Power player | John Kerry, director of Maine's Office of Energy Independence and Security, on the state's energy challenges and what businesses can do to help

Eighty percent of Maine homes are heated with oil, which has gone up in price more than 30% in the past four years. Businesses like the Katahdin Paper Co. mill in Millinocket and Knight-Celotex in Lisbon Falls have cited energy prices as they close their doors, leaving more Maine workers without steady paychecks.

Facing Maine’s energy challenges is John Kerry, who in March 2007 became the new director of the state’s Office of Energy Independence and Security. Gov. John Baldacci chose Kerry, a former state senator from Saco and CEO of Catholic Charities of Maine, because of his experience in the energy field. In the state Senate, Kerry chaired the utilities committee, and between 1983 and 1986 was director of the state’s Office of Energy Resources under former Gov. Joseph Brennan. Over the past 14 months, Kerry and his staff have created a comprehensive, long-term energy emergency management plan for the state. This winter, he will help implement Gov. Baldacci’s recently unveiled short-term emergency plan.

Though energy has become a worry for many, Kerry believes the troubles offer an economic opportunity for the state. “There’s a bright future in Maine for energy,” he says. “I think from this day forward energy and environmental issues will be seen as keys to economic development.”

Mainebiz spoke with John Kerry about the state’s long-term energy plan, its potential as a hub of renewable energy, and whether he plans to put in a four-day work week. The following is an edited transcript.

Mainebiz: Gov. John Baldacci recently unveiled his short-term energy plan, which includes an increase in LIHEAP benefits for families, increases weatherization funding and even promotes alternative work schedules like a four-day work week. But what’s the state’s long-term energy strategy?

John Kerry: Well, first of all, we have a comprehensive energy plan outlined for the state of Maine which integrates energy, economic development and environmental issues into a strategically long-term vision. Basically, the purpose of the vision is to create public-private partnerships to take us out of this fossil fuel culture we’re in and move to a more conservation biofuel culture, and then hopefully over time bring us into a more sustainable energy culture that we could then progress, not only from an energy point of view, but from an economic development and environmental view.

The governor’s plan also puts another $1 million in the Economic Recovery Loan Program at the Finance Authority of Maine for eligible energy conservation projects for businesses in the state. How else is the state trying to help businesses deal with rising energy costs?

We have been working with the banking community and asking them to provide low-interest loans to their customers. And so many banks are reaching out to small businesses throughout the state and offering them loans below market rate or at least market rate that would give [people] incentives to make improvements on their small businesses. The other program that is in place is the Efficiency Maine program, which provides [businesses with] funding for lighting, HVAC equipment, for energy efficient motors, for systems controls on their computers and a new refrigerator replacement program.

So these programs are available, but I think the key thing that we do is the energy office has its own little SWAT team and we go out to businesses, large and small, and we coordinate and facilitate a business’ assessment of their energy needs. What type of energy are they using? Is it oil? Is it natural gas? Are they using biomass or are they using pure electricity? And we give them an assessment as to what they could do to enhance their energy independence and security. That’s proven to be a very successful endeavor by this office. We try to emphasize that the best kilowatt is the kilowatt that is not utilized and the best BTU is the BTU that is not burned. So what we’re trying to do is encourage people to become more energy efficient first and foremost with the energy that they are using.

You say the state’s long-term vision is to move towards energy independence. There is a lot of talk about Maine becoming a hub for alternative energy sources, from wind to tidal. How realistic do you think that vision is? And how will the state make that happen?

I think everything is realistic if it’s placed in its proper context. First, you have to take a 50-year vision. We have about an $8 billion energy bill we pay for primarily petroleum products at this time, and we export most of that [money] out of the state — so that costs Maine jobs, it costs Maine dollars, it undermines our economic vitality. So our first goal is to devise a strategy that will first conserve energy. If we could save 10% of the energy we consume in both our transportation sector and heating of our small businesses and homes that use oil, that would be a major factor. And electricity: If we could cut those costs down by using energy more efficiently, we would save literally hundreds of millions of dollars, if not billions. So my first order of business is to devise a plan to reduce our dependence on foreign petroleum products and increase the use of indigenous renewable resources. And that takes time, and in all probability, we’re going to have to invest — and I don’t mean the state, but I mean public and private entities. I think it will take a minimum of $100 million a year of investment in the economy, and I mean this is by a Fairchild Semiconductor or by a Barber Foods or by a commercial baking company or by X number of small businesses where they would actually use private dollars to invest in energy efficiency and conservation and put Maine employees and Maine people to work, rather than shipping that money out on just burning oil.

Some say developers of alternative energy projects face significant regulatory hurdles in Maine. What’s happening to make it easier to streamline the process for these developers?

What we have done, which I think is critical with regards to wind, the governor established his task force on wind with a mandate to remove the barriers that are preventing wind development in Maine and make Maine a leader in wind. But doing so in such a fashion that we protect the environment and also to make sure we have some tangible financial and economic benefits from the development of wind in the state. I think that when the legislation was passed it in fact did make it easier to develop wind projects in Maine, but it also designated those areas that would be sensitive and that would be controversial. In order to develop the wind resources in Maine, especially the northern part where there may be a couple thousand megawatts of wind, we need to have a transmission system that connects to the New England grid. I would also say in the future — and I think it’s more futuristic at this point — but still something we should pursue vigorously is offshore wind. There are tremendous opportunities offshore. The technologies are not quite developed at this time but that should not deter us from looking to an area where there may be a hundred thousand megawatts of wind out there. We only need to use between 2,500 and 3,000 at max in Maine, so it would give us once again an opportunity to develop an industry in Maine with jobs and one that would be consistent with our high environmental standards, and yet at the same time conserve a broader regional purpose of making the greater New England area energy independent.

You mentioned some energy projects can cause controversy, like we saw with the Redington Pond wind farm proposed in western Maine or the coal gasification plant that was narrowly shot down in Wiscasset. It seems like many proposed energy projects that could diversify Maine’s energy mix face resistance from residents. Is this an issue?

It’s a major issue. There’s concern by different people about wind farms and their geographical location or coal gasification plants or petroleum storage areas. And even if you do a biomass cogeneration project, which has less energy impact than fossil fuels, people still find concerns. Even with solar panels or solar arrays people have concerns. So we’re always going to have to balance the energy, economic development, environmental issues with a social dimension. But that should not deter us. We have to seek the common good here and the development of prudently sited wind, solar, biofuels and even transmission lines for electricity, natural gas, oil — it has to be done for the common good. You can’t have a policy that says don’t build anything, anytime, anywhere under any circumstances, whether it’s in the ocean or it’s in the mountains or in some farmer’s field.

In June, a proposal for a $50 million biomass boiler in Millinocket fell apart because of congestion in the power grid. Jerry Tudan, the man behind the project, told the media that ISO New England said other companies, especially First Wind, which is planning a wind farm in Washington County, had queued up for so much space on the grid there was no room left for him and his boiler. Is the grid really maxed out?

I think there’s no question we have to expand our transmission system. There’s a scenario analysis done by ISO New England and others that clearly demonstrates we need to expand our infrastructure to remove any congestion there may be here in Maine. [We need] to upgrade the transmission system to serve the various businesses in rural areas and to bring renewable resources such as wind from Aroostook County or Washington County down through Maine and into the overall New England grid, which would in the long run reduce energy costs for the state of Maine.

But is there no more room on the grid in Maine?

No, I wouldn’t say at this point there’s no room as such. Everything is priced over a long term. Currently, as systems go into the queue, the number of projects is always greater than those that can be handled at the current time. That’s always the case, but we’re always expanding, always growing, we’re always trying to accommodate things. That particular circumstance should not be applied across the board because that’s going to change. It’s a dynamic process and hopefully [situations] like that particular circumstance will be rectified in the future. People should definitely stay robustly desirous of investing in Maine and helping us expand and promote our energy transportation system and infrastructure with new projects.

You held the equivalent post between 1983 and 1986 when you were the director of the Office of Energy Resources under former Gov. Joseph Brennan. Maine deregulated its electricity system in the 1990s. Given your experience before and after, has deregulation has been good or bad for Maine?

I think at this point the jury is out on it. It hasn’t been really positive in term of rates — rates have gone up. The cost of electricity has gone up. But you have to recall once again, nothing rattles in the universe — everything is connected. The minute oil prices and energy prices and natural gas prices started going up, as they’re the fuel sources for much of our electricity generation, the cost would go up. That is not a function of deregulation, that’s a function of oil costs and natural gas costs. The other issue is we had Maine Yankee, which was providing about a third of our energy in the 80s and early 90s, and that has been replaced with natural gas. And natural gas at one time was trading at $2 a million BTUs, now it’s up to as high as $8 to $10. So I think the fact we now have 40% electricity generation by natural gas makes it much more expensive. The transmission and distribution costs have not gone up; in fact I think they’ve probably gone down.

Are you going to start taking a four-day work week?

It may be something that could be done. I’m kind of in a difficult position because of the magnitude of the job that lies before me here. There aren’t many people here to do the things that have to be done and the job — certainly this year — has been quite extraordinary in terms of demand. So we’re called up to do many things that with three people is kind of hard. It’s pretty hard for me not to work seven days a week, and that’s what I do.

Whit Richardson, Mainebiz staff writer, can be reached at wrichardson@mainebiz.biz.