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April 22, 2013

Staff photo by David Leaming

In this October 2012 file photo, The Revs. Alice and David Anderman show off a new energy-efficient furnace, hot water tank and foam insulation-covered walls in the basement of their home in Waterville.

Can state cut energy costs? The heat is on

By Tux Turkel
tturkel@pressherald.com
Staff Writer

Mainers are burdened by some of the highest energy bills in the country. Paying $3,000 to $4,000 a year to heat a home is not uncommon. Over the next month, state lawmakers will try to agree on specific steps to lower those costs.

A handful of proposed laws aim to increase access to natural gas, help homeowners switch heating systems, and make homes and businesses more efficient, so they use less fuel or electricity. In some cases, taxpayers, oil heat customers or utility ratepayers would help pay for the measures.

But with a Democratic majority in the Legislature and a Republican governor who is averse to spending hikes and rate subsidies, meaningful accomplishments will demand compromise.

"We have the potential for a stalemate if we go along partisan lines," said Sen. John Cleveland, an Auburn Democrat who is co-chairman of the committee that handles energy legislation. "And that would not be a good outcome for Maine."

Some of the key bills would:

Redirect money now spent on cutting electricity consumption and use a portion of it to subsidize the purchase of more efficient home heating equipment or home weatherization.

Authorize a $55 million bond issue to weatherize and upgrade efficiency in homes.

Add resources to Efficiency Maine Trust, a fund supported by the auction of greenhouse gas emission limits that supports energy efficiency programs.

Create a state authority to issue bonds that would pay for expanding natural gas pipelines, giving more residents access to a less expensive fuel for heating.

Cleveland's committee has held public hearings on a few of these proposals, but most are expected to be presented over the next three weeks. The Legislature has set a May 17 deadline for committees to finish their work on bills, so there's not much time.

Cleveland said his goal is to craft elements of the leading bills into a comprehensive package that can gain political traction but also have real benefits for Mainers.

"If we can't find common ground, it's likely that most of these bills won't survive," Cleveland said. "We can't all be purists on this issue, or we'll get nothing done."

Cutting heating costs is the focus of a proposal from Gov. Paul LePage. It would shift millions of dollars from programs that lower home and business electricity usage to efforts that can cut home heating bills.

The plan would essentially change the mission of Efficiency Maine Trust, the quasi-public agency set up in 2009 to administer energy efficiency programs. Most of the trust's funding comes from the Regional Greenhouse Gas Initiative, or RGGI, a program in which air-emission limits are sold at auction, and through a small tax on electric bills, called a system benefit charge. Because the funding is linked to electric rates, most of the trust's programs are aimed at cost-effective measures to cut electricity costs, such as upgrading motors in factories or subsidizing compact-fluorescent light bulbs.

"I think there's a genuine interest in refocusing on heating costs," said Patrick Woodcock, the governor's energy director.

Changes in the RGGI program mean Maine stands to take in up to $9 million this year. Forty percent of that -- roughly $3.6 million -- would be earmarked for homeowners to cut heating costs, through measures that could include buying more-efficient heating systems, switching from oil to natural gas, or weatherizing their homes.

Cleveland has agreed to co-sponsor the bill, which could give it added weight. Despite that, the bill contains elements that Cleveland acknowledges he and other Democrats will find hard to support.

For instance: One provision exempts some larger businesses and industries from paying into the system benefit charge. The aim, according to Woodcock, is to lower electric rates for businesses that compete in parts of the country where costs are lower.

Census figures show that Maine's overall electric rates are the lowest in the Northeast. But industrial rates, which average 8.4 cents per kilowatt hour, are more than a penny higher than some states with forest products competitors, such as Michigan and Wisconsin.

Very large electric users in Maine, such as paper mills, already are exempt from paying the system benefit charge. Exempting more businesses would take roughly $2 million from Efficiency Maine's programs. And that savings would cut average industrial electric rates only a fraction of a cent.

Woodcock, however, says the cut is more than symbolic.

"It is a marginal difference," he said. "But we continue to hear from industrial consumers that margins are important."

But environmental activists say this approach doesn't make sense because efficiency investments have such a quick payback. One group, Environment Northeast, points to The Jackson Laboratory in Bar Harbor, which used a $1 million Efficiency Maine grant to buy a wood-fired boiler. The unit cost $4.4 million. But it will save $2 million a year in oil costs and trigger $1.8 million in spending for the state's forestry industry.

Efficiency Maine's data show that its programs deliver energy savings at an average cost of 1.27 cents per kilowatt hour, compared with the 8.7 cents or so that larger businesses can pay for power. Handing the system benefit charge money back to some large businesses also ends up costing other companies more in the long run if they can't gain access to the agency's programs, said Dylan Voorhees, clean energy director at the Natural Resources Council of Maine. He estimates that the shift contemplated by LePage will cost businesses $100 million over the next three years.

Voorhees said he's not opposed to spending more to cut home heating costs, but doesn't think it should be done at the expense of proven, cost-effective savings on electricity use.

"It's not one or the other," he said. "They're not competing ideas. We should be fully investing in energy efficiency, across the board."

Voorhees' group is supporting a bill being presented by Sen. Jim Boyle, a Democrat from Gorham. It would let the Public Utilities Commission, rather than the Legislature, determine the system benefit charge, based on what it determines to be cost-effective efficiency measures. The bill also would seek small, voluntary payments from the sale of oil and propane to establish a fund for efficiency improvements and weatherization.

A pair of bills that would help expand natural gas lines in Maine and New England, presented by House Republican Leader Ken Fredette of Newport, had public hearings last week before the committee. One would let the state issue bonds to help finance new or expanded pipelines. The goal is to increase the capacity of gas flowing into the region, and lower the price. Natural gas is about half the price of oil, but it's higher in New England than in other parts of the country.

These and other measures provide a starting point for discussions on how to enhance Maine's energy policies, said Rep. Barry Hobbins, a Saco Democrat who co-chairs the committee with Cleveland. Hobbins credited LePage with reaching out early to Democratic leaders -- through Woodcock -- in search of consensus.

"This session, there is an opportunity that I don't want to squander," he said.

 

Tux Turkel can be contacted at 791-6462 or at:

tturkel@mainetoday.com





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