A bill requiring utilities to enter into long-term purchasing agreements for wind-generated power is in the works for the 2011 General Assembly, with supporters and opponents getting ready to air the issue.
Prince George’s County Sen. Paul Pinsky and Montgomery County Del. Tom Hucker, both Democrats, are planning to refile legislation similar to the ones they sponsored this year.
The bill did not specify a purchasing agreement with offshore wind producers, but wind was the only form of renewable energy that qualified.
The Pinsky-Hucker bill would support both renewable energy and an expansion of the wind-generated power industry in the state. Renewable energy proponents say that the only way developers can get financing for wind farms that can cost billions is through long-term contracts that guarantee a revenue stream.
Support from the governor, Delaware
Sen. Rob Garagiola, a Montgomery County Democrat who is majority leader and a member of the Senate Finance Committee, supports purchase agreements for wind power.
Garagiola said that given Gov. Martin O’Malley’s support of more offshore wind generation, “it’s very possible there will be an administration bill” on the matter. “If not,” he added, “I absolutely will be part of a bill.”
The Maryland Department of General Services and the University System of Maryland have current agreements to buy power from a future wind farm off Rehoboth Beach, Del. The developer, NRG Bluewater Wind, has also proposed a wind farm off Ocean City, and is awaiting federal regulations allowing this kind of construction to be approved, as well as financing, before proceeding.
Maryland’s contracts for offshore wind generated in Delaware “are not enough. You need a bigger market. You need the utilities to participate,” said Hucker.
Mike Tidwell, executive director of Chesapeake Climate Action Network, recently organized a coalition of several environmental groups and a labor union to advocate for offshore wind in Maryland. Tidwell said that “the moment has arrived for significant development of offshore wind in Maryland.”
“Both Massachusetts and Delaware have laws requiring public utilities to buy 20- to 25-year long contracts for wind,” said Tidwell. “The Maryland Public Service Commission has the authority to require such contracts.”
Brad Heavner, head of Environment Maryland, a coalition member, said the 2010 bill “started the conversation.”
The Maryland district of the United Steel Workers is also a coalition member. On a national level, the union has come out in favor of offshore wind, and the reason is jobs, said District Director Jim Strong.
About 90 percent of offshore wind turbines are composed of steel, “much of it made by our members,” Strong said. “We are interested in seeing those jobs created in Maryland.” At Bethelehem Steel alone, he added, “we’re talking several hundred additional new jobs.”
A potential sticking point is the possibility of increased cost to customers, Garagiola said. Various options are on the table to keep it low, he said, ranging from having each utility apply the cost to just its consumers to spreading out the cost equally among all electric customers regardless of the provider.
“The devil is in the details,” said Garagiola, “but the cost will be relatively nominal compared to the benefits.”
Opposition from utilities, legislators
Pinsky is anticipating that utilities will opposed the bill, as they did in 2010.
“My feeling is they will say it is unfair competition,” Pinsky said.
Utility companies would not say this where they would lean on legislation. Constellation Energy Group spokesman Aaron Koos said, “We are tracking the proposal closely and look forward to learning more details as the process progresses.”
Delmarva Power, which has customers in Maryland, negotiated a 25-year power purchasing agreement with NRG Bluewater Wind for its Rehoboth Beach project. Spokeswoman Bridget Shelton called that “a precedent with which we are comfortable.” Shelton said they were not mandated to participate in the deal, which will cost an average $1.58 more per month for all customers, business and residential, for the length of the contract.
There may also be opposition from other legislators. Del. Warren Miller, R-Howard, ranking minority member of the House Economic Matters Committee, said that he does not object to renewable energy, but he is not inclined to support long-term contracts for wind power.
Miller said that other, more efficient forms of renewable energy may be developed, leaving utilities stuck with costly contracts. He also referred to the Maryland Renewable Energy Mandate, which requires that 20 percent of the state’s energy comes from renewable sources by 2022.
“The mandate is intended to foster greater reliance on renewable energy. But there’s a lot of risk in the marketplace and we, as a state, should not be guaranteeing any one renewable over another,” said Miller. “This is not a road we want to go down.”