Faced with likely rejection by the Maine Public Utilities Commission, Statoil North America has revised its terms for a pilot wind energy project off the Maine coast.

The new proposal received a guarded reception from Patrick Woodcock, the new director of the Maine energy office, who said Friday he continues his review to “see if this is a good deal for Maine’s economy and ratepayers.”

Statoil’s revised proposal reduces the cost to ratepayers of energy generated by the test project and attempts to ease doubts about its longterm economic benefit to Maine.

The changes address concerns raised by Woodcock’s predecessor, Ken Fletcher and, later, by PUC Chairman Thomas Welch during an Oct. 4 public hearing on Statoil’s original term sheet.

As a pilot project for more extensive development of offshore wind energy, Statoil proposes to moor four floating turbines in federal waters off Boothbay Harbor to generate 12 megawatts of energy.

On May 2, 2011, Statoil submitted a proposal for the Hywind Maine project to the PUC, which had issued a request for proposals after the Legislature passed the 2010 Ocean Energy Act.

Statoil must gain PUC approval for a 20-year contract to sell electricity from its offshore wind experiment to one or more of Maine’s investor-owned utilities — Bangor Hydro, Central Maine Power or Maine Public Service Co.

In October, Welch indicated he would join Commissioner Mark Vannoy in voting against ordering utilities to buy electricity from Statoil unless the firm revised its offer. The PUC’s third commissioner, David Littell, supports the project.

The revised proposal, submitted last Monday, cuts the energy cost from $290 per megawatt-hour to $270 per megawatt-hour and adds a “good faith” commitment to involve Maine contractors in any commercial wind farm Statoil develops along the Atlantic Coast from Maine to Maryland before 2025.

Even with the price reduction, energy generated by the four floating turbines would cost more than market prices. Barring clear evidence that Hywind would benefit Maine’s economy in other ways, that concerns Woodcock, who plans to submit formal comments to the PUC.

Woodcock voiced concern Friday that Statoil’s proposed price reduction is contingent upon receiving $47 million in U.S. Department of Energy grants and investment tax credits for capital costs.

“I would have hoped that, with those assumptions, the price would have been reduced more for Maine ratepayers,” said Woodcock, noting that the revised proposal would reduce costs to ratepayers from roughly 30 to 27 cents per kilowatt-hour. “We would have hoped that receiving a 30 percent tax credit and a grant would have reduced the energy price more than three cents,” he said.

John Carroll, a spokesman for Central Maine Power, said the utility will file comments to the PUC before Tuesday’s deadline.

“The general sense is that it’s still a lot of money,” he said. “Our concern will be the effect on utility ratepayers and on the price they pay for their electricity.”

Welch in October 2012 asked Statoil for assurances the pilot project would lead to a “much larger offshore wind development” and sought “a sufficient probability of bringing substantial benefits to Maine.”

Statoil presented studies by economists Charles Colgan and Todd Gabe to buttress its claim that Hywind Maine would yield direct and indirect benefits for Maine companies and workers, but Welch and Vannoy remained unconvinced.

In its revised term sheet, Statoil states that it will make “commercially reasonable efforts” to direct at least 40 percent of its capital expenditures for the pilot project to Maine companies; employ at least 150 people during its construction phase; place the operations center in Maine; and contract with Maine consultants.

To demonstrate a long-term commitment to Maine, Statoil proposes to “use good faith, diligent efforts” to award contracts of 10 percent of capital expenditures, up to $100 million, “to qualified Mainebased contractors and suppliers,” if they meet Statoil’s standards.

In his cover letter for the revised term sheet, Lars Johannes Nordli, Statoil’s vice president of wind business development, indicates that the firm won’t negotiate further.

“Statoil is not in a position to make further concessions,” he states. “Statoil continues to believe that the Hywind Maine Project creates an extraordinary opportunity to begin the development of offshore wind in the Gulf of Maine, an industry that holds tremendous potential.”

The PUC will accept online comments about the revised term sheet through noon Tuesday.

FOR MORE, see the Bangor Daily News at bangordailynews.com.

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