Legislation proposed by Gov. Paul LePage to scale back a law requiring that 10 percent of Maine’s electricity come from renewable sources by 2017 would save homeowners 40 cents a month, according to calculations done by The Portland Press Herald and reviewed by the Maine Public Utilities Commission.

The proposal was prepared by Kenneth Fletcher, a former Republican lawmaker who heads the governor’s energy office. The goal is to begin a process of lowering electricity rates, a pledge LePage made during last year’s gubernatorial campaign.

Fletcher projected that the change would save Maine ratepayers $42 million over the next six years.

The savings, however, average only $4.80 a year — one-half of 1 percent — on an annual residential bill of $960, according to the newspaper’s calculations.

The calculations are based on the PUC’s documentation of how much the current requirement for renewable energy cost ratepayers in its first two years, 2008 and 2009. The commission determined that the law added 10 cents a month to a home’s electricity bill in 2008, and 35 cents a month in 2009. Last year’s figures aren’t yet available.

A typical residential customer of Central Maine Power Co. pays $80 a month.

It’s difficult to calculate a typical payment for a business, partly because larger businesses often negotiate their prices for energy contracts. Overall, Maine customers pay an estimated $1.5 billion a year for electricity, according to the PUC.

Fletcher acknowledged that the savings from LePage’s bill, L.D. 1570, wouldn’t amount to much. But he said the governor believes it’s important to reverse the trend of ratepayers paying for policies that drive up the cost of electricity.

The proposed law is scheduled for a work session today by the Legislature’s Energy, Utilities and Technology Committee. Businesses that benefit from the current arrangement oppose the bill, saying the governor’s plan represents a major shift in Maine’s energy policy that would drive away investment for wind, tidal and biomass energy projects.

The controversy highlights the complexity of energy policy in Maine.

A recent survey by the Maine State Chamber of Commerce identified energy costs as a top concern of its members, behind health care premiums. But after being briefed on the bill earlier this month, the state’s largest business trade group chose not to testify either way.

“Overall, we need to do everything we can to lower electricity costs,” said Ben Gilman, a lobbyist for the chamber. “But we also have to take into account businesses that benefit from hydro, biomass and wind.”

The wind power industry estimates that the state’s current energy policy has attracted $1 billion in investment over the past four years and could bring an additional $16 billion in the next few years.

The proposal also got a cool reception from a trade group that represents paper mills and other manufacturers, the Industrial Energy Consumer Group. Among other things, the change would hurt biomass plants that qualify in Maine as renewable generators, the group said. The proposal would do nothing to address the primary reasons for high energy costs, it said, including transmission charges.

The bill’s most vocal business supporter is CMP, which consistently endorses policies that it believes will lower the overall price of power for customers. Over the years, it has opposed state policies that create incentives for renewable power, saying they end up increasing costs for ratepayers.

The bill also has won praise from wind-power opponents, who see it as a way to hobble investment in new turbines, and from lawmakers who oppose government subsidies and tax benefits for renewable power.

L.D. 1570 would keep the current requirement that 4 percent of Maine’s electricity come from renewable energy sources. It would stop the current law’s 1 percentage-point increase for each year through 2017.

The bill also would require the PUC to get the Legislature’s approval before requiring any power company to enter into a long-term contract for energy supplies. Long-term contracts are designed to make electricity prices more stable.

One basis for the bill, Fletcher told the energy committee Tuesday, is Maine’s high electricity costs relative to other states.

Fletcher cited data prepared by the Maine Development Foundation that showed Maine’s retail electricity prices above the national average and the gap widening from 1990 to 2008. The data came from the U.S. Energy Information Administration.

That conclusion, however, overlooks more recent trends.

Updated figures show that Maine’s price gap shrank from 48 percent in 1999 to 20 percent in 2010, and that Maine has the lowest overall electricity rates of any Northeast state except Pennsylvania, which gets half of its power from coal.

The biggest reason is the sharp drop in natural gas prices after 2008, when the recession sapped demand for electricity in New England. Maine gets roughly half of its electricity from natural gas, and when wholesale gas prices slide, retail electricity prices follow.

Fletcher agreed that natural gas is the benchmark for electricity prices in New England. But he noted that if its price rises again, the rates that developers can get for wind and other renewables also will go up.

It’s unclear how closely the energy committee can consider all of the complex details so late in this legislative session. Nine of the 13 members are serving for the first time.

But Fletcher, who served on the committee, said the basic question is whether lawmakers agree that it’s time to stop adding costs that state government can control.

“There’s a policy decision for this committee to make,” he said.

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

tturkel@pressherald.com

 

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