February 13, 2013

Energy initiative delivers $34.4 million to Maine

The assessment comes after Gov. LePage says he wants to change the way Maine spends the money.

By Steve Mistler smistler@pressherald.com
State House Bureau

As lawmakers await more details about Gov. Paul LePage’s plan to redistribute money from a program that charges power generators for greenhouse gas emissions, the Legislature’s Energy Committee heard Tuesday that the program has delivered the state $34.4 million since 2008.

The committee also heard that Maine is among the states that are getting the most bang for the dollars from the Regional Greenhouse Gas Initiative, a coalition of nine Northeastern states including all of New England.

That assessment, in an independent analysis from 2011, was delivered to lawmakers just days after LePage announced that he wants to change the way Maine spends money from the initiative, from strictly energy efficiency investments to direct energy bill relief for residential and business customers.

The governor says his proposal is partially designed to blunt a key obstacle to business development: Energy costs.

He also said the goal is to help residents afford alternatives to oil heat like wood pellet stoves, propane or natural gas. Democrats are withholding judgment on LePage’s plan, which has not been drafted into legislation.

However, there is an undercurrent of skepticism, from Democrats and conservation groups, that stems from the governor’s past hostility to a program that has been repeatedly assailed by conservative groups. Such groups argue that the Regional Greenhouse Gas Initiative is a sneak tax that utilities essentially pass on to consumers through higher rates.

The argument was at the forefront in 2011, when LePage signed a Republican-initiated law to allow Maine to pull out of the initiative if a “sufficient” number of coalition states withdrew.

Now, however, the governor says Maine will stay in the coalition if the Legislature adopts his proposal to change the way the program distributes revenues.

click image to enlarge

Gov. LePage says Maine will stay in the Regional Greenhouse Gas Initiative if the Legislature adopts his proposal to change the way the program distributes revenues.

Staff photo by Joe Phelan

Related Documents

PDF: Regional Greenhouse Gas Initiative economic impact report

LePage's proposal comes as the debate over the effectiveness of RGGI continues. A recent analysis by the Washington Post said that the new RGGI plan adopted by the Northeast coalition will cut annual emissions by about 13 million tons, or about 0.06 of all power plant emissions in the United States last year. The same analysis questioned the program's effectiveness curbing climate change, but acknowledge that it has become a revenue generator for participating states. 

Maine is set to collect an additional $200 million in gross domestic revenue from RGGI and thousands in jobs through 2020, according to Regional Economic Models Inc. The group estimated the economic impacts from a newly drafted agreement by the coalition that will further reduce carbon emission by 45 percent from 2014 to 2017.

Patricia Aho, commissioner of the Department of Environmental Protection, told lawmakers on the Energy Committee Tuesday that the new carbon cap, combined with the governor’s plan, would help the state address energy costs and efficiency needs.

Democrats said they’re eager to see LePage’s proposal. However, there is concern that it will move the program away from energy efficiency.

“The cheapest energy is the one we don’t use,” said Rep. Diane Russell, D-Portland. “We know energy efficiency has lowered the bills for Maine people and businesses. We shouldn’t put that in jeopardy.”

In the Regional Greenhouse Gas Initiative, utilities essentially bid for permission to emit carbon dioxide into the atmosphere. States use the proceeds to fund energy efficiency efforts, renewable energy projects, electricity bill relief for low-income residents, and sometimes their own budgets.

Maine now redirects the funds almost exclusively into energy efficiency, because of a law passed by the Legislature in 2007.

In 2011, the Boston-based Analysis Group found that New England states receive the biggest economic benefit from RGGI because of their emphasis on efficiency investment. It found that energy investment returned $2 to $4 for every dollar spent.

Patrick Woodcock, director of the Governor’s Energy Office, told lawmakers Tuesday that the governor’s plan would still include efficiency investment. He would not be more specific when pressed by Democrats on the committee.

Woodcock did indicate that efficiency efforts may be geared more toward fossil-fuel use, such as converting oil furnaces to natural gas. He said the goal is to give Mainers $600 toward converting to less expensive heating systems.

Currently, the Maine program is weighted more toward electricity efficiency.

According to a review of Maine’s RGGI program, electricity ratepayers have seen a 0.06 percent increase since the state enrolled in the cap-and-trade initiative in 2008. The increase is calculated before the accompanying economic benefit, said David Littell, a member of the Public Utilities Commission.

Littell noted that the new agreement could yield bigger returns if the state increases its efforts in fossil-fuel efficiency programs.

Littell, quoting projections by Regional Economic Models Inc., said the state’s gross domestic product could increase to $300 million through 2020 with a modest increase in fossil-fuel efficiency projects.

That would appear to bode well for LePage’s plan to help residents convert from oil to natural gas heating systems. The governor has met with companies that specialize in natural gas conversions, including Summit Utilities Inc., a Colorado-based natural gas company that installs distribution systems for homes and large businesses.

Summit has contributed $500 to LePage’s re-election committee.

The governor has also met with Les Otten, owner of Maine Energy Systems LLC in Bethel, a Republican candidate for governor in 2010. Otten, whose company sells wood pellet heating systems, has given $1,500 to LePage’s re-election committee.

Democratic Rep. Barry Hobbins, the House chairman of the Energy Committee, asked Woodcock Tuesday when lawmakers could expect to see the governor’s proposal. Woodcock would not provide a definitive date, but said the governor is eager to put the bill forward this session.

Steve Mistler can be contacted at 620-7016 or at:

smistler@pressherald.com

twitter.com/stevemistler

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