Legislative leaders shelved a measure Thursday aimed at putting huge wind turbines off Maryland’s Atlantic coast, saying they needed more time to study the likely impact on the state’s ratepayers of investing in that form of “clean” energy.
The move was a setback for Gov. Martin O’Malley, who had wanted to boost offshore wind energy development by making Maryland utilities promise to buy electricity generated by the turbines.
The governor and wind supporters had pointed to the potential for thousands of construction and manufacturing jobs associated with building the turbines 12 miles or more off Ocean City, and he stressed that Maryland was in a “race” with other Atlantic Coast states to be the first to start generating electricity from windmills offshore.
But opponents had questioned the potential costs to the state’s residents and warned of soaring electricity bills.
“It is just not ready for prime time yet,” said Sen. E.J. Pipkin, an Eastern Shore Republican on the Senate Finance Committee. “There is a lot more work that needs to be done.”
Shaun Adamec, O’Malley’s press secretary, said the wind bill’s shelving was “not unexpected” because other major, complex legislative proposals have taken more than one year to pass. He pledged that the governor would work with lawmakers to study the issue and bring the bill back next year.
“This is a massive, complex idea,” Adamec said, “essentially creating a multibillion-dollar industry for the state of Maryland. So it’s at least understandable that there are legislators that want to take some time to look at the implications of it.”
Proponents of offshore wind contend that developers need guaranteed buyers for their electricity in order to secure the financing needed to build projects estimated to cost $1.5 billion to $2 billion. O’Malley’s bill would have required utilities to sign 20-year contracts pledging to buy from 300 to 600 megawatts of electricity.
The proposal had enthusiastic backing from environmentalists, who see wind as a clean-energy alternative to burning coal and other fossil fuels. It also had the support of labor leaders, won over by predictions that thousands might find work building and running the wind turbines, and potentially even working at manufacturing and assembly plants lured to the state by the development.
But many lawmakers were worried about unforeseen cost overruns or other issues that would send Marylanders’ electric bills skyrocketing to pay for more expensive electricity from offshore turbines, when natural gas prices are dropping.
O’Malley attempted to assuage their fears by putting limitations on the contracts, including capping any increase in rates for offshore wind electricity to no more than $2 a month. While that appeared to mollify some, others remained on the fence.
“I think everybody liked the idea of wind turbines off our shore, and everyone wished it was cheaper than conventional fossil fuels today,” said Malcolm Woolf, director of the Maryland Energy Administration. “But it’s not, and no one can guarantee future electricity prices. People liked the [promise of] jobs, but were concerned about the potential ratepayer impact.”
Though the House Economic Matters Committee had scheduled a vote Thursday on the governor’s bill, leaders in both chambers decided that too many lawmakers were undecided, and too little time left in the session – which ends at midnight Monday – to resolve all their questions and doubts.
“We might have been able to get the bill through if we had pressed,” said Del. Dereck E. Davis, chairman of the House Economic Matters Committee. Davis, a Prince George’s Democrat, said he supported the wind bill personally and “wanted to give the members more time to get comfortable, but in these waning days, that’s no longer possible.”
“Quite frankly, we are just out of time,” said Sen. Thomas M. Middleton, a Charles County Democrat who is chairman of the Senate Finance Committee. He had floated the idea several weeks ago of holding the bill for summer study, but with O’Malley pressing his amended bill, had held sessions this week so members could scrutinize its provisions and question administration officials.
“He’s pushed hard,” Senate President Thomas V. Mike Miller said of O’Malley on Wednesday, even before the plug had been pulled on the bill. “The problem is cost. This is a difficult time. When it was approved in our sister states to the north, it was a more affluent times. But now people are up against it. Gas prices and consumer prices and wages not catching up with inflation, and they are very concerned about if this is necessary at this time.”
Pipkin, one of the most outspoken skeptics, said he was concerned based on research into as-yet unbuilt offshore wind projects in Massachusetts and other states. He argued that the bill would not guarantee that turbines would be built off Maryland’s coast or that the transmission lines carrying the electricity generated would go through the state.
“What you could end up having in the bill is our ratepayers picking up the tab for $2 billion to $4 billion in cost with no benefit back,” he said. “That is what needs to be looked at with the extra time.”
Environmentalists countered that lawmakers had devoted ample time to study the bill, but were simply gun shy about any complicated energy legislation after seeing electricity rates skyrocket after their approval in 1999 of energy deregulation.
“They have the information they need,” said Brad Heavner, state director of Environment Maryland. “They just decided not to make a decision.”
Heavner said he was particularly disappointed that lawmakers balked at supporting offshore wind while giving far less scrutiny to a bill environmentalists oppose that would boost incentives for facilities that produce electricity by burning trash. The bill, which has unanimously passed the Senate, gained preliminary approval Thursday in the House.
Mike Tidwell, head of the Chesapeake Climate Action Network, warned that by delaying action, Maryland may have lost an economic development edge to Delaware or any other Atlantic state moving ahead with offshore wind. Those states may be more likely to attract turbine manufacturing plants and related businesses, he said.
Woolf said he didn’t anticipate the holdup would scare away any of the eight firms that have expressed interest in securing federal leases for putting turbines up on the outer continental shelf off Ocean City. The Interior Department has indicated that it may be in a position to offer leases by the end of this year.
But Woolf said once leases are awarded, developers would have to invest significant sums in environmental impact and other studies. At that time, he said, developers might balk at moving forward without guaranteed buyers for their electricity. He said it’s still possible the Navy or other federal or state government agencies could sign long-term power purchasing agreements. But those likely could not pledge to buy enough electricity to support a large utility-scale wind energy project, he said.
The tabling of the offshore wind bill is just the latest setback for O’Malley’s legislative priorities in this 90-day session. His bid to limit new development on septic systems was tabled earlier by a House committee, and a proposal to create a $100 million investment pool to help startup companies is still in committee.
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