Politics

June 24, 2013

Maine Senate must decide crucial energy questions

Analysis: The conflicting interests of users, LePage, companies and others emerge in debate on an omnibus energy bill.

By Tux Turkel tturkel@pressherald.com
Staff Writer

Is it worth risking the health of Maine's paper industry to clarify the state's ocean energy policy?

click image to enlarge

A scale model of the VolturnUS, a floating wind turbine project designed by University of Maine scientists. Is it worth risking hundreds of millions of dollars in foreign investment to help the University of Maine? Gov. LePage says yes, and it's a question returning Maine lawmakers must answer.

Gordon Chibroski, Staff Photographer

Is it worth risking hundreds of millions of dollars in foreign investment to help the University of Maine?

Those issues don't seem to be linked, at first, and the questions don't seem to make sense. But they are questions that the Maine Senate may need to answer Wednesday, when lawmakers return to Augusta.

While much of this week's debate will center on the state budget for the next two years, a sweeping energy bill that promises some relief to everyone from factory owners to homeowners also hangs in the balance.

For manufacturers, a provision in the bill could help expand natural-gas pipeline capacity and save factories an estimated $200 million a year.

For Gov. Paul LePage, the bill offers some last-minute leverage to compel the Legislature to revise the state's ambitious wind energy goals, which the governor says contribute to high electricity rates.

Caught in the middle is Statoil USA, the Norwegian energy company that's testing the waters off Boothbay Harbor for a possible commercial-scale, floating wind turbine park called Hywind Maine.

It's trying to blunt an 11th-hour effort by the governor to improve, at Statoil's expense, the prospects of a floating wind turbine project that UMaine launched last month.

The energy bill was vetoed last week by LePage, then immediately revived by a 121-11 override vote in the House. The margin reflected the measure's broad support in the Legislature, and showed that Republicans were willing to ignore LePage's desires on the issue and go along with the Democratic majority.

It would take a two-thirds majority in the Senate to override the veto.

The energy bill's initial passage was hailed by lawmakers as a bipartisan victory, in a session marked by much conflict and tension between the two parties. It promised to lower energy costs for Mainers by helping to expand natural-gas pipelines, increasing funding for energy-efficiency programs and helping residents switch to more affordable heating systems.

Now it's up to the Senate to again consider the merits. This time, it's possible that an amendment will be attached to a related bill, with the aim of helping UMaine. Behind the scenes, politicians are working to craft compromise language for the amendment that would help the university in a way that doesn't penalize Statoil. If the Senate approves the amendment, it will go to the House for a vote.

It's a complicated calculus for manufacturers like Verso Paper, which has mills in Bucksport and Jay and a total of 1,500 workers.

A key provision in the energy bill would let the state become a financial player in lining up capacity for natural-gas pipeline expansion projects. Verso says it spends an extra $22 million a year for natural gas because of limited winter pipeline capacity in New England, so it's eager for the provision to become law. It doesn't understand why LePage is willing to kill the energy bill over a pilot wind power project. It's lobbying senators hard to override the governor's veto.

"We recognize the politics," said Bill Cohen, a Verso spokesman. "But we're reaching out to people to get them to understand how important this bill is for our mills to be able to compete."

The Legislature left Augusta on Thursday, but Cohen said he has been calling key lawmakers at their homes and businesses. He is telling them that Verso doesn't want to get involved in the wind power issue. If the amendment is important to the university, he said, that's fine.

"But please, Legislature, don't hurt us in the process," Cohen said. "That's the message we've repeated over and over."

Verso has been joined by some of the state's leading manufacturers, including Bath Iron Works, Madison Paper, Sappi and Hutamaki Maine, said Tony Buxton, a lawyer who represents large industrial energy customers.

"What we have here is a minor inconvenience for Statoil and a major problem for the manufacturing sector," he said.

LePage has made it clear that he opposes the terms of an agreement and the above-market power rate that Statoil won last winter before the Maine Public Utilities Commission. The governor wants the PUC to make a second round of requests for competitive bids for deep-water wind power projects, with assurances that the university's project would qualify. The PUC would make "all reasonable efforts" to complete the review by the end of December, according to a recent draft of the amendment obtained by the Portland Press Herald.

"We're at a point where these decisions will have an effect for decades," said Patrick Woodcock, the governor's energy director. "The state has to decide which direction to go. We're at a crossroads."

Maine passed the Ocean Energy Act in 2010 with the goal of making the state a center of offshore energy research and development. Supporters say it someday could lead to thousands of jobs and billions of dollars in investment.

Last month, UMaine launched its one-eighth-scale model turbine into the Penobscot River, for testing off Castine and Monhegan Island. If the concrete-and-composite technology is proven, the next step is to build two six-megawatt turbines that could generate enough power for 6,000 homes.

Statoil, meanwhile, plans four three-megawatt turbines off Boothbay Harbor. It's doing tests this summer. It already has built and tested a full-scale, floating steel turbine off Norway.

UMaine's project wasn't ready to bid two years ago, when Statoil presented its project for the PUC's review, as required by the Ocean Energy Act. Giving UMaine's project another shot would be good for Maine ratepayers, Woodcock said. It would create competition between two different technologies, support the state's university and perhaps lower rates for offshore wind power.

Statoil is not happy about the governor's veto, although it has been careful not to make any public criticism. In a statement last week to the Press Herald, Statoil's project manager for Maine said the company responded in good faith to the state's request for investment to develop offshore wind energy and, based on approvals from the PUC, made "significant investments."

It noted that it has been collaborating with the university on research and development for three years, and has committed to using Maine companies as much as possible to build a commercial-scale wind park.

On Monday, the company was asked by the Press Herald if passage of an amendment that favors UMaine could lead Statoil to abandon its Maine project -- some wind-energy advocates fear that could happen. A spokesman in Norway, Morten Eek, said the company would have no further comment.

As a practical matter, it's too soon to know how the amendment would affect Statoil. The language in the latest draft is loose enough to need a legal interpretation, said Tom Welch, the PUC chair. That job would fall to the three-person commission.

"We would have to make a decision on exactly how to apply it," he said.

Welch said it might be difficult to complete that process and finish negotiating a final contract with a wind energy company by December, as envisioned in the proposed amendment. The PUC has been reviewing Statoil's final contract, and some observers expected it to be signed by this fall.

 

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

tturkel@pressherald.com

 

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