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Fairness, competition ease high energy costs

All Mainers are environmentalists, even business owners, that is why we live here and work hard to make this a better place for all of us.

Maine has a lot of things going for us. We’ve got good people, good food, and unprecedented natural beauty, just to name a few. But when you combine the highest freight costs in the nation with wrong-headed and unfair energy regulations, it’s a losing formula for Maine’s small businesses and working families.

As a Maine business owner myself, few things bug me like unnecessarily high energy costs.

High energy costs mean higher prices for consumers. It means a more painful electric bill for elderly couples living on Social Security. It means businesses have fewer resources to invest in growing their enterprises and hiring more employees here in Maine.

But it doesn’t have to be this way.

Increasingly, natural gas is becoming a bigger part of Maine’s energy mix, and this is bearing fruit for our economy (and, for what it’s worth, for our environment). Unfortunately, Maine doesn’t have natural gas reserves we can tap into, so we’re left dependent on other states to supply our demand. We lack any control over our energy destiny.

Nonetheless, there is one very specific, concrete and quite simple step Maine could take to lower the cost of energy: End favoritism for industrial wind power corporations.

There are a number of ways, such as tax preferences and streamlined regulatory processes, that Maine policymakers have given industrial wind power companies the upper-hand in the energy market. But the most significant is a law known as Renewable Portfolio Standards (RPS).

This regulation – implemented with a view to spurring investment in renewable resources and helping the environment – has served to increase the cost of doing business in Maine while providing little demonstrable environmental benefit.

First implemented in 1999, Maine’s RPS law requires 30 percent of retail electricity sales to come from “renewable” sources. The law was strengthened in 2006, when the Legislature passed a bill requiring utilities to increase “new” renewable capacity by 10 percent by 2017. In practice, the government’s definition of what is “renewable” and the requirement that power sources be “new” has worked almost exclusively to the benefit of industrial wind power.

This complicated regulatory scheme produces some perverse results, as is often the case with government intervention in the economy.

For example, the regulation only allows power generators with a capacity of less than 100 megawatts to contribute to RPS compliance. In other words, power from a big 200MW hydroelectric dam cannot be counted as part of the renewable portfolio. Remarkably, though, wind power facilities of the same size can contribute to meeting RPS standards because lawmakers have exempted wind power from this cap.

The law is biased not just against specific sources of renewable energy, but also against existing power generators. For example, a hypothetical solar-power plant built in 2003 would not qualify as a renewable energy source. Yet the same plant, built today, would qualify – unless of course it planned to generate more than 100MW.

If this sounds complicated, confusing, and perverse, that’s because it is.

So what do we get for the many favors our policymakers have bestowed on industrial wind?

Higher-costing electricity, for one. All ratepayers subsidize this preferential treatment when they pay their energy bills. Manufacturing businesses are especially hard hit. Then there’s the environmental harm of mountaintop blasting, acres upon acres of clear-cut forests, and unsightly metal towers that will never really function consistently enough to replace power generated by traditional plants, therefore we continue to need them too, as backup.

Maine could buy most of the electrical energy it needs from Hydro Quebec if this law did not prevent it. And perhaps it would be less unsightly than what is happening to our mountaintops.

Mainers bear the brunt of this misguided corporate welfare. It’s time to break the cycle; it’s time to stop letting one narrow, politically connected interest determine the entirety of our state’s energy policy.

Rather than let political connectedness determine the course of our energy economy, we should embrace the innovative power of competitive free markets. Rather than pick and choose which sources of alternative energy Mainers want to encourage, we should support an all-of-the-above strategy and let the free market work.

In Maine, this means repealing policies that give preferential treatment of industrial wind power corporations and letting other renewable energy sources, especially hydro, compete fairly on a level playing field.

Peter V. Anania is chairman of the Maine Heritage Policy Center, on the board of the Windham Economic Development Corporation and a former Windham town councilor.