Governor Martin O’Malley’s proposal for Maryland to subsidize development of a $1.5bn offshore wind farm through higher electric rates got an initial cool reception during renewed discussions about it this week in the legislature.
Lawmakers in the Senate Finance Committee raised questions over the cost for taxpayers and its purported economic benefits for the state. Concern was also expressed over O’Malley’s personal ties with his former chief of staff and childhood friend who is with a developer interested in a federal lease for the Maryland project.
O’Malley earlier this year suffered a political setback when both houses of the legislature, controlled by his own Democratic Party, shelved until 2012 possible action on offshore wind promotion bills that he had touted as the centerpiece of his clean energy agenda. They agreed to study the issue further this summer.
Offshore wind supporters remain hopeful that legislation will be approved once lawmakers have more time to study the project’s potential benefits. They list those as reducing dependence on imported fossil fuels, healthier air, creation of good paying green jobs and having Maryland become a manufacturing hub in the emerging industry.
For now, Democratic lleaders in both houses are keeping their legislative options open. O’Malley has said that without offshore wind power Maryland would probably not meet a 20% renewable portfolio standard by 2022 that the legislature approved during his first term.
Much of the discussion within the committee centered on how much additional cost taxpayers would need to shoulder if Maryland’s utilities are required to purchase under long-term contract as much as 600MW of offshore power at above-market rates.
The O’Malley administration estimates that monthly electric rates would increase by $1.44 for residential customers, versus $3.61 by the nonpartisan Maryland budget analyst’s office. In March, the Public Service Commission presented a range of rate hikes between $2.16 and $8.70.
Industrial and manufacturing sectors forecast substantial rates hikes that they say would make it hard for them to compete with producers in other states and imports. Electric utilities oppose subsidizing offshore wind arguing that it would give developers and the sector an unfair competitive advantage.
Some lawmakers also question the potential for offshore wind to create numerous permanent jobs and to give the state’s estimated $260bn a major boost. O’Malley contends Maryland could gain as many as 20,000 jobs, some of which could be filled by members of trade unions, a key constituency within the Democratic Party. A core issue is whether Maryland could attract investment from the industry’s supply chain given many states along the US East Coast are also vying for those same dollars.
Earlier this year, eight developers expressed interest in a commercial lease area offshore Maryland in the Atlantic Ocean proposed by the US Interior Department, which oversees wind energy development on the Outer Continental Shelf.
They included RES America Developments, Iberdrola, Seawind Renewable Energy, Fishermen’s Energy, NRG Bluewater Wind, Energy Management Inc. and Spain’s Orisol Energy. Michael R. Enright, a former chief of staff and childhood friend of O’Malley’s is managing director of a company that forms part of Maryland Offshore LLC, the eighth developer.
State Senator Delores Kelley, a Democrat, raised the possibility of excluding Maryland Offshore from the list of developers as a precondition to the General Assembly voting on any offshore wind bills. Jim Lanard, president of the Offshore Wind Developers Coalition, an industry group, reminded lawmakers in his testimony that the Interior Department, not the O”Malley administration, will award leases.