Armed with assurances that this will be the year for passage, Gov. Martin O’Malley testified Wednesday in a Senate committee on his bill to incentivize the development of an offshore wind farm, paid for in part by Maryland ratepayers.
The bill, O’Malley said, would only get the ball rolling on offshore wind energy, with the hope that other developers and farms would follow.
“This is not going to happen by itself,” O’Malley said.
O’Malley’s bill allows energy companies to develop a 200-megawatt wind farm 10 to 30 miles off the coast of Ocean City and charge the average residential energy customer up to $1.50 a month to subsidize the project, subject to the Public Service Commission’s approval. Commercial and industrial customers also would be charged up to an extra 1.5 percent of their annual usage.
The charge would not hit customers’ bills until turbines start turning, which would be 2017 at the earliest, administration energy adviser Abigail Hopper said.
Annually, residential customers will pay a total of $41 million under the bill, and commercial and industrial consumers will pay $54.8 million, according to a state analysis. The developer of the project will recover about $1.73 billion from customers over the life of the project.
O’Malley has pushed the bill for the past two years, but was stopped by some on the Finance Committee who were concerned about the cost to customers – especially low-income residents – and wanted assurances that minority-owned businesses would be included in the project.
Senate President Thomas V. Mike Miller Jr. (D-Dist. 27) of Chesapeake Beach, who changed committee assignments to ensure that the bill would make it to the Senate floor, is predicting a win for the bill, but said it would be a struggle.
“It’ll pass the committee, and it’ll pass the Senate,” Miller said. “There will be a lot of debate, and there’ll be amendments, but I’m confident it’ll pass.”
The Senate version of the bill has 26 sponsors, more than enough to pass it.
One member of the Finance Committee is already suggesting an amendment: Sen. Allan H. Kittleman (R-Dist. 9) of West Friendship suggested that developers who do not plan to work with unions be considered on equal footing with those who do use union labor. The bill includes a long list of factors that the Public Service Commission must consider when deciding which developer will be selected for the project, and whether the developer has a project labor agreement is one factor.
Sen. E.J. Pipkin (R-Dist. 36) of Elkton remains unconvinced on the viability of the proposal.
“I think it’s the dumbest idea ever,” Pipkin said, citing the intermittent nature of wind – which blows less during the summer months when Marylanders consume the most electricity, which cannot be stored – and the expense of energy from wind farms, which he said is more than four times more expensive than traditional sources like fossil fuels. Unlike some forms of energy, wind cannot be stored.
Others opposing the bill are commercial property managers and retail associations, who say that the higher cost of electricity will lead to job cuts in grocery stores and the like.
However, groups representing manufacturers are not opposing the bill, as they have in the past, because changes were made to this year’s bill to cap the cost for certain types of customers, especially those that require large amounts of energy to make their product.
But the hope, O’Malley said, is that this project will lead to more projects. Maryland has the capacity to produce 10,000 megawatts of wind energy offshore, O’Malley said.
“This will be a very difficult climb,” O’Malley said of building and expanding offshore wind infrastructure. “I think it’s very important that we start, and it’s very important that we pursue this, otherwise we’ll never get to economies of scale. But if this were easy, you know, it would have already happened.”
In 2010, New Jersey created a similar funding mechanism for an offshore wind project, and received only one developer application, which has not yet been approved. Virginia has an area approved by the federal government for development, but has no funding mechanism in place. Projects off the coast of Massachusetts and Delaware also have languished.
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