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The Good, Bad and Ugly on Maine Energy

Pennies on the dollar are what some legislative policies cost the average ratepayer. Most people don’t worry about those pennies, but I am not one of those people. I believe that if you watch your pennies, they add up to dimes and eventually to dollars. Those pennies have added up, resulting in Maine having one of the highest electric rates in the country. The last two bills we worked on this year are classic examples of policies that, although well-intentioned, are costly and will likely do nothing to lower energy costs, never mind decrease our tax burden.

Through my service on the Energy, Utilities and Technology (EUT) Committee in Maine, I have ascertained that the reason for Maine’s high energy costs stem from the actions, and in some cases inactions, of the work from that committee as well as the well-paid suits that have frequented it for decades.

There were some good things we accomplished in the 127th. You, gentle reader, will have clean water to drink and the “Dig Safe” law is there making sure nothing leaks or explodes when companies lay pipes and wire! Those were easy choices with common-sense solutions, and it was a pleasure to work on them.

But, then things got complicated.

The difficult bills required language comprehension of terms such as renewable energy credits, megawatts, kilowatts, dispatchable, firm capacity, base load demand, stranded costs, etc. Stranded costs, a granddaddy of concern, are inevitable in any industry where the regulatory environment changes dramatically. Partial or full compensation for these unrecoverable costs are socialized through all ratepayers.

Pennies on the dollar are what some legislative policies cost the average ratepayer. Most people don’t worry about those pennies, but I am not one of those people. I believe that if you watch your pennies, they add up to dimes and eventually to dollars. Those pennies have added up, resulting in Maine having one of the highest electric rates in the country.

The last two bills we worked on this year are classic examples of policies that, although well-intentioned, are costly and will likely do nothing to lower energy costs, never mind decrease our tax burden.

The solar bill we worked on this last session has a looming veto over it. The proponents came in with bright yellow T-shirts and smiles and they lined the halls to entice legislators to support their particular vested industry. They were very enticing. I certainly enjoyed many lovely conversations with them and supported many of their ideas.  Being the penny pincher I am, I needed to make sure this policy was not going to cost me, my friends, neighbors and businesses more money.

It did.

The Public Utilities Commission warned us that in 5 years, this legislation would cost all electric ratepayers around $22 million annually, but those numbers were speculative. The public advocate had a lower number of around $14 million to ratepayers annually, but again, the numbers when dealing with energy are speculative. Unsurprisingly, the solar industry itself had the most enticing number of an increase of about 31 cents monthly to your average household electric bill.

That doesn’t sound too bad, unless you are running Sappi Paper, Bath Iron Works, Fairchild or another large electric consumer. Their burden is significantly higher. In fact, it is in the hundreds of thousands of dollars per month in increases. That is not good considering these companies are competing with other states for bids on jobs and projects. In many cases, we see these large employers pack up and leave for locations that offer more competitive electric rates and lower tax burdens.

Beside affecting ratepayers, there is also an annual fiscal note appropriated from the General Fund in excess of $200,000 in the first and second year and $263,000 in 2019 for this policy.

When I asked one young solar expert “how many solar installations would you do if there was no 30% federal tax credit? ” his answer was “none.” That should speak volumes. That being said, I love solar energy and if you can afford to do it on your own dime, more power to you, no pun intended.

Then we have the biomass legislation. This bill was a heartbreaker that likely passed because feelings, much to my dismay, seem to carry more weight than logic and reason under the dome.

I honestly felt horrible for our logging industry who are desperately trying to save biomass. But after listening carefully to hours of testimony and taking my work home with me to try and find palatable solutions, I came to the conclusion that this legislation was throwing good money after bad and was really nothing more than a corporate bailout that is unlikely to help the loggers.

I did offer a proposal that would help by installing 80% efficient wood chip burners in rural Maine, among other innovations, through Efficiency Maine Trust that will create anchor tenants for the wood products industry. This proposal passed unanimously out of committee.

However, the facts remain that since 1995, biomass plants have received more than $2.6 billion from Maine electric ratepayers, selling power for as much as 12.3 cents kwh when wholesale markets were under 5 cents. Of the $2.6 billion, $2 billion were above market rates, which means that Maine electric ratepayers were paying $2 billion more for energy than the wholesale market price from 1995-2015.

Biomass, unfortunately at this time, cannot compete in today’s energy market and likely will not be able to compete even 2 years out. The cost is expensive and the industry will continue to falter with natural gas and oil prices projected to stay low for the next 5 years. These low prices are good for the overall economy, but detrimental to biomass.

A carrot was dangled by JD Irving of a $100 million investment, but logic dictates to me that is unlikely to bear fruit. That investment counts on an overseas pellet market that is very well supplied, and again, with projections five years out for low prices on natural gas and oil, it will be difficult for Irving to lock in on those markets.

Perhaps that is why they want to use our taxpayer money instead of their own, and also why Re-Energy, a company that is backed by River Stone Holdings, a $33 billion investment firm (Goldman Sachs) won’t risk any more of their own money to “sure up” biomass and protect loggers in Maine.

Covanta, the owners of 2 closed biomass facilities in Maine, said this legislation won’t help them re-open. It seems to be a bill crafted to benefit one plant in Ashland which is owned by Re-Energy and is the proposed site for Irving’s investment.

This bill as penned takes $13.4 million from Maine taxpayers over a two-year period, yet it passed with a veto-proof majority in both the House and Senate. I am still shaking my head on that one.

I freely admit that while I was a true novice in the world of EUT and learning the language spoken in that committee room was a daunting task, after 16 months, I finally have it down; sort of. Having had an early career in the banking world was a blessing that taught me EUT logic 101: follow the money.


Source: http://www.themainewire.com...

APR 25 2016
http://www.windaction.org/posts/44888-the-good-bad-and-ugly-on-maine-energy
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