December 20, 2012

Bold idea aims to slash Maine's power bills

Under a legislator's plan, as much as $170 million a year could be saved by buying natural gas from out of state.

By Tux Turkel tturkel@pressherald.com
Staff Writer

Maine has a chance to trim $170 million a year from electricity bills, cut its reliance on oil and take advantage of historically low power costs, but lawmakers first must authorize state government to help bring natural gas here from new gas fields in the Northeast.

click image to enlarge

In this June 25, 2012 file photo, a crew works on a drilling rig at a well site for shale based natural gas in Zelienople, Pa. Under a Maine legislator's plan, residents could save as much as $170 million a year by buying natural gas from out of state.


Rep. Kenneth Fredette, R-Newport

Contributed photo

That’s the pitch the incoming House minority leader is expected to make when the Legislature reconvenes next month.

Rep. Kenneth Fredette, R-Newport, will promote the initiative with help from an informal working group that has been studying the most effective way for Maine to cut its above-average energy costs.

“We need to be more proactive and be more bold,” Fredette told the Portland Press Herald. “We’re going to look at a bold bill.”

Fredette would not discuss details of his proposal, but people familiar with the plan say it would not use taxpayers’ money to build new pipelines in Maine. Instead, it would aim to give the state the financial and legal authority to secure volumes of gas for Maine homes and businesses by signing contracts with companies that already plan to build or upgrade pipelines in southern New England.

The process could involve expanding the role and authority of the Governor’s Energy Office and creating a panel of experts to review potential investments. It also could ask utility ratepayers to backstop any financial risk, such as by paying added charges if gas demand falls short.

Such details could make the initiative a hard sell.

In a speech last week to mill owners and other large electricity users, Fredette said a primary goal is to reinvigorate Maine’s manufacturing sector. To do that, he said, Maine must figure out how to eliminate a premium that’s paid to get dependable gas supplies delivered here when demand is high in the winter.

That premium, added to the commodity price of natural gas, is called a basis differential. If Maine had authority to buy specific volumes of gas for extended periods, homeowners and businesses could save $170 million a year, Fredette said.

“I want to eliminate the basis differential, or as much of it as we can,” he told members of the Industrial Energy Consumer Group. “This will lower everyone’s electricity costs. ... I can think of no single other action state government can take that will provide this large a benefit to the people of Maine this soon.”

Fredette’s proposal has tentative support from Gov. Paul LePage. But Ken Fletcher, who heads the Governor’s Energy Office, said LePage would balk at any financial arrangement that adds a new charge to electricity bills.

LePage’s stance suggests that the politics of the proposal may be complicated.

Democrats, who historically have been more receptive to surcharges for energy programs, now have majorities in the House and Senate, and this proposal is coming from the leader of House Republicans.

And LePage, who frequently cites the state’s high energy costs as a deterrent to business expansion, has had Fletcher working over the past two years to expand natural gas pipelines.

Fletcher recently calculated the impact of converting 20,000 homes from oil heat to gas, based on today’s prices. The savings would be $24 million a year.

“I can’t think of anything else we could do to put more money in people’s pockets,” he said of expanding the availability of natural gas.

Half of New England’s electricity comes from gas-fired power plants, so the region’s economy is highly dependent on gas prices. Since 2008, gas prices have fallen so much that Maine is saving $230 million a year on electricity, according to the Maine Public Utilities Commission.

The savings are tied to the discovery of major gas deposits in shale formations in New York and Pennsylvania. Fredette and others say those gas deposits are providing a new opportunity to drive energy costs even lower.

(Continued on page 2)

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