August 7, 2011

Maine Voices: Maine benefits from power deregulation

Policies that were drafted in the 1980s and 1990s have set the stage for consumer-friendly energy markets.

During the 20 years that I worked as Maine's Public Advocate, I was in on many of the decisions regarding electric utility deregulation. In retrospect, I can identify a number of good -- as well as some flawed -- outcomes resulting from that process. And while there may be some blame to go around (and I accept my share), the real truth is that a great deal of good came out of the electric restructuring that got under way in 2000.

POWER LINES
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Maine restructured its electricity regulation in 2000, opening the door to a vigorous renewable power market that didn’t exist 11 years ago.

The Associated Press

ABOUT THE AUTHOR

Steve Ward
was Maine’s public advocate from 1987-2007.

One highlight of restructuring that was intended from the outset actually has been achieved -- our power mix here in Maine is much more renewable and more environmentally benign than in the 1980s. Natural gas is less expensive and cleaner as a boiler fuel than No. 6 oil, for example. The existence of wind turbines across the state today, and emerging new technologies for tidal power, are both a result of opportunities created by industry restructuring and the array of incentives established by the Maine Legislature. In fact, Maine has rapidly become the storehouse of renewable energy for New England as a whole.

PRICE HIKE HEDGE

Consumers stand to reap benefits from the expansion of renewable energy in a couple of ways. First, there is the advantage of price stability. When the price of non-renewable generated power - such as natural gas -- is high, we generally see our rates go up in Maine. Likewise, when natural gas prices are low, we're happier than other folks in other places. That is because so much of the region's power generation (as much as 80 percent) relies on fossil fuels. Renewables actually decrease that volatility. And therefore, the larger the renewable piece of the energy pie we have, the more likely price swings will be diminished here in Maine. This is a real plus for consumers and will be more so over time.

Today, Maine's electricity rates are lower than other parts of New England, but we face a steep climb in order to keep our rates competitive with the rest of the country. It will be very hard to bring retail rates in Maine down to the national average, for a number of reasons. We have to make do with what is in our own backyard. We don't have coal deposits here in Maine -- like the Ohio Valley. We don't have federal investments in hydro-electricity -- such as the Tennessee Valley Authority, and we won't have federally subsidized nuclear power plants as are planned today for the southeastern part of the United States. Therefore, we must look to the resources we do have. In Maine, we have two distinct advantages to work with: longstanding policies favoring renewable generation and the fact of Maine's geography.

The fact that Maine's Legislature has created incentives and subsidies for wood-fired, hydro-electric and wind generators is well known. These policies go back to the mid-1980s, are well-accepted and have been a feature of economic development in Maine for nearly 30 years. They have given Maine a head start over other states in the region in the development of clean, non-greenhouse-gas emitting resources. In my opinion, these policies should be preserved in order maintain our lead in attracting investment in new renewable infrastructure.

Our second advantage is a matter of geography: All power or natural gas that is exported from Canada to the Boston market has to be transported across Maine. Recognizing this, in 2010 the Legislature established a public body whose task is to negotiate leases -- and generate lease payments for Maine's Treasury -- from developers who want to build new infrastructure on state-owned rights-of-way crossing Maine.

REDUCING OIL DEPENDENCY

By law, these revenues must be dedicated to the budget of Efficiency Maine for reducing oil dependence and promoting energy efficiency at businesses and homes in Maine. Today, that public entity, the Interagency Review Panel, is hard at work drafting the rules for undertaking lease negotiations with developers of new energy infrastructure.

None of these elements-- a vibrant market for renewable power in the region, the export of renewable electricity to markets in southern New England, the Interagency Review Panel and even Efficiency Maine -- existed in 2000 when electric restructuring got under way in Maine. Some weren't envisioned at all. By that measure, we have made a lot of progress in a short while toward the goal of cleaner and less volatile power sources. We need to keep working with the advantages that are unique to Maine and accelerate this progress.

- Special to the Telegram

 

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