Articles By Peter Mills
Maine's Caught in an Electricity Vise
Portland Press Herald OpEd by Senator Peter Mills
May 20, 2008
For every penny that out-of-state pressures raise the price of a kilowatt-hour, we lose $120 million.
The millions of people who live south of Maine in the region from Boston to New York create huge demands for electricity.
But because supplies are so limited, they have the highest power costs in America.
To the north and east of Maine, by contrast, power is tantalyzingly cheap, a blend of hydro, nuclear and wind sources from Quebec and New Brunswick. In addition, Maine has its own supply surplus and the potential to generate even more power from wind, bio-mass, and hydro – if only we could move the electrons south to those who need them.
And that's the problem. Existing power lines running from central Maine to the south can't carry any greater peak load, either from within Maine or from our Canadian neighbors.
As one economist put it, Maine is sandwiched between 6-cent power to our north and a 10-cent market to our south. That price gap is creating pressure to build a new $1 billion transmission line to move electricity from northern generators to southern customers.
Unfortunately for Maine, our own power costs are tied to the southern New England market. We are a regulated partner in ISO New England, whose job is to make sure that all six New England states get reliable power.
Despite our surplus, Mainers pay almost as much for electricity as do consumers in Connecticut.
If a new power line is built, Maine's power prices may simply float to match those of Boston. Even though the cost of the line will be spread among all New England users, Maine may get little credit for flooding the Northeast with fresh sources of green power.
Maine uses more than 12 billion kilowatt hours of electricity per year. Adding a mere penny per KWH will take $120 million out of our pockets.
The impact of that penny is like raising property or income taxes by 10 percent – except that the lost money is not spent here. It goes largely to foreign energy suppliers.
Rising power prices, like taxes, tear the heart out of our economy. Businesses that depend on electricity are often forced to move their jobs from Maine to other places where power costs half as much.
The most important work done by the Legislature this year was to pass three energy bills out of the Utilities Committee:
1. The first bill sets up a process for Maine to negotiate long-range contracts with producers to ensure that Maine customers will pay rates favorable to the prevailing market.
A series of such contracts is essential to create a rate preference for Maine over the rest of New England when northern generators come on line to take advantage of new transmission opportunities.
2. A second bill authorizes the Public Utilities Commission to sever Maine's ties to ISO New England if the PUC is not able to make better deals than we have at present. If we divorce from our New England partners, it is an open question whether Maine might go it alone or tie in with Canada.
3. The third bill expedites wind power development by pre-designating sites where such projects will be welcome. The bill may remove some of the uncertainties and delays that have plagued Maine's cumbersome approval process.
None of this will produce cheap power for Maine. Our costs will probably remain high for the remainder of our lives.
But these new laws may place us on a glide path toward moderating prices. To save even a penny per KWH is like giving every Maine citizen a $100 bill on every birthday.
Let's hope that we have done enough. CMP is no longer your grandfather's electric company. Eight years ago CMP was bought by Energy East, a company with 3 million customers in the northeastern states.
Energy East is now being bought by a Spanish company, Iberdrola, one of world's largest energy conglomerates. Iberdrola, in turn, could be bought by Electricite de France, which is bigger still.
Maine is running with some big dogs now, and so we must be wary.