PORTLAND, Maine – The decision to place two long-term wind power contracts in regulatory limbo has sparked conflict among wind industry advocates, Maine’s major electricity providers and political leaders.
The Maine Democratic Party on Monday chided Republican Gov. Paul LePage for “meddling” in the business of the Maine Public Utilities Commission, based on a Dec. 8, 2014, letter in which LePage urged the commission to reconsider long-term contracts for two wind projects that have not yet been built.
PUC spokesman Harry Lanphear said Monday that LePage’s letter or influence is not the cause for the commission’s review of the contracts.
“That letter and what is happening are not linked,” Lanphear said in a telephone interview Monday.
The letter from LePage was not included in public documents the commission had collected in relation to the wind energy contracts, a circumstance Lanphear said was due to the confidential nature of those types of proceedings.
“A lot of times, bids have information that is confidential and so therefore basically everything in the case is confidential,” Lanphear said. “When this letter came in, that’s where it was put.”
Lanphear said the commission planned to include LePage’s letter in the public portion of the case, though the letter already was obtained and published last week by reporters, including at The Associated Press, the Maine Public Broadcasting Network and the Bangor Daily News.
While LePage’s letter aroused political controversy, the about 50 comments submitted Monday by wind industry advocates and other interested parties will fuel the bulk of discussion during PUC deliberations on the contracts Wednesday.
The PUC-approved term sheets call for Central Maine Power Co. and Emera Maine to enter long-term agreements to buy power from NextEra’s planned Highland Wind project in Somerset County and First Wind’s planned Weaver Wind project in Hancock County.
The Weaver Wind project would sell power at about 5.3 cents per kilowatt-hour for 25 years and the Highland project would sell its power for 4.7 cents per kilowatt-hour for 20 years.
Supporters say the deals would benefit electricity customers and that overturning the contracts would be another slap at wind industry investment, akin to the legal changes that drove away Norwegian offshore wind developer Statoil in 2013.
The three-member commission’s makeup has changed since December, with LePage’s former legal counsel, Carlisle McLean, taking over for chairman Tom Welch, who retired early from his six-year term at the end of 2014. Mark Vannoy, another LePage appointee, became chairman after Welch’s departure.
In soliciting comments, the newly configured commission asked whether sharp declines in oil and natural gas prices have changed the math upon which the PUC made prior decisions.
In a Feb. 18 order, the commission called for comments on whether the deals should be reconsidered in response to natural gas price forecasts from the benchmark Henry Hub, which now estimates that natural gas prices will be 20 percent lower than the prices the PUC used in its analysis of the wind power contracts.
“Such a review would be foolhardy,” wrote Paul Williamson, director of the Maine Ocean and Wind Industry Initiative, arguing short-term declines in oil and gas prices are not a reason to reconsider the long-term contracts. “What has been demonstrated in recent months is clearly there are short-term market price swings.”
The request for proposals opened about a year ago to bring onto the grid renewable power sources that have more stable year-to-year pricing than electricity generation based on fossil fuels.
Central Maine Power is among those advocating for the commission to consider to the contracts anew, writing in comments Monday that “the recent decline in forward energy markets has significantly impacted the financial costs and benefits of both proposed contracts.”
Emera disagreed with CMP, urging regulators not reconsider the contracts on the basis of changes in oil and natural gas prices.
“It is simply not possible to forecast prices, particularly volatile natural gas and oil prices, with a high degree of certainty,” wrote Emera’s legal counsel Nathan Martell. “To reconsider a prior order when oil and gas prices rise or fall in the future would insert a great deal of uncertainty and unpredictability into the long term contracting and regulatory process.”
Industry advocates including Williamson argued that reconsidering the contracts stands to chill interest from investors in the wind industry who could be deterred from doing business in the state.
That argument also has support from the office of the public advocate, whose staff participates in complicated energy cases on behalf of electric ratepayers.
“The obviously countervailing harm in reconsidering the orders is that it undermines the perceived finality of commission decisions,” Public Advocate Tim Schneider and senior counsel Agnes Gormley wrote in their comments in the case.
The public advocate said, however, that the PUC is not by law allowed to consider “economic development” benefits from construction of the projects that have not yet been built.
The contracts were approved in a Dec. 16, 2014, vote by Welch and commissioner David Littell to approve terms for both wind power projects, with a detailed written order issued by the commission Feb. 6, 2015.
Vannoy voted against the term sheets, saying he believed their value to ratepayers was due to “ a temporary cycle of high electricity prices that is dependent on regional policy choices.”
The commission will deliberate whether to reconsider the contracts at 1 p.m. Wednesday in its offices at 101 Second St. in Hallowell.
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