LEWISTON — In a new video, Gov. Paul LePage warns that energy costs in the Pine Tree State could increase enormously in coming years.
LePage also says in the video posted on the governor’s website that elected officials have pushed a renewable energy agenda that depends too heavily on federal subsidies and one that will cost Maine millions of dollars and thousands of jobs.
“Energy in the state of Maine has a long ways to go,” LePage says. “In the past several decades some of the wealthier, more politically well-connected individuals in the state have pushed an agenda that requires federal subsidies. Federal subsidies are paid for by ratepayers. So we have to find renewable energies that do not require subsidies.”
LePage also suggests Maine could become an “intermediary” and a transmission pathway for low-cost electricity from Quebec that would then be sold to other states in New England.
“We can get competitive rates by purchasing large amounts of cheap hydro power from our neighbors to the north,” LePage says.
In 2007, the Legislature passed a law requiring a 10 percent increase in the amount of renewable electricity produced here, adding 1 percent a year until 2017.
That law, known as the Renewable Portfolio Standard, also caps eligibility for renewable producers of energy — except wind power — at 100 megawatts of installed capacity per facility.
Critical of the law, LePage said the 100-megawatt cap ought to be removed.
“Right now, the only one that benefits from the 100-megawatt limitation is wind power,” LePage said. “Wind power, wind power, wind power. So why don’t we just remove the limitation on all alternatives, all options and let the free markets take over?”
Lifting that cap would make larger hydro-power plants in Quebec and New Brunswick eligible to supply Maine with power deemed renewable, which Maine would then supply to the New England grid.
The plan, according to Kenneth Fletcher, director of the governor’s Energy Office, is to make Maine a conduit to southern New England for inexpensive Canadian power. Maine would be able to tap into that lower-cost juice, helping drive rates down.
Fletcher said the high cost of electricity is often cited by business people as one of the barriers they face when thinking of expanding or relocating in Maine.
He and LePage acknowledge that Maine still enjoys the lowest-cost commercial and industrial power rates in New England.
“The point is, we are the lowest in New England, but New England is one of the highest in the country,” Fletcher said. “That’s not the only thing that drives economic development. There are other things . . . a whole group of things as to why the economy in certain states grows faster than others.”
In 2011, for example, the 10 states with the fastest-growing economies were not the 10 states with the most affordable electricity.
Only four in the top 10 for economic growth were also in the top 10 for low-cost power, including North Dakota, Oregon, West Virginia and Utah, according to data available from the Energy Information Administration and the U.S. Department of Commerce’s Bureau of Economic Analysis.
Four others in the top 10 for economic growth were also among the 10 states with the most expensive electric rates, including Connecticut, Alaska, Massachusetts and California.
Maine has the 12th most expensive electricity rates in the nation.
LePage said he would like to see that ranking go to about 40th.
“I think that would be good; that would be competitive for us,” LePage said. “This is one instance where being on top is not good.”
Following a study of the issue by the Maine Public Utilities Commission, LePage tried to advance legislation in April 2012 that would have lifted the 100-megawatt cap, but the Legislature rejected it.
That study completed by London Economics International, a Boston-based consulting firm, showed pros and cons of the state’s policy on renewables. It notes costs and benefits, but also says it is not a cost-benefit analysis.
The study has been widely cited by those on both sides of the issue, with those opposed to rolling back the cap noting it will stymie the state’s ability to build renewable-energy capacity and would kill jobs.
Among the pros is more than 11,700 construction jobs and more than $560 million of capital investment for Maine. Those estimates are based on conservative calculations that assume only half of the wind-power projects proposed for Maine would be built.
“These economic development benefits are cumulative for the $560 million of investment, but would in reality accrue over multiple years, given the likely staggered timing of this investment,” the report states.
It also notes that the Renewable Portfolio Standard is likely to increase rates, which calculates to increased costs for Maine businesses and possible job losses, Fletcher said.
“In the same analysis, at the end, after you’ve constructed 625 megawatts, the estimated permanent jobs created is about 60 jobs,” Fletcher said. The report also shows an increase in electric rates in Maine would translate to a decrease in real household income because more spent on power is less spent on other things in the economy, Fletcher said.
“Decreasing household income by $12 million would have a negative effect on gross state product and that could be 129 permanent jobs lost,” Fletcher said.
The issue is likely to resurface when Maine lawmakers return to session in 2013. In his video, LePage urges residents to contact lawmakers about the issue.
“As a Mainer, if you think you are paying too much for energy, contact your legislators,” LePage says. “Hold their feet to the fire. Make them tell you they will fight for lower energy costs.”
London Economics International study of Maine’s renewable portfolio standard
Send questions/comments to the editors.
