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Debunking an editorial
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To those present when the CMP lobbyist testified in committee hearings against LD 1450 on April 14th, the editorial seemed as if he himself had written it. Issues of fact-checking and journalistic independence aside, the editorial seems to have been written to deliberately mislead the reader.

NOTE: this was sent to the Maine Sunday Telegram and printed in the Business section on
May 10, 2009 on the Editorial page (D4).

Maine Sunday Telegram May 3, 2009 editorial

"GREEN POWER BILL TAKES WRONG ROAD TOWARD GOOD GOAL”

Small power generators are not better than big ones. They're just smaller. It makes sense to diversify Maine's energy supply, and it's a good idea to lean more heavily on renewable power sources. Inasmuch as a bill now before the Legislature attempts to do that, it's based on worthwhile goals. But the way it plans to achieve them should make it a nonstarter.

The bill would require utilities to pay premiums through long-term contracts to small producers who use solar, wind, hydro or other green energy sources. Its backers say that would encourage more people to invest in alternative energy generation and create jobs in the state. But it would also raise our already high electric rates, burdening the people who are least able to pay and heightening a competitive disadvantage that Maine has when it comes to attracting business.

What the bill's backers may have forgotten is that Maine has already learned an expensive lesson in the 1980s, when utility companies were forced to enter long-term power contracts with non-utility generators, like biomass plants and dams. What looked to be competitive rates when the contracts were signed quickly ended up being a tremendous burden on ratepayers and a brake on economic development.

There are more efficient ways to achieve the goals of this bill. Small generators aren't any cleaner than large ones, they're just smaller. The state can continue to set goals for renewable power portfolios and let the market determine the best way to reach them. Federal tax credits and other incentives will continue to encourage alternative energy investment, which remains a worthwhile goal for the state.

But mandatory long-term contracts with ratepayers footing the bill is not the way to get there."

Below, Peter Drum (LD1450 author) quotes some of the inaccuracies of the Editorial, then clarifies the record:

1. " What the bill's backers may have forgotten is that Maine has already learned an expensive lesson in the 1980s, when utility companies were forced to enter long-term power contracts with non-utility generators, like biomass plants and dams."
IN FACT: Many of the long term contracts that the article derides would be saving Mainers money right now, especially hydro, if we had not deregulated and forced them to be sold. Most states have experienced significant jumps in power cost after deregulation. Much of the "stranded cost" of the utility companies comes from the multi-million dollar liability CMP incurred by being involved in the nuclear project at Seabrook. Plus, there is a large difference between large central generation and small dispersed generation. For one, dispersed generation saves money because the need to install expensive transmission lines is greatly reduced. Furthermore, you don't get such large transmission losses when you use power where it is produced. So, more of the kW produced are used instead of lost in transit. That is expressly why we support distributed generation.

2. "What looked to be competitive rates when the contracts were signed quickly ended up being a tremendous burden on ratepayers and a brake on economic development."
IN FACT: Where is their proof that these contracts were a brake on economic development? Can they show that we lost more money from slightly higher rates than we gained in employment, gross domestic product, and taxes? There may have been problems with HOW Maine enacted PURPA, but the problem does not mean that long-term contracts for dispersed generation are bad. PURPA was centralized. In fact, in the 46 other countries where this very policy is being adopted, it is being undertaken because it is the most economically efficient means of transferring to renewable power. That is exactly why Germany, France, and even England now have long-term renewable payment power contracts with small suppliers. And, the cost to society of not having new high transmission lines that devastate property values is no small benefit. We care about property values in this coalition. Also, if you believe that once we recover from the recession that energy prices will go down, not back up, I applaud your optimism. Do you realize that America's natural gas capacity is dropping markedly this year alone? Even the Bush White House's Energy Information Agency found that natural gas was only going up through 2030 even with the assumption that we are going to magically find large 'unconventional sources of natural gas'. Natural gas is HALF of our electricity capacity in this state. As with oil (a quarter of our capacity) the largest exporters of NG are not our friends generally speaking.

3. "There are more efficient ways to achieve the goals of this bill."
IN FACT: Actually, a recent report by no less than Ernst and Young (one of the world’s largest professional business services organizations) found that renewable energy payments “are the most efficient means of transferring over to renewable power requiring far smaller payments than an artificial market for renewable energy credits, and with much lower transaction costs.”

4. "Small generators aren't any cleaner than large ones, they're just smaller. The state can continue to set goals for renewable power portfolios and let the market determine the best way to reach them."
IN FACT: Renewable portfolios encourage mega-scale wind. Do we want to see every natural mountain vista in Maine covered with wind? We should produce power where we use it and save what is left of our wilderness. And actually, small generators are much cleaner because they don't require new high tension transmission lines, construction of new roads to mountain-top wind facilities both of which require a great deal of tax-payer and rate-payer money and a lot of carbon inputs for fuel. And because power is used locally, less has to be produced, lowering the carbon impact of installing greater centralized capacity.

5. “Federal tax credits and other incentives will continue to encourage alternative energy investment, which remains a worthwhile goal for the state."
IN FACT: Actually, tax credits and “other incentives” are economically inefficient. First, they require that the person taking advantage of the credit is rich enough to benefit from it. Secondly, you get the entire benefit up front so there is no incentive to maintain a high quality system over its useful life. Third, we can lower the tax burden by obviating the need for it. And, unless we are to fully fund the State rebate programs, we should forget about them. Do we really want to raise taxes to fully fund an economically inefficient tax rebate program? Finally, through the renewable payments in Germany, they have created 300,000 jobs in less than a decade at a cost today of about $1.60 per month, per rate payer.(that is an investment of 0.00053 cents per job created) Germany is the leading producer of solar panels, the cost of which they have reduced by 25%. They have also quintupled their renewable capacity. Instead of having all of the profits go to large central power companies, they go to farmers, homeowners, and small businesses. We want to see the very same people profit from this legislation because we believe that when we pay Mainers for Maine produced renewable power, we will all win.