A newly constituted Maine Public Utilities Commission voted 2-1 recently to reopen the bidding process on a pair of long-term energy contracts previously approved by the commission. Even before that vote, Governor Paul LePage had come under fire from some quarters for advocating the reconsideration.
The two contracts in question involve Emera Maine and Central Maine Power Co. and a pair of wind turbine projects yet to be constructed, one of them here in Hancock County. The initial approval was voted by former PUC Chairman Tom Welch, who already has left the PUC, and Commissioner David Littell, whose term ends this month. New Chairman Mark Vannoy voted against the contracts. He now has been joined on the commission by the governor’s former legal counsel, Carlisle McLean, and the two of them voted to revisit the contracts, with Littell in opposition.
Critics of the decision – many of them directly involved in the wind industry – claim that reopening the bidding will create “regulatory uncertainty” in the global market and put the flow of investment dollars to the state at risk. We believe any such risk would be limited to further investment in land-based wind power development in Maine. And our view – one shared by many others in Maine – is that such a slowdown would be a welcome occurrence.
In February, the PUC approved a 25-year contract under which the 23-turbine Weaver Wind project, to be located in Eastbrook and Osborn, would sell power to Emera Maine and CMP for 5.3 cents per kilowatt hour. Under a second contract, Highland Wind in Somerset County would sell its power for 4.7 cents a kilowatt hour for 20 years.
Those prices are below current electricity rates for many Maine consumers. The latest standard offer rate for residential and small commercial customers was established at 6.5 cents per kilowatt hour commencing March 1. PUC Commissioner Vannoy has expressed doubt – a doubt we share – that the promised benefits to consumers would actually materialize. The notion that, in today’s world, energy markets will be stable for one year, let alone two decades or more, is a fantasy. And the idea that Weaver Wind or Highland Wind can sell electricity at rates significantly below the likely cost of its generation for 20 years is laughable – unless those wind turbine projects are heavily subsidized.
According to a Bangor Daily News report, Vannoy and McLean cited recent sharp declines in natural gas and oil prices as sufficient basis for taking a second look at the contracts. They noted that the kWh rates that would be locked in under the contracts were based on higher projections for oil and gas prices made in a study by London Economics International. “If we can be so dramatically off on the near-term, how can we say that the current terms offer a severe discount on prevailing prices?” asked Vannoy.
In his December letter to the PUC – a letter since made confidential – the governor reportedly proposed that the commission expand a new request for proposals to include other clean energy sources, hydropower and nuclear among them, and that it determine whether any potential long-term contracts would benefit Maine ratepayers and the broader economy. Those are legitimate concerns that should be components of any and every PUC review of long-term power agreements.
Whether that will happen remains to be seen.
Since former Governor John Baldacci successfully pushed the Maine Wind Energy Act through the Legislature in 2008, wind developers have enjoyed a special fast track status. Until now, the wind industry has garnered sufficient legislative and government administrative support to repel all attempts to restore the power of citizens to affect where the giant wind turbines are located.
Any action, including the reopening of the Weaver Wind and Highland Wind contracts, that slows or derails the development of these intrusive, intermittent and unreliable turbine farms on the mountains of Maine, is a move in the right direction.