July 9, 2013

Maine Voices: 'Open for business'? Reneging on Statoil deal says state is anything but

Reopening the bidding on a wind power pilot project sends the wrong message to out-of-state companies.

By Jack Cashman

BREWER - Whether or not you are a believer in wind energy and whether or not you believe offshore wind farms are to be a future player in our energy picture, you have to be appalled at the recent actions in Augusta.

Hywind on location
click image to enlarge

Statoil had planned to install floating wind turbines off Boothbay Harbor that would resemble this test turbine, now producing power off Norway. The Norwegian company is suspending its work in Maine until it’s sure it has a deal to sell power here.

Trude Refsahl/Statoil

The chain of events started when Gov. LePage vetoed the omnibus energy bill passed by the Legislature. The cornerstone of the bill was that the state of Maine would commit to buying capacity in a yet-to-be-built gas line that will come into New England and relieve congestion in the region.

To understand the folly of that premise, consider that Maine only uses 150 million cubic feet per day of natural gas and that would be the level of the capacity purchase. This is hardly enough capacity to move the needle in relation to the larger picture.

The idea that purchasing this tiny amount of capacity will inspire developers to commit the billions of dollars necessary to build the line is laughable on its face. One would be hard-pressed to find anyone in the gas business who thinks this is a good idea.

Many of us applauded the governor's veto, and there are a number of good reasons he could have used to justify his action. To name only a few:

The bill does nothing to address the lack of infrastructure within Maine, and the money used in the bill for one-time payments to certain industries would be better spent to fund a program of incentives to bring gas to Maine communities such as Rockland, Ellsworth and Millinocket.

Gov. LePage could have pointed out that having Maine act by itself and put ratepayers at risk to address a New England-wide problem is a bad deal.

Unfortunately, he chose to base his veto message on a desire to undo a deal already in place with Statoil to develop an offshore wind-power pilot project and allow the process to be reopened so the University of Maine can put in a competing bid.

Ignoring the fact that allowing a state-funded institution to compete with private industry is a strange position for a Republican, pro-business administration to take, the real problem is the state's changing the rules after the fact.

You can spin this any way you like, but to the worldwide business community watching all this, Maine has reneged on a deal with a private company that committed to invest hundreds of millions of dollars in our state. Now that company has put its plans on hold.

In order to save a bill that potentially will create more problems than it is intended to address, the Legislature went along with the deal reversal.

Senate President Justin Alfond points the finger of blame at the governor, but he and his fellow Democrats voted to go along with it all.

In an attempt to spin things, the governor's energy chief, Patrick Woodcock, is now claiming that Statoil was not committed to the project.

This claim belies the fact that the company has committed a great deal of time and money to go through the process that ended with their gaining Maine Public Utilities Commission approval. That process is now being changed.

MPUC Chairman Tom Welch chimed in on the spin effort, telling the Bangor Daily News in reference to the passage of the bill allowing UMaine to bid on the project, "Obviously people in the private sector always prefer that things stay exactly the way they are. But that just isn't the case in the real world."

I don't know what "real world" the chairman lives in, but in the real business world, when two parties reach an agreement and make commitments to each other, both sides expect the other to honor the commitments, not change the deal after the fact -- especially in a state "open for business."

Jack Cashman of Brewer is the former chairman of the Maine Public Utilities Commission and a longtime small-business man in the Bangor area.

 

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