relishing a continuation of some of those difficulties.

You mentioned as a contributing factor the two-year PUC study that tried to figure out where Maine should be in the electric grid. The key recommendation was that we should stay with the New England ISO. Could you explain why?

The Legislature, quite fairly, asked us to explore the issue of whether consumers would be better off if our utilities stayed in the regional electric grid. And we did a very thorough study. We actually did two studies, where we had all stakeholders bring evidence. It was a very open proceeding. The commissioners concluded it was in Maine’s interest to stay in the ISO, in terms of moderating rates and to be able to build out the infrastructure Mainers expect to have for reliable service. Unfortunately, that conclusion was just not very popular. There were policymakers and members of the public who were very unhappy. And we took a lot of heat for it.

One of the biggest issues that comes up in business surveys, as a disadvantage to operating in Maine, is energy costs, particularly electric costs. We are higher than the national average — not the highest, but we’re up there. But you feel that setting a goal of lower electric rates is not realistic.

Again, that’s unpopular among my political peers because I’m willing to say that out loud. As we look to the future, we’re actually in a lower-cost period, given that most of our electricity is generated by fossil fuel amid a global recession. Prices will go up once the economy improves. New England is heavily dependent on fossil fuel for its electricity, and we don’t have the benefit of having coal. That’s the reason why other regions are lower priced. Now coal is going to get more expensive. Electricity prices are likely to go up, not down.

If you’re looking for some good news, people outside the region may be closer to where we are today because they will have to pay higher prices.

That’s not a happy story to tell in other regions. Even though Maine and New England are above the national average, that national average is going up. The cost of coal is likely to increase through climate change initiatives, to its appropriate cost relative to the environmental damage it causes.

On the generating side, one we’re now missing is nuclear — Maine Yankee. Was the shutdown of Maine Yankee unfortunate?

It would have shut down some day. But there was an economic decision made by the owners who looked at what they thought the future prices were going to be, relative to the expense it was going to take to fix the cracked steam tubes that caused the shutdown. They made an economic decision to close and dismantle. The plant’s gone, and it’s an interesting site for possible future energy development, but when you look back, you say, “I wish that Maine Yankee plant was still running.” Most of us would say that really would have been a big help in our energy mix.

The big new source on the horizon is wind. Are we on track? Are the goals realistic in terms of permitting and development?

The good news is that Maine has an actual indigenous source of energy, and that is wind. Along with biomass and various hydro and tidal power. But wind is the key to new development and land-based wind is more viable now. We have a very interesting resource offshore; but it’s going to be much more expensive to develop. So there are still tremendous opportunities for new investment. It’s been difficult in this economic climate for developers to find financing. There’s also an aspect those of us within the managing world are well-acquainted with, and that’s that the transmission grid itself needs to be upgraded. We’ve gone pretty far with the wind that’s been developed, but if we were to add 800 to 1,000 megawatts of wind in northern or eastern Maine, we’ll need significant transmission upgrades.

That seems like a key point, because people have heard a fair amount about Central Maine Power’s reliability project, and assume it provides a lot more capacity. But it doesn’t?

It really is a reliability project. It reinforces the existing grid and allows for some economic and population growth. It is not designed to support 1,000 megawatts of new wind.

People can see wind towers on the hill and either like them or hate them, but should transmission have gotten more emphasis?

That was part of my own frustration because I have been an energy analyst for many years. People just don’t like to think about transmission being part of it. No one likes to see transmission wires, particularly not in their own backyard. And they’re very expensive. When entrepreneurs and advocates were very excited about developing renewable resources — and they should be excited — they discounted the ultimate economic cost of developing those resources. But you have to talk about the grid because electrons aren’t going to flow by magic.

You mentioned offshore wind. That has big potential, but also, you’re saying, big costs. Even if you can figure out how to get the right equipment out there, it may be much more expensive than land-based wind.

It certainly is right now. We’re seeing successful developments in Europe, but at a tremendous cost. The resource is out there, and the Gulf of Maine is a tremendous wind resource. I know folks at the University of Maine would like to help develop that, and I think that’s a great prospect for Maine. In 10 or 20 years it could be commercially viable, but we’re not there yet.

Some other renewables — solar, tidal power — aren’t at the same stage. What’s the potential?

Wind and biomass are well-developed, and the university is exploring ways to make better use of biomass. I know folks are very excited about tidal and small hydro, and solar certainly has potential. But we’re not quite there commercially for large-scale development. But it’s encouraging that pilot projects are going on throughout New England and the Maritimes. It’s great to explore so we won’t be left behind when some commercial breakthrough actually occurs.

What about conservation, or efficiency, as people prefer to call it. You gave fairly high marks both to the PUC and to Maine’s efforts. What have we done that’s been helpful?

Efficiency Maine, which recently became its own agency, has run programs that helped us avoid building another power plant. Instead, it helped residential customers and businesses, and large commercial and industrial enterprises use electricity more efficiently. On the residential side, there’s a very successful compact fluorescent light program. Most people now recognize that those little spirally bright lights are good for them. They do save energy. You can see it on your bill. For businesses, lighting, weatherization and improving industrial processes have saved money for those companies, but it helps all of us, since we would otherwise be paying for a new power plant.

In considering different ways to use electricity, you say we would have to change the way we charge for electricity. The first step is the new smart meters, but what would have to happen for electric cars to make a meaningful contribution?

In Maine, and anywhere else, for electric cars to be purchased and deployed by average folks, energy savings require local utilities to have time-differentiated rates. That way you can charge your car off-peak, in the middle of the night. If you let it charge when the price of electricity is very low, you get to drive it during the day when electric prices are higher. In Maine we don’t have time-differentiated pricing, so people don’t realize the cost of electricity in the afternoon is higher.

So we’re not paying for that difference?

We just averaged all the rates. And that’s going to be the next big political fight as people focus on the need to de-average rates to make these new technologies — electric cars or thermal storage — cost effective. Otherwise, it makes no sense.

It was interesting to hear that people who were initially resistant to the idea of paying more for electricity at peak periods actually became very good at taking advantage of the system. This is real life, not just speculation.

It is. We’ve seen pilot programs across the U.S. and internationally. Some of the resistance to time-of-use rates comes from advocates who argue that elderly, stay-at-home folks won’t be able to respond. But most of them like the ability to control their bills, watching their meters like a hawk and making changes — very modest changes, but ones that reap benefits for them personally and all of us, because we’re not building more peaking plants. During that hot August day, if people were not running their dishwasher and had set their thermostat slightly differently, you save a tremendous amount. With a smart grid and dynamic rates, we’re seeing interesting behavioral changes. We’re used to price signals, and this is just an extension of it.

For a retail business, a pizza oven running during dinnertime is clearly going to take a huge amount of electricity. What can a business that has to use power at that hour do?

There will be some entrepreneurial development opportunities, but there are some technologies already for energy storage and certainly energy efficiency. Some businesses are going to be much more adaptable to time-of-use pricing than others. But most businesses can shift some electricity use to times when the price isn’t so high.

Using your crystal ball, do you think some of these things will happen in Maine? Are we going to see all-electric cars running around the streets and people moving a little closer to town?

I think so. If folks in Maine are smart about it, they’ll stay a step ahead and be engaged in this green evolution that’s going on. Once we have some form of de-averaged pricing, electric cars will make sense even in Maine. People who live and work in regions like Augusta and Portland can take advantage, who don’t need the large range of a traditional car. We’ll see the thermal storage and other heating changes. We’re so dependent on fossil fuel right now for all our energy, not just electricity. For our cars, and for the 80% of us that heat with oil, we need to recognize we’re in a relative price lull, and fossil fuel prices are going to go up.

Going back to the ISO, if Maine stays within the New England grid, can we still pursue interconnections with Canadian suppliers?

Maine and the other New England states in the ISO are all interested in new energy sources and new pipelines from our Atlantic Canadian neighbors, because they do have lower prices. There needs to be a balance. We can’t import 100% of our power, and we wouldn’t want to. But the ISO will help facilitate that. It was one of the points we looked at closely. It turns out we really need to spread the cost among all six New England states in order to make any of that happen. Connecting to New Brunswick through Nova Scotia and the Hydro Quebec deal, obviously, is on the table. But it requires us working as a region. If Maine decided to become an electric island, it would be to our detriment.

Some people are concerned about exporting electricity, but within a grid is that a good thing?

I think so. For once, Maine has indigenous resources — wind and biomass, and perhaps tidal. We had paper companies throughout the 20th century, and we built those paper companies to export. We were using only a small portion of it. Same idea with electricity. If we can help the country develop its renewable resources, we will benefit. There’s a serious competing threat of Midwest wind being shipped to the East Coast. We will pay for that and get no benefit. As a region, we would be much better off finding the investment and the political will to develop our own renewable resources.

You spent almost seven years at the PUC. Any advice to your colleagues?

Well, there are always challenges. It’s important to listen to the public. It’s important to work with other policymakers. But I think the PUC stands out as an institution because there’s a transparent process where all these questions are dealt with. These are legal proceedings, and at times it can get a little too legalistic. I would try to find ways to encourage the public to participate. There will be a lot on the table — the smart grid and rate changes are just the tip of it. Then there are things that come up that you never imagine would become an issue, and that’s just the nature of the game. I wish my colleagues well, and hope they approach everything with an open mind and make the best decisions they can.

Douglas Rooks, a writer based in West Gardiner, can be reached at editorial@mainebiz.biz.