January 15, 2012
Maine, Opinions

New renewable mandate would drive up costs

By Kenneth Fletcher, director of the Governor’s Office of Energy Independence and Security, ' Bangor Daily News, bangordailynews.com 14 January 2012

The recent proposal by the Maine Citizens for Clean Energy coalition to impose a new mandate on consumers to pay for higher-priced electricity will place an enormous burden on Maine people. Electricity rates in Maine are already the 12th highest in the nation and the ballot initiative will require people to pay even more.

The coalition’s proposal would require that Maine ratepayers pay a huge subsidy to certain renewable energy generators to achieve a higher percentage of a particular electricity source. Maine’s current Renewable Portfolio Standard is at 35 percent and is the highest in the nation.

As proposed, the new mandate would require that 50 percent of electricity used in Maine be from specific renewable sources. No other state places such a requirement on their ratepayers. Preliminary estimates indicate that the additional 20 percent renewables by 2020 mandate could add $44 million to $88 million per year to people’s electricity bills. This new subsidy would go to a select few generators both in state and out of state who may not even supply the energy needs of Maine.

While it is understandable that consumers may want to support certain types of electricity generation, I would suggest that they should have the right to decide rather than be forced to comply with a government-imposed mandate. Rather than letting consumers decide, the coalition’s proposal would put in law that certain sources of generation must be used regardless of the cost impact to consumers.

Gov. LePage’s approach is to allow consumers to make the choice as to their energy decisions. Consumers will have the choice to select more renewable energy in the first months of this year through a new offering from the Maine Public Utilities Commission. Why not let the consumers who are paying the bills decide if they want more renewable energy?

Maine deregulated electricity supply in 1998 for the specific purpose of allowing the open market to determine which generation could compete and be most cost-effective. The basic premise was that generators would assume the risk of their decisions as to what source of generation they decided to construct. In turn, the generators would bid in to the market and the lowest cost supply would be selected.

Consumers were supposed to be protected from having to subsidize poor decisions of developers and generators. The coalition’s proposal is going in the opposite direction and would add millions of dollars to consumers’ electric bills.

It would seem once again, that Maine ratepayers are being forced to bail out a few select developers and generators who have apparently invested in technologies that cannot compete in an open market. Many of these generators are already receiving significant taxpayer subsidies but now are demanding more.

Also included in the coalition’s proposal is the elimination of the authority of elected representatives to approve fees and taxes that are added to people’s electric bills. As has been the law for years, any fees imposed on electric rates to subsidize government-run energy efficiency programs have required the approval of the Legislature and governor.

In addition, the Legislature has had oversight of the government agency that administers the efficiency program to ensure that the ratepayers’ money is used appropriately. Not only does the proposal remove the Legislature’s authority to approve any fee increases, it also would remove the oversight and decision-making ability on budgets and spending.

In essence, a quasi-governmental agency would be able to raise fees on electricity ratepayers if it received approval from another state agency without the people’s elected representatives being involved.

Gov. LePage supports all energy technologies that are economically viable and sustainable but also believes that consumers should not be forced to pay more to give preferential benefits to generators who decided to invest in technologies that cannot compete in the marketplace.

While the governor continues to work to lower Maine people’s electricity and energy costs, it is disheartening to see that there are still groups that want to burden Maine people with higher energy costs for the benefit of their own special interests.

The governor believes it is time for the Maine ratepayers and taxpayers to be represented rather than a select few special interests who benefit from government-imposed mandates and subsidies.

Ken Fletcher is director of the Governor’s Office of Energy Independence and Security.