Two years ago this summer, heating oil prices in Maine hit $5 a gallon. State government planned to open emergency shelters to keep residents from freezing in their homes by winter, but the global financial collapse averted the crisis.
That close call will serve as a stark reminder for the next governor of just how vulnerable Maine is to volatile, imported energy.
A new governor will lead a state in which 80 percent of homes heat with oil, and nearly all vehicles depend on gasoline. This petroleum dependency drains an estimated $5 billion a year from the state economy, depending on prices. Add to that the extra costs of living with electric rates well above the national average, in part because power generation relies heavily on natural gas.
Reducing this reliance in the short term, and laying the groundwork for energy independence, has been a priority for Gov. John Baldacci and recent legislatures. Together they have enacted a comprehensive energy plan. They created an independent agency — Efficiency Maine Trust — to oversee efficiency and conservation programs. They regulated proposed energy corridors from Canada and set rules to encourage wind power development on land and in the ocean. And they took these steps, generally, with bi-partisan support.
But a new governor may find a changed political environment.
The flood of federal stimulus money that bolstered recent energy investment may be ebbing, as is the sense of urgency that followed the oil-price spike. Growing, instead, is a public distrust of government, and among many rural residents, a resentment of government support for industrial-scale wind power on Maine’s ridgetops.
The next governor will either broaden the path blazed by Baldacci and his Democratic allies in the Legislature, or head in a different direction.
John Kerry, Maine’s current energy director, says it will be safer politically to support policies that are less expensive today, such as opposing a surcharge on heating oil and natural gas to pay for conservation and efficiency. But Kerry, an architect of the state’s comprehensive energy plan, says that in the absence of government money or other factors, customers will likely need to pay a bit more on their energy bills now to wean Maine from oil tomorrow.
“The next governor will have to have the vision and political will to introduce legislation and ideas to fund energy programs,” Kerry says. “But when oil and gas are low, there’s no compelling public outcry for these programs to go forward.”
Kerry’s advice may go largely unheeded. Nine of the 11 gubernatorial candidates who will appear on the June 8 primary ballot oppose expanding Maine’s systems benefit charge. The fractional surcharge now adds up to roughly $8 a year on household electric bills and is used to help fund conservation and efficiency programs. The vast majority of candidates also oppose extending the surcharge to oil and natural gas heat.
The candidates also were asked specifically how they would pay for their proposals. And they were asked if they supported current policies regarding land-based wind power development.
Abbott wants Maine to do more to leverage its location and natural resources to become more energy competitive. He wants to expand natural gas availability to encourage more generation, attract business and offer fuel alternatives to industry. He would continue to promote energy efficiency programs.
In general, Abbott favors having market forces pay for these efforts. But he would consider state funding on a program basis, possibly through low- or no-interest loans to spur investment. He opposes expanding the systems benefit charge.
Maine has done a good job regulating wind power, Abbott says, but needs to continue fine-tuning its rules to address the concerns of nearby residents.
“As with all large development projects,” Abbott says, “wind power development needs to be regulated, but the regulation must be reasonable.”
A former vice president of Bangor Hydro-Electric and power development official in Alaska, Beardsley blames Maine lawmakers and past governors for driving up the cost of energy through failed policies that have limited the state’s alternatives. He would work to bring all energy options back to the table, allowing market forces to lower costs.
Among his ideas: Propose a referendum to allow the state to consider a new nuclear power plant; introduce a law to let Maine utilities once again generate electricity as well as deliver it; help speed construction of a liquefied natural gas terminal; gain the authority to explore for oil and natural gas in the Gulf of Maine.
Beardsley also would explore the idea of a consumer-owned, rural electric cooperative that might be able to buy back the state’s hydro dams and build new power plants.
Beardsley wouldn’t raise power bills to pay for conservation or efficiency. That idea, he says, “is deserving of the Golden Fleece Award.”
He supports wind power development, as long as no state money is involved.
Lowering the cost of electricity must be Maine’s top energy and economic development priority, Cutler says. The state’s ability to compete in areas where it has a natural competitive advantage, such as forest products and agriculture, depends on lower prices.
Cutler was a top energy official in the White House under President Carter in the late 1970s. He wants to create a public power authority, called Maine Energy Resources.
The new office would be financed partly through tax-exempt bonds and used to encourage public-private partnerships to build energy infrastructure, develop renewable resources, invest in efficiency and sell lower-priced power directly to businesses and communities. The bonds would be repaid with revenue from the sale of electricity.
Cutler is opposed to increasing the surcharge on electric bills, or expanding it to oil and natural gas. But he wants to examine the new energy conservation plan developed by Efficiency Maine Trust and see how the proposed public power authority could help finance the most cost-effective measures.
Cutler supports current laws and policies regarding land-based wind power, noting that the state’s expedited permitting process recently was upheld by the Maine Supreme Judicial Court.
As president of the Maine & Co. business-attraction organization, Jacobson looks at energy policy through the lens of job creation. High energy costs make it hard to attract new companies, and are a burden to existing firms.
“Any solution we consider must help our businesses grow,” he says.
One focus, he says, should be on exploiting wind power research and development. The University of Maine already is a leader, with composites technology. Maine should be able to design and build the wind power equipment that both overseas and domestic energy companies are installing in the United States, he says.
To pay for winterizing all Maine homes, Jacobson is counting on rent money from energy corridors, hoping to negotiate agreements with Canadian utilities that could be worth tens of millions of dollars. He opposes expanding the systems benefit charge to pay for conservation.
And while he wants to capitalize on wind power development, he doesn’t consider it a solution to high electricity costs in Maine.
“There’s not enough benefit to wreck some of our most beautiful areas for very expensive power,” he says.
LePage says Maine has an abundance of resources that could be developed.
Hydro, nuclear, LNG, oil and biomass are either readily available or have been proven to be commercially viable, he says. In LePage’s view, however, land-based wind power, offshore wind power and geothermal aren’t commercially viable today.
LePage says the construction of a transmission line down the Interstate 95 corridor seems to have the most immediate promise. He would lease land down the median of the I-95 and Maine Turnpike corridors and build a transmission line with the proceeds. He also would negotiate to purchase some of the hydro energy for use in Maine.
LePage is against funding conservation with utility bills. High energy costs are a major cause of the loss of the manufacturing base in Maine, he says. We need to think outside the box and find other revenue sources to complete weatherization programs, he says.
“I do not support any programs that would increase the electric bills for Maine people and businesses,” he says.
LePage also doesn’t support land-based wind power, because the industry requires taxpayer subsidies to reduce the true cost of generation.
“While I believe wind may have future promise as a commercially viable source of energy,” he says, “it clearly is not there at this time.”
McGowan would set three priorities: Reducing energy costs through efficiency, making Maine a green energy hub and embracing new technologies.
He supports the consolidation of programs under Efficiency Maine Trust.
Using energy more efficiently offers the best return on investment for cutting both oil and electricity costs, he says.
McGowan wants Maine to use its abundant wind, ocean and biomass resources to become a green energy hub for the region. Maine can create jobs by exporting this energy, just as it did when it was a leading manufacturing state.
The state also needs to do more to develop technologies including smart-grid management, thermal storage heat and biofuels that use our vast forest resources.
To pay for programs, McGowan hopes Maine will be able to tap into revenue from leasing land for energy corridors from Canada, as well as seeking more federal grants. He’s reserving judgment about whether it’s appropriate to pay for programs through energy bills, waiting for a pending state study on the matter. He does support Maine’s current wind power laws and policies, calling wind “a key to Maine’s energy future.”
Mills notes that Maine is mostly forested, has dozens of hydro dams and a high potential for wind, biofuels and other renewable energy sources, yet has some of the nation’s highest electricity rates.
“Although conservation is crucial,” he says, “cheaper power is even more important.”
Maine, Mills says, is in the middle of an “energy sandwich,” with cheaper power to the north and a high-priced market to the south. He says we need to take better advantage of Canada’s cheaper power, and do more to develop our own natural resources.
Mills doesn’t specifically say how he would pay for energy proposals. He’s opposed to expanding the systems benefit charge. He hopes the state will be able to receive some rent money from future energy corridors. For now, he wants to see how the new Efficiency Maine Trust is working, and whether more investment should be made in industrial settings, which are more cost effective.
Current wind power policies strike a good compromise, he says, although he doubts the state’s ambitious goals of land-based wind can be achieved, in the face of growing opposition from residents.
Mitchell, president of the Maine Senate, equates the drain of petroleum dollars from Maine to doubling the sales and income tax, and getting nothing in return. She proposes a plan that would expand renewable energy production and integrate that effort with a manufacturing base that makes wind turbine blades and other components. She also wants to increase energy efficiency efforts for homes and businesses to reduce demand, and expand transportation options.
To pay for these proposals, Mitchell would seek more federal grants and use responsible levels of bonding to expand revolving loan programs. She is one of only two candidates who would consider a limited increase of the systems benefit charge, because it has demonstrated a favorable rate of return for ratepayers by cutting demand and lowering costs. She also would consider extending the charge to oil and natural gas, if it can meet the same goals.
“The price volatility in fossil fuel in the summer of 2008,” Mitchell says, “demonstrated very clearly that Maine, both its government and its citizens, must prepare now for any future price spikes.”
Mitchell supports the state’s wind power goals, which she says have generated hundreds of millions of dollars in investment and hundreds of jobs.
Otten says he wants to make Maine the first energy-independent state in America. A key strategy would be to switch Maine homes and businesses from oil to wood heat.
Otten is focused on the negative impact of sending oil dollars out of state.
He started a business, Maine Energy Systems, that sells wood pellet heating units. He chaired a wood-to-energy task force that found that switching 10 percent of Maine homes from oil to wood heat could create 9,600 jobs, including former oil dealers who would deliver pellets and install the equipment.
“The only way to keep oil prices down is if we don’t use it,” he says.
To pay for the conversion, Otten proposes tax credits for homes and businesses that switch fuels. This activity will create jobs and new revenue, he says.
He’s against raising more money from the systems benefit charge. He supports current policies on land-based wind power, but notes that most Maine homes and businesses aren’t heated with electricity.
Poliquin says he wants to lower energy costs for Maine homes and businesses, but won’t use state money to do it.
“Maine government has no new money to pay for new initiatives,” he says.
Poliquin has three main ideas to help cut electricity costs without new state revenue: Support private efforts to upgrade the state’s power grid; negotiate to get less-costly hydroelectric power from Canada; and pursue an energy corridor that connects Canada and Boston, to take advantage of the economic development potential.
Poliquin is aware that most of the new weatherization and efficiency programs in the state are paid for through federal stimulus funds and the surcharge on electric bills. But he’s opposed to increasing the charge, or expanding it to oil heat. He’d veto any bill that increases taxes or fees, he says.
Poliquin is cautious about large-scale wind power, and the federal subsidies that foster its development.
“We must be careful not to substitute a more expensive form of power for one already too expensive now,” he says.
Rowe has a goal of making Maine energy-independent. He supports programs that upgrade home-energy efficiency, and would introduce a voluntary energy-rating system for buildings. He wants to promote investment in locally generated renewable power, as well as manufacturing in clean energy equipment.
To pay for these objectives, Rowe would expand the new, revolving loan program that’s being set up to help homeowners weatherize their properties. He supports expanding the systems benefit charge and extending it to home heating fuels.
But Rowe also wants to make sure any money raised through these charges has a good return on investment. Current programs save three or four dollars for every one spent, he notes.
Rowe supports a balanced approach to land-based wind power development and supports the current siting process.
“This is a reasonable concept,” he says, “so long as the expedited review remains thorough and careful, and allows for full public input.”
Scarcelli says good energy policy is good economic and social policy. Maine’s average electricity costs, which are much higher than the national average, are bad for both businesses and families, she says.
Scarcelli would convene a statewide energy summit in her first year to determine whether Maine’s policies are on the right track. But overall, she wants to focus on conservation and efficiency, and to explore a broad “portfolio” approach to developing new power sources ranging from tidal and solar to nuclear power.
Scarcelli plans to pay for her initiatives through a low-interest, revolving loan program for weatherization and fuel-switching at homes and businesses. Borrowers would repay the loans through their hometown property tax system, similar to a revolving loan plan now being proposed in Maine as part of a $30 million federal stimulus fund award.
Scarcelli doesn’t support raising money through electric or oil bills. Those bills already are too high, she says.
And while she supports wind power in a broad sense, Scarcelli says she’s concerned about the “gold rush” in wind development fueled by government incentives. Growing community opposition and questions over the cost of wind power are leading her to want to “take the pot off the boil.”
Staff Writer Tux Turkel can be contacted at 791-6462 or