Making energy cheaper, cleaner and more predictable
As a newly minted member of the Legislature, I wanted to be on the Energy, Utilities and Technology committee. My goal is for Maine to have the cheapest, cleanest power in the nation. I believe that goal is achievable — we already have the cheapest, cleanest power in New England — but I've certainly had an early education on the politics of energy.
When I was the CEO of Biddeford-based Correct Building Products LLC, managing eight direct reports and 75 people total, I learned a lot of things the hard way. One of them is you can't tell people exactly what to do — they'll just wonder why you didn't do it yourself. So I learned to focus on goals, communicate those goals and try to get everyone working towards them. There's a clear parallel here to the energy committee: as stewards of the regulations affecting Maine energy policy, we can't tell people what to do. We can't tell them to make energy cheaper, cleaner, more widely available or more predictably priced. All we can do is set the goals, and then ask ourselves whether a particular plan or policy tweak will get us closer.
There are many moving parts. To start with, there's the renewable energy credit (REC) market. This is meant to provide an incentive for investing in renewable energy development, but, as of today, this market is not really working. In fact, the price of a Maine REC has crashed over the last 18 months, dipping below $4/megawatt. Maine produces approximately 50% of New England's renewable energy, which is partly why Maine's REC market isn't as lucrative as Massachusetts and Connecticut, so that's where our Maine projects find their market opportunity. Then there's Maine's 100-megawatt limit for a single source of generation applied to all renewable power except for wind power — larger projects, no matter the type, are not defined as renewable. There is some momentum to increase this limit for hydro projects, which would theoretically provide some incentive for Hydro Quebec to sell power into Maine.
As a business owner and significant energy user myself, I'm actually most interested in something I don't hear much about — predictable energy costs. Prices are unpredictable and it seems like we spend most of our time reacting, with regard to policy, to what happened last winter. In the winter of 2013-14, the cost of producing electricity skyrocketed because of shortages of natural gas and high crude prices. Everyone assumed the same would happen this winter, but, thanks at least in part to good planning by ISO New England, it did not. In fact, electrical rates are down significantly. The same is true for natural gas. You're probably hearing about a shortage of natural gas in New England. In reality, that shortage does not exist. Because crude oil prices are low, liquefied natural gas, a commodity that flows similarly to crude in world markets, is at a low price as well. Low-priced LNG, as opposed to piped gas, is supplying our needs well this winter.
So we don't need to worry, right? Well, low crude oil and LNG prices today do not mean low crude and LNG prices next winter. I tend to think that a diversity of options: power from wind, solar, biomass (the actual source of most of Maine's renewable power), together with natural-gas-fired power will have to be available. And a restructured REC market that will draw in cheaper renewable power is needed. That way we can be free to choose the lowest cost option, just like you would at home. If oil's expensive, you're going to run the woodstove more, right?
Martin Grohman is a Biddeford entrepreneur and businessperson who is a first-term legislator and member of the Legislature's Energy, Utilities, and Technology committee. He hosts a podcast called “The Grow Maine Show,” available on iTunes. He can be reached at martin.j.grohman@gmail.com.
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