The Press Herald’s May 23 “Our View” editorial on the LePage administration’s proposal to begin the process of lowering the electricity rates for Maine people through a few common-sense reforms demonstrates the complexity of the issue.
Recent articles by the paper’s reporters highlighted the confusion that exists regarding the mandated usage of renewable-energy sources to supply electricity in Maine.
While some stories have listed the government-imposed requirement as 4 percent, the actual percentage is 34. In fact, Maine’s renewable-energy requirement is the highest in the nation and is at least three times greater than any other New England state.
The editorial stated, “His bill would stop the diversification of Maine’s electricity portfolio.” The referenced bill did not propose to stop the diversification, but simply said that increasing the subsidies to a few developers and generators is not beneficial to the Maine economy as a whole if the net result is increased electricity prices.
The editorial went on to conclude that the bill “would not help a manufacturer who wants to invest in efficiency, but needs to lock into a long-term contract to finance it.”
Here again, the bill did not propose to change any ability for a manufacturer or others to enter into contracts for efficiency, but simply said that if the state’s Efficiency Maine Trust agency proposed a contract that added a fee or raised electricity rates, the Legislature would need to approve that increase. I would hope that the editorial board agrees that the Legislature must retain its authority to determine taxes.
The governor’s bill did address the implications of long-term contracts with developers who ask for assistance to help finance their projects.
In the past, poorly designed long-term contracts have obligated Maine ratepayers to pay above-market rates that raised electricity prices for all. Since predicting future electricity prices is very difficult, the governor’s bill would require that future contracts be based on actual market prices rather than be locked in at a fixed price.
If the developer expects the ratepayer to commit to take their output, why is it appropriate to expect the ratepayer to pay more than market price?
Another conclusion reached by the editorial writer was that a bill “that would create uncertainty for investors is hardly business-friendly.” The only uncertainty created by the proposed legislation would be the possible elimination of future subsidies. There was not a scaling back of current renewable requirements.
Renewable-energy development in Maine is happening because the resources are here, the regulatory permitting process has been expedited, and the New England demand is increasing. Maine is an electricity exporter and already has 50 percent greater installed capacity than in-state demand. As with any export, Maine people should receive a fair value of exported product.
Maine electricity consumers will be given the opportunity to buy more “green” renewable electricity in 2011. While some have predicted devastating results if government mandates for renewable energy are not increased, the LePage administration believes that consumer choice to increase demand of cost-competitive renewable sources is the better option to ensure sustainable generation sources for the future.
On a broader perspective, state government does not always audit the actual results of a new law or program to determine if the expected results were realized. In the case of the mandated ratepayer subsidy of renewable-energy projects, the LePage administration observed that ratepayers were paying far more than what would seem reasonable. That disparity was the genesis of the proposed legislation.
Maine has the 12th-highest electricity prices in the nation, with rates 40 percent higher than the national average in 2008. In 1990, Maine’s electricity rates were 16 percent higher than the national average.
In the past 20 years, Maine people and businesses have lost ground compared to the rest of the nation. High electricity prices are hurting the economy and job growth.
As the much overused saying goes, the first thing to do to get out of a hole is to stop digging. The governor’s bill was simply a first step to stop digging and to stop the shifting of higher electricity prices onto the people and the Maine economy.
Kenneth Fletcher is director of the state’s Office of Energy Independence and Security.
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