Let’s be clear: This is not about a missing word.
When the Maine Public Utilities Commission voted 2-1 last week to slash a scheduled increase in the budget for energy-efficiency projects, the commissioners were not hung up on an apparent drafting error that left the word “and” out of one sentence.
Commissioners Mark Vannoy and Carlisle J.T. McLean were not confused. They were carrying out a long-term policy priority of the governor who appointed them.
Gov. LePage’s single-minded focus on electric rates has led him to oppose any program like the Efficiency Maine Trust that is funded by a surcharge on power prices, and the commissioners furthered that goal by ignoring the Legislature’s clear intent.
You can call the governor’s opposition to this form of efficiency investment short-sighted, or you can call it ideologically rigid, but you can’t say he’s inconsistent. He has hammered away at the Efficiency Maine program since coming to office, and now his allies on the PUC have used a missing word as an excuse to cut it back.
There is still time to fix this before the damage is done. The $60 million in new investments were not scheduled to begin until the year that begins July 1, 2016. There will be ample time to find a way to restore funding for the efficiency projects, as House Republican Leader Ken Fredette committed himself to do last week.
But there will be some tough negotiations ahead, and the governor has proven to be the state’s toughest negotiator. In this episode, he has given Maine another lesson in how to apply political leverage: He knows what he wants, he stays focused on his goal and he doesn’t give up when he loses. When an opportunity presents itself, as it did last week, he hits it hard.
To understand Tuesday’s PUC decision, you have to go back to the last days of the legislative session in 2013.
The efficiency investments now under threat were part of a bipartisan omnibus energy bill that passed overwhelmingly in the House and Senate. LePage vetoed it, and when he realized that both houses were prepared to override him, he used his influence over Republican senators to stop the process.
He convinced them not to vote to override the veto unless he could extract a price. To save the energy bill, the Democratic-controlled House and Senate would first have to pass a measure that reopened the competition for an offshore wind contract, which had already been awarded to the Norwegian energy giant Statoil. Without that bill there would no Republican votes in the Senate for the omnibus bill, and it would die.
It was a tough choice for many legislators. They wanted to support the efficiency investments and a plan to build a natural gas pipeline, but not necessarily at the cost of losing Maine’s potential role as the home of a nascent ocean wind industry. In the end, enough members decided that up to $60 million a year in energy-efficiency projects was worth the risk.
What happened next is a matter of record. Statoil declined to reapply for the contract it had already won; the University of Maine’s Aqua Ventus experimental project got the contract but could not produce a good enough proposal to win a major grant from the U.S. Department of Energy. And, as the governor likes to say, the investment capital went where it was welcome, which, in this case, was not Maine.
Now, two years later, the governor is going after the efficiency investments that were bought at such a high price. He has appointed Vannoy and McLean to the three-member PUC, and they are furthering his policy agenda by misreading the intent of the Legislature.
The governor’s position is based on his often-stated belief that Maine’s high electricity rates are an impediment to economic development. He’s partly right, but his solution makes the problem worse, not better.
LePage is fixated on the per-kilowatt-hour electricity rate because he says that’s what companies shopping for development sites look at. He pays less attention to what customers in Maine actually pay for power, which is more important than the rate.
For example, a commercial operation that pays $2,000 a month for electricity would pay a 4 percent surcharge on its electric bill to fund the efficiency trust, raising its per-kilowatt-hour rate. But it would also be eligible for rebates to upgrade its lighting system, which could reduce its power use by 60 percent. The surcharge would cost $80 more per month, but the upgrade would save $1,200. The business would save more than $13,000 a year – even while paying a higher rate.
The other advantage of investing in efficiency is that it reduces demand. The kilowatt-hour saved turns out to be the cheapest kilowatt-hour you can buy, and every investment in new generation or transmission that can be avoided – and every million BTU of natural gas you don’t have to buy – lowers the price for everybody.
The problem comes when you focus only on the sticker price and not on the bottom line. LePage wants to market Maine as a low-cost-energy state to out-of-state companies when he should be focused on lowering what the companies actually spend once they get here.
The PUC could rescue this process by reconsidering its vote and fixing the language through rule making. That would respect the intent of the Legislature and restore the integrity of the 2013 bargain.
At the very least, the two LePage appointees can stop pretending this is a debate about a left-out word or ambiguous legal language. We can see what’s happening. This is pressure politics as it is played in the LePage era, and the governor has made his move.