March 12, 2010

Oil dealers: Offshore
wind plan a mistake

They oppose a bill to speed up ocean energy projects, which they say will kill their industry and cost many jobs.

By Tux Turkel tturkel@pressherald.com
Staff Writer

AUGUSTA — A bold plan that would switch homes and cars from oil heat and gasoline to offshore electricity is coming under fire in the Legislature.

John Baldacci
click image to enlarge

In 2008, Maine Gov. John Baldacci set up the 22-member Ocean Energy Task Force to make recommendations focused on offshore wind power.

Associated Press file photo

The idea is to cut Maine's dependence on petroleum by using renewable energy, largely from giant wind turbines far off the coast, to power an expected surge of electric vehicles and high-efficiency space heaters.

But the futuristic plan is running into present-day opposition.

Oil dealers say it would kill their industry and cost thousands of jobs. They and other critics also say the electricity from offshore wind would be very expensive, and note that customers would have to pay higher electricity bills to make it possible. That's what happened in the 1990s, they point out, when the state forced utilities to buy more costly power from biomass boilers and hydro dams.

"It's voodoo economics," said Ned Bulmer, an Irving Oil executive, speaking on behalf of the Maine Energy Marketers Association. "Don't make that mistake again. Learn from history."

Proponents agree that subsidies will be needed for Maine to start a transition from volatile, imported petroleum to massive, clean resources just off our shores. But they point to the summer of 2008, when heating oil and gasoline prices jumped above $4 a gallon and fell only when a deep recession took hold.

"We dodged a bullet that time," said Republican Kevin Raye, the Senate minority leader. "It would be foolhardy to think it couldn't happen again."

Raye noted that a tidal-energy demonstration project placed last week off Eastport, near his hometown, is a model for an ocean energy industry that could eventually create thousands of jobs.

Such contrasting views were voiced Thursday in response to a bill that would carry out the recommendations of the Governor's Ocean Energy Task Force. The bill got a public hearing before the committee that handles energy issues, drawing an overflow crowd.

The task force spent a year fashioning its suggestions, but the bill, which is considered emergency legislation, wasn't printed until recent days. As the short legislative session approaches its final weeks, some lawmakers are asking for more time to digest the details. A committee work session on the bill is planned for next week.

The bill would put into law the broad recommendations of the task force set up by Gov. John Baldacci to encourage and speed up development of ocean energy resources, with a focus on offshore wind power. The 22-member task force included state officials, lawmakers, energy developers and interest groups, including lobstermen and environmentalists.

The law would establish a state goal of installing 8,000 megawatts of wind capacity by 2030, including 5,000 from offshore turbines. That's the equivalent of six nuclear power plants the size of Seabrook Station in New Hampshire.

Some of that power would help Maine move away from using oil and gasoline for heating and transportation. Electricity generated from renewable resources would charge efficient heat pumps, thermal storage heaters and plug-in electric cars, for instance.

Details in the bill ask state agencies to come up with an incentive program by January to entice Mainers to switch from oil heat to new-generation electric heat. That program would include an added charge on monthly electricity bills to defer the cost.

Oil dealers oppose that approach. They packed the hearing room Thursday and spilled into the hallway.

Let the market decide how people should heat their homes, not the state, said Robert Moore, president of Dead River Co. The task force's plan would put dealers out of business and saddle Mainers with more costly electricity, he said.

Since Maine already has an elaborate system to store and deliver liquid fuels, it makes more sense to weatherize buildings and encourage development of biofuels, Moore said.

No one wants to put people out of business, said Sen. Barry Hobbins, D-Saco, who co-chairs the Utilities and Energy Committee. The oil spike of 2008 highlighted the state's over-dependence on oil and gasoline, he said, and the state needs a long-term plan to develop alternatives.

But even an executive who has spent most of his adult life selling electricity said the ocean wind alternatives are too expensive.

Carroll Lee, former president of Bangor Hydro-Electric Co., estimated that offshore wind power would cost 25 cents per kilowatt hour, well above what residential customers now pay. It would make more sense to generate power in Maine from natural gas, he said, and install efficient heat pumps.

That led Rep. Jon Hinck, D-Portland, the committee's House chair, to note that the nuclear power industry was subsidized in its infancy. He asked Lee whether he thinks offshore wind serves as an analogy.

Lee disagreed, but general debate over the cost of offshore wind power and how to pay for it got a bit more real when Chuck Digate stepped up to testify. Digate is managing general partner of Neptune Wind LLC, a Massachusetts company that is interested in developing an ocean wind farm in Maine.

It will cost an estimated $1.5 billion to build a 250-megawatt ocean wind project, he said. Its power would cost 22 cents a kilowatt hour, and with no state support to help financing debt, he said, it would add $8 a month to the average household's electricity bill.

The financial benefit for Maine: $585 million spent during construction and $112 million a year over 25 years of operation.

Digate posed a question that may be the core of what lawmakers will have to decide over the next few weeks: How do you encourage a half-dozen developers to come to Maine and each spend $500 million on construction and $100 million or so a year?

 

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

tturkel@pressherald.com

 

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