RenewNewEngland.com

Inside Policy Series: A Panel Discussion with Kenneth Fletcher on Maine’s Energy Challenges

Join us on Thursday, February 16, for Pierce Atwood's next Inside Policy Series which will feature a panel discussion with Kenneth Fletcher, Director of the Governor’s Office of Energy Independence & Security.  Mr. Fletcher will be joined by Pierce Atwood attorneys Jared des Rosiers and William Hewitt for a lively discussion about Maine's energy challenges. A question and answer period will follow. 

The event will be held from 12:00 p.m. to 1:15 p.m. at Pierce Atwood’s Portland office.  Space is limited and seats will be filled on a first come, first serve basis. Click here for more details and to RSVP. 

You can also join the discussion on Twitter. Follow us at @PierceAtwoodLLP and @RenewNewEngland as we live-tweet the event. Use hashtag #MEenergy.

Maine PUC Chair Speaks on Renewable Energy

On December 15, Maine Public Utilities Commission Chairman Tom Welch addressed attendees of the Maine Renewable Energy Association’s 17th Annual Gathering.  In his thoughtful and thought provoking presentation (pdf), Mr. Welch questioned the role of renewable energy in addressing climate change in the near- and medium-term, as well as the difficulty in achieving any politically palatable policy changes that could alter trends over the next century or two.  What might this mean for the renewable energy industry, he asked?  He suggested that in explaining the need for renewable energy to the public and to policy-makers, proponents of these sources of energy might need to change their focus.  Instead of highlighting the reduction in carbon emissions achievable through a shift to renewable energy, proponents may find it more helpful, and even necessary, to highlight the other benefits of renewable energy projects.  Mr. Welch summarized what he sees as the other key benefits in his presentation.  His insightful remarks are well worth the read.

 

Maine Legislature to Consider Hydropower Legislation During 2012 Session

The details of the 2012 legislative session are now coming into focus as the Legislature prepares for the start of the new session on January 4, 2012.  Among the proposals that will confront the Legislature are two hydropower-related bills that will be considered by the Energy, Utilities and Technology Committee.

The first bill, LD 1686, An Act To Amend the Process for Issuing State Water Quality Certificates to Hydropower Projects That Withdraw Water from Great Ponds, is sponsored by Representative Ralph Sarty (R – Denmark).  This bill would require the Department of Environmental Protection to consult with the Department of Inland Fisheries and Wildlife and the Department of Conservation before issuing a water quality certificate for hydropower projects that withdraw water from impoundments managed as great ponds.  Significantly, in order for the DEP to issue a water quality certificate, DIFW and DOC would have to agree that the hydropower project does not violate water quality standards as they relate to fishing, recreation, and habitat for aquatic life. 

Attorneys from Pierce Atwood have met with Representative Sarty regarding this proposal as it was being developed.  Representative Sarty, who formerly worked for the Maine Warden Service, is very strong in his support for this bill and will certainly be a strong advocate for his proposal.

The second bill, An Act To Improve Maine’s Capacity To Produce Low-cost Renewable Energy, is sponsored by Representative Johnson (R – Greenville).  This proposal, which has not yet been printed, has been summarized by the Legislative Information Office as follows:  “This bill would prohibit the issuance of a permit to remove a dam from hydroelectric generating capacity unless there is a demonstrated replacement for the energy.” 

As the Governor’s and the Legislature’s agendas come together for 2012, it is clear that energy will be one of the most discussed issues this legislative session.  Obviously, hydropower will be an integral part of this discussion.  If you have any questions or would like further information, or are interested in assisting us as we work to shape these bills, please contact Matt Manahan, John Delahanty, or Avery Day.

Maine Governor’s Energy Bill Would Cap RPS, Restrict Long Term Contracts for Renewables

The price of energy was a top issue in Maine’s 2010 gubernatorial election, and earlier this week the Maine legislature’s Committee on Energy, Utilities and Technology took up Governor LePage’s energy bill, LD 1570 “An Act to Reduce Energy Prices for Maine Consumers.” The bill would cap the state’s renewable portfolio standard (RPS) at 4% of sales in 2010: as currently enacted, the RPS is set to climb to 10% from new renewable resources by 2017.  The bill also would cap the alternative compliance mechanism to 110% of the cost of RECs from the previous year. 

 LD 1570 also revises 35-A M.R.S. § 3210-C, the Maine Public Utilities Commission’s (MPUC) long term contracting authority, preventing the MPUC from approving any long term contract whose price is greater than 90% of the average market price for capacity resources, and requiring the MPUC to obtain approval of the legislature before entering into any long term contracts. The existing law does not include a hard cap on price.

The bill appears likely to move to the full legislature for a vote, where its future is uncertain: support for the bill from the Maine business community was somewhat tepid, and Maine’s renewable energy companies have been vocal in their opposition. 

If anything, the bill serves to highlight the limits on a state governor’s ability to lower energy prices in a regional market for electricity. Though the costs of compliance with Maine’s RPS will likely rise as the target percentages increase, to date the costs to individual ratepayers have been minimal.  Earlier this year, the MPUC released its annual report to the Legislature on the RPS for the 2009 compliance year, which described the cost of complying with the new renewables target:

During 2009, the cost of [Class I] RECs used for compliance ranged from approximately $6.50 per MWh to $44 per MWh, with an average cost of $26.28 per MWh and a total cost of $4,587,052.  A minority of suppliers (4 out of 47) choose to satisfy the portfolio requirement through the ACM at the rate of $60.92 per MWh for a total cost of $319,233.  Thus, the total cost to ratepayers during 2009 was $4,906,285, which translates into a rate impact of .06 cents per kWh (or about 35 cents monthly increase to a typical residential bill). 

More than 85% of those Class I RECs came from facilities in Maine, the vast majority of which were biomass.  Many of these facilities are on-site at mills and pulp and paper facilities, where revenue from RECs and the use of biomass boilers (including the sale of excess energy) have helped to provide an additional income stream and some level of insulation from high energy prices.   The story with long term contracts is similar: the MPUC has approved just two long-term contracts under § 3210-C, the  most recent of which was intended to enable Verso’s Bucksport mill to convert from fossil fuels to biomass.

 

Efficiency Maine Trust Releases Draft PACE Rules

As promised, the Efficiency Maine Trust has released its first proposed rules that will govern Maine's Property Assessed Clean Energy (PACE) program (previously).  There are actually two sets of rules.  The first set (Chapter 1) lays out the process by which the Trust will select service providers and grant recipients.  Though this rule applies to all of the Trust's programs and grants, it is a necessary prerequisite for the newly created Trust to enter into the agreements with loan servicers, vendors and energy auditors the PACE program will require.  The second set (Chapter 110) is what many have been waiting for: the comprehensive regulations for the PACE program itself. 

Though much of the new rules restate the governing statute, it also provides some much-needed detail on the procedures for property owners looking to obtain PACE funding, and the responsibilities of the entities who will be serving those loans.  In what appears to be a change from previous statements by the Trust, commercial and industrial properties are explicitly eligible for loans under the new rules.  Some parts remain incomplete: for example, there's no information on how the Trust will collect data to quantify the carbon savings from PACE-funded upgrades (Maine has been exploring potential carbon market-based revenue sources for its efficiency-related programs, for which quantification is a necessary first step).

The rules are part of a process with many moving parts: Maine towns must also approve special ordinances before PACE loans can be issued for property in the town: at least one town will send such an ordinance to voters for approval this fall.  The Trust must also sit down with a stakeholder group to hash out the underwriting standards for PACE Loans.

A public hearing on the Chapter 110 is scheduled for August 31, 2010, in Room 211 of the Cross Office Building in Augusta, Maine.  Written comments must be submitted by September 10th.

Bill Implementing Maine Ocean Energy Task Force Recommendations Released

The Governor's Bill implementing the recommendations of Maine's Ocean Energy Task Force has been printed as LD 1810. Senators Hobbins and Raye and Representatives Fitts and Berry are the bill sponsors.  

The 41 page bill, drafted as emergency legislation, contains a broad range of provisions that are designed to overcome the economic, technical and regulatory obstacles to to provide economic incentives for vigorous and efficient development of marine renewable energy sources.  The provisions include authorization for the PUC to conduct a competitive solicitation for proposals for offshore wind, tidal and wave energy produced in state or federal waters and to negotiate a long-term contract with a technically competent generator if the contract terms would not have an unreasonable rate impact.  A hearing on the bill are scheduled for March 11 at 1 pm at the Utilities and Energy Committee.

Previous posts on the Ocean Energy Task Force:

Maine Ocean Energy Task Force Submits Final Report

The Straw Proposal: Offshore Wind and Tidal Power Seek Surer Footing on Maine’s Submerged Lands

FERC and Maine Sign MOU on Ocean Tidal Power

Safe Passage for Ocean Energy

Maine Ocean Energy Task Force Submits Final Report

The Maine Ocean Energy Task Force  submitted its final report (pdf) with detailed appendices (pdf), to Governor Baldacci on December 31, 2009.  (We discussed earlier drafts of this proposal in this previous post.)

OETF Co-Chairperson Beth Nagusky, Director of Innovation and Assistance at the Maine Department of Environmental Protection, has indicated that The Governor's Office will submit draft legislation to implement the OETF recommendations early in the legislative session.
Key findings of the Report include recommendations that Maine:

• Make a major commitment to development of offshore wind, tidal, and wave power;
• Commit to a goal of installation of 5 gigawatts (5,000 megawatts) of offshore wind energy generating capacity in Maine’s coastal waters and adjoining federal waters by 2030, and to a goal of timely and efficient development of tidal energy resources at optimal locations in Maine’s coastal waters, including but not limited to those in the Passamaquoddy Bay region;
• Improve the siting, permitting and governance framework for renewable ocean energy development;
• Move aggressively to support strengthening Maine's current out-dated transmission and distribution infrastructure, incorporating smart-grid technologies, and explicitly recognize in law the need for new transmission and distribution capacity to achieve the State’s wind power and energy conversion goals; and
• Support the financing and development of renewable energy goals by requiring the Maine Public Utilities to issue a Request for Proposal for renewable ocean energy generation where the rate impact is reasonable.

For more information about the Ocean Energy Task Force and offshore development opportunities in Maine, contact Pierce Atwood's Lib Butler.  

Testing the Wind

Today, in accordance with LD 1465 (pdf), “An Act To Facilitate Testing and Demonstration of Renewable Ocean Energy Technology,” Maine’s Governor Baldacci announced the final selection of three offshore wind energy demonstration areas in Maine.  (The four site finalists were announced in October 2009, as discussed in this previous post.)

One of the three sites, located near Monhegan Island, is designated as the “Maine Offshor Energy Research Center,” which will be used for research and development projects run by (or in cooperation with) the University of Maine.

The other two sites – off Boon Island near York and off Damariscove Island near Boothbay - are available for R&D projects by commercial entities.  To obtain a permit for a project in one of these sites, a company must first apply for a general permit for offshore wind energy demonstration project under 38 MRS §480-HH from the Department of Environmental Protection.

With a MDEP general permit approval in hand, the company must then apply for a submerged lands lease from the Department of Conservation.  Because these sites are designated for research and development uses rather than permanent, commercial installations, permits for the Boon Island and Damariscove Island sites will good for five years from the date they were granted or three years from the date construction starts (with certain term extensions available); in applying for the permit, applicants must provide a project removal plan that details how they will remove the project at the end of the permit period.

More details about the demonstration areas, including interactive maps of the designated areas, are available at the Department of Conservation site.

This site selection process complements the work of the Ocean Energy Task Force and its recommendations concerning legislation to make near-shore and off-shore sites available for both R&D and ultimately commercial renewable energy projects.  The draft final report of the OETF can be found here. 

Fox Islands Wind Project Is Live: Community Wind on the New England Coast

Yesterday, the Fox Islands Wind Project held its official ribbon-cutting, attended by dignitaries from around the state and our own Lib Butler, Avery Day, Tom Doyle and Nick Livesay (Pierce Atwood represented Fox Islands Wind throughout this process). After years of work, the project is expected to lower electricity rates for island residents, and keep year-round island living economically viable. 

The three turbine, 4.5 MW project is not large for Maine, compared to facilities like TransCanada's 44 turbine, 132 MW Kibby Mountain installation, currently under construction, or First Wind's 38 turbine, 57 MW Stetson Wind project.  But the project may offer a glimpse of the future of wind development in Maine and New England.

In the near term at least, it's likely to be increasingly difficult to construct large scale terrestrial wind in Maine.  Both existing and proposed projects have encountered increasingly fervent opposition, which cites concerns about building in scenic or otherwise undeveloped landscapes, and the growing, if unsubstantiated, claims of negative health effects from wind turbines near homes.  The pace of current proceedings at the Maine PUC for approval of a transmission project needed for reliability purposes does not bode well for the sizable transmission projects needed to meet state and regional wind development goals.  One solution is the state's aggressive development of offshore wind, which, though fabulously expensive, is not in anyone's backyard.

The model of the Fox Islands Wind Project offers another solution: relatively small, community-owned projects sited close to load, owned by those who will use the electricity. While the process of constructing Fox Islands' wind turbines was similar to other wind projects (though not without some island-specific twists), the process of developing community support was unique, involving a deep commitment to community education and detailed engineering, economic, environmental and visual impact studies. The Island Institute, working with the Fox Island Electric Cooperative, a member-owned cooperative utility, involved the community members throughout the process.  The cooperative initially created a wholly-owned project development company.  That company then designed the project, and found private equity investors and US government loans to finance the project.  Research suggests that local residents' sense of ownership and participation in a project's development can have a positive effect on their response to the visual and auditory impact of wind turbines.  The Fox Island experience bears this out: as a result of this process, island residents voted to approve the project by a vote of 383 to 5 in July of 2008.  The response to the project in the coming months and years will be telling, both for Vinalhaven and for the other communities around Maine that hope to replicate the success of the Fox Islands Wind Project.

Maine Forest Service Announces Funding for Biomass Heating for Public Buildings

Last Thursday, the Maine Forest Service announced its Request for Application for its Public Building Wood to Energy Program, funded by $11.5 million in funds received under the American Recovery and Reinvestment Act (ARRA).  The Forest Service expects to use approximately $10 million of that money to fund at least fifteen "shovel-ready" projects to convert public buildings to wood or dual-fuel heating. Projects must be completed within one year of receiving a grant. The program is open to all Maine public entities or parties with public buildings, including schools, hospitals, state, county, local and tribal governments.

Two classes of projects will be eligible for awards:

Standard Projects:
Eligible for grants of up to $25,000.  Example projects include smaller conversions to wood based systems such as a small pellet boiler or furnace or appropriately-sized wood pellet stove.  Generally, these systems will be less than 200,000 BTU’s and will involve a single building or other small facility.

Complex Projects:
Eligible for grants of up to $750,000.  Systems in this category will typically be larger systems in excess of 200,000 BTU’s installed in larger facilities or serving multiple building such as heating several dorms on a college campus.

Applications are due by January 5, 2010, with awards granted as soon after reciept.  More information, including the complete Request For Applications, can be found at the Maine Forest Service's ARRA site.

The Forest Service's RFA represents the first significant funds Maine has put toward biomass conversion, despite several years of effort and study by Governor Baldacci's Wood to Energy Task Force and several legislative proposals to support biomass conversion for public buildings.  Many see biomass as essential to help reduce the state's reliance on oil in general and foreign oil in particular, an issue of particular concern in Maine, where over 80% of homes rely on #2 heating oil for residential heating, more than any other state.  New Hampshire's Governor John Lynch has also expressed support for use of biomass for heating. 

The road ahead for biomass is uncertain: industrial biomass development in New England continues, with ten new biomass facilities in the ISO-NE Interconnection queue, totalling 373.65 MW of new capacity.  Together with use of biomass for heating, this has prompted concerns about the capacity of Northern New England's forests, competition with the pulp and paper industry, and the environmental impact of burning all this wood.  Nonetheless, for those facilities eligible for this RFA, these funds offer an opportunity for significant long term savings and reduced reliance on oil.