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Green-energy bill gets a yellow light

Now a bill in the Legislature would make Maine the first state in the U.S. to have utilities pay premiums, through long-term contracts, to small producers using solar, wind, hydro and other green energy sources. Supporters say it would create thousands of jobs and help wean Maine from its dependence on imported fuel. Sounds good, but who would pay the cost of these above-market rates?

Legislators are wary of paying small power producers because it would raise electric bills.

Maine's renewable energy advocates are envious of Germany.

They see a country that has less overall sunshine than Maine, but is a world leader in the number of solar-electric panels installed. A big reason, they say, is an 18-year-old German law that requires utilities to pay homeowners and other small producers above-market rates for power from their rooftop systems. The arrangement is called a feed-in tariff.

Now a bill in the Legislature would make Maine the first state in the U.S. to have utilities pay premiums, through long-term contracts, to small producers using solar, wind, hydro and other green energy sources. Supporters say it would create thousands of jobs and help wean Maine from its dependence on imported fuel.

Sounds good, but who would pay the cost of these above-market rates?

If you get an electric bill, you would. Ratepayers would absorb the added expense, calculated to provide certain annual rates of return for small generators.

A feed-in tariff would raise electric bills for people who can least afford it, opponents say. And it would repeat a costly policy experiment from... more [truncated due to possible copyright]  

Legislators are wary of paying small power producers because it would raise electric bills.

Maine's renewable energy advocates are envious of Germany.

They see a country that has less overall sunshine than Maine, but is a world leader in the number of solar-electric panels installed. A big reason, they say, is an 18-year-old German law that requires utilities to pay homeowners and other small producers above-market rates for power from their rooftop systems. The arrangement is called a feed-in tariff.

Now a bill in the Legislature would make Maine the first state in the U.S. to have utilities pay premiums, through long-term contracts, to small producers using solar, wind, hydro and other green energy sources. Supporters say it would create thousands of jobs and help wean Maine from its dependence on imported fuel.

Sounds good, but who would pay the cost of these above-market rates?

If you get an electric bill, you would. Ratepayers would absorb the added expense, calculated to provide certain annual rates of return for small generators.

A feed-in tariff would raise electric bills for people who can least afford it, opponents say. And it would repeat a costly policy experiment from the 1980s, in which Maine ratepayers subsidized long-term contracts for renewable energy, only to see market rates fall when petroleum prices collapsed.

The two sides presented testimony at a public hearing earlier this month. On Tuesday, the legislative committee that oversees energy issues is set to work on the bill before it makes a recommendation to the full Legislature.

German solar envy aside, the bill has almost no chance of passing in its current form. Even key supporters on the committee have begun looking for a less-costly compromise, perhaps a small-scale pilot program.

But in a state with high energy bills and a heavy reliance on imported oil, lawmakers will wrestle with a familiar dilemma: how to make Maine more energy-independent, without increasing the burden on ratepayers and taxpayers.

Maine has long had a net-metering law, in which customers that produce excess renewable power get a credit on their bills. The provision was used by 360 Central Maine Power Co. customers last year, up from 224 in 2007. Federal and state tax programs that offset the cost of solar and other equipment also encourage green power.

But these incentives fall short, in the view of the Midcoast Green Collaborative, a group of Damariscotta-area businesses and residents promoting renewable energy as a vehicle for economic growth. They helped draft the feed-in tariff bill, modeled after European efforts. The tariff has created hundreds of thousands of jobs in Germany, they say, while adding only a couple of dollars a month to electric rates.

The Maine bill covers generators producing less than 20 megawatts. It includes solar, wind, hydroelectric, methane, biomass and tidal power. Contracts for this power would last at least 20 years, with rates set by the Maine Public Utilities Commission. Those rates would provide revenue for several purposes, such as paying operating expenses, but also to produce a minimum rate of return.

Feed-in tariffs exist in several countries. But if foreign laws seem less relevant to Maine, lawmakers can look closer to home, at Gainesville, Fla.

Since the Maine bill was drafted, Gainesville became the first American city to enact feed-in tariffs. The regional utility pays participants 32 cents per kilowatt hour for the first two years of the 20-year program, roughly three times the basic home rate.

"With that tariff, I could easily double the size of my company in a year or two," said Phil Coupe, co-owner of Portland-based solar installer ReVision Energy.

Coupe, who has 30 employees, gets calls from people who want solar electricity. But a typical home-sized system costs more than $15,000, before current tax incentives. That's out of the reach of many residents. A German-style tariff would offset the cost, he said, and create thousands of installer and manufacturing jobs.

The premium would be borne by Maine ratepayers, though, and that makes the proposal unacceptable to CMP. Its home customers already pay roughly 15 cents per kilowatt hour, which is above the national average.

"We're sensitive to electricity prices," said John Carroll, a CMP spokesman. "We know that really matters to our customers."

A feed-in tariff amounts to a regressive tax, Carroll said. Low-income customers - people least likely to install renewable energy systems - would be hit the hardest, he says.

At the recent public hearing, CMP also made a broader point. In the 1980s, Maine lawmakers forced utilities to sign long-term contracts at high rates with renewable power generators. The worthy goal was to lower the state's dependence on expensive oil. But when oil prices unexpectedly fell, CMP spent millions of dollars to buy out costly contracts. Customers are still paying the extra costs of some of these contracts, the last of which expires in 2020.

These concerns were echoed in testimony from Maine's PUC. While not taking a stand on the bill, the agency cautioned about signing non-competitive, long-term contracts for which the price isn't linked to the market value of electricity.

The commission also noted that the proposed bill has no cap on the number of generators that can participate. For example: If utilities entered into 10 contracts for 20 megawatts at prices 10 percent above market rates, the cost to ratepayers would be $4 million to $10 million a year, depending on generation type.

These calculations are giving pause to some supporters, including Rep. John Hinck, D-Portland, who is co-chair of the utilities committee and a co-sponsor of the bill. After reviewing the testimony, he said, he likes the concept of a feed-in tariff, but worries about the price.

"If we're going to require ratepayers in a market with among the highest rates in the country to pay this, we need to do a very sophisticated analysis of the costs and benefits," Hinck said.

One way to study the impact, he said, would be to start with a limited pilot program that would cap the cost. That idea may be gaining momentum in the committee, said Rep. Sean Flaherty, D-Scarborough, a strong supporter of efforts to move Mainers away from oil heat and gas-fired electricity.

"A pilot program is often a good way to build consensus on the committee and allow us to move forward with some great projects," Flaherty said.

It remains to be seen if the utilities committee can reach agreement on a compromise bill to recommend to the full Legislature. But beyond Germany, Gainesville's experience with introducing a feed-in tariff may be instructive.

The Gainesville utility set a cap of 4 megawatts, for both 2009 and 2010. It got a flood of applications, and the targets were reached within days.


Source: http://pressherald.mainetod...

APR 27 2009
https://www.windaction.org/posts/20024-green-energy-bill-gets-a-yellow-light
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