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What’s driving Maine’s surging electricity costs? Despite campaign rhetoric, not renewable energy

Central Maine Power
Robert F. Bukaty
/
AP
In this Tuesday, May 28, 2019 photo, power lines converge on a Central Maine Power substation in Pownal, Maine.

Electricity and energy prices are major issues in Maine's gubernatorial race ahead of what is expected to be a difficult winter for many families. But the political rhetoric often obscures the real reasons electricity rates are rising across New England – and appear poised to go even higher in Maine.

Former Republican Gov. Paul LePage and Democratic Gov. Janet Mills may agree on one key point when it comes to electricity prices – namely, that Maine residents are paying too much. But the two longtime political rivals have very different explanations for why Maine's electricity rates are rising as LePage blames Maine’s renewable energy policies while Mills (along with many energy policy observers and experts) say skyrocketing natural gas prices are the primary factor.

That difference was crystal-clear during a lengthy back-and-forth between the former and current governor.

“In 2010 when I took over, the state of Maine was 10th highest energy costs in the United States,” LePage said during the televised WGME/Bangor Daily News debate. “We got it up to 11. Right now (we’re) No. 4 highest. And it isn’t fossil fuel. It’s net metering and it’s solar energy. That’s what’s causing it.”

"Maine solar policies are not the reason why energy prices have increased,” Mills responded. “Our energy prices have increased because of our dependence on fossil fuels, pure and simple, like natural gas,” Mills said. “We are so dependent on natural gas because Mr. LePage, in my view, failed to diversify our energy sources during his eight years. So if you want to look at the reason why prices are so high, look at my opponent."

Maine and its New England neighbors consistently have among the highest electricity rates in the nation. And that unfortunate distinction isn't likely to change in the near future because of the key cost driver within the New England regional power grid – natural gas.

"We generate about half of our electricity in New England from natural gas,” said Bill Harwood, who heads Maine’s Office of the Public Advocate that is tasked with representing the interests of ratepayers on all things related to utilities. "And there are constraints and limits on the amount of natural gas we can get into New England. And when you constrain the supply and demand remains the same, the prices go up. And we are seeing substantial increases in the price of natural gas, which are affecting prices on the supply side."

The “spot price” for natural gas has nearly tripled in the last two years as global demand has exceeded production. Russia’s invasion of Ukraine then threw already volatile energy markets into all-out turmoil as European nations that relied on Russia for natural gas desperately sought out other sources, including U.S. gas producers. Further complicating factors locally, New England is at the tail end of pipelines that can only carry so much natural gas. As a result, New England also relies on liquified natural gas, or LNG, to supplement its supplies when demand peaks on bitterly cold winter days.

"And that worked pretty well for the last several years until war broke out in Ukraine,” Harwood said. “And now LNG is bought and desired for Europe. So we are competing with Europe for a limited supply of LNG. And as a result, prices go up.”

In Maine, most customers of Central Maine Power and Versant saw the supply portion of their rates increase 83% and 88%, respectively, earlier this year. The two utilities only deliver electricity -- they don't produce it. Instead, the supply rates that account for about half of a household electric bill are set by the Maine Public Utilities Commission based on bids from the companies that actually generate the power.

The PUC will set new so-called "standard offer" rates this month. Commission chairman Phil Bartlett said those bids are still coming in. But based on current natural gas prices – and the recent experiences of his counterparts in other states – Bartlett said he expects prices to be higher again. Both CMP and Versant are also separately seeking to increase their distribution rates.

"Timing matters a lot – these prices are very volatile, they are based on expectations of future prices, which are changing. you know, almost daily,” Bartlett said. “So it's hard to predict with any certainty what it is going to be except to say that we do expect prices to be higher than they were last year."

Under Gov. Mills, Maine has set ambitious renewable energy targets. And last year, more than 70% of the electricity generated within Maine came from renewable sources, with hydropower and wind turbines producing the most megawatts. But because Maine is part of ISO New England, the state’s electricity generation, usage and pricing are all wrapped up in the regional grid.

During a recent campaign event at Colby College, Mills accused LePage of undermining development of renewable energy when he was governor and pointed to his past support for oil exploration off the New England coastline. Meanwhile, Mills says her own policies have lead to a boom in development of rooftop solar as well as larger, grid-level solar projects.

"People are smartening up and saying we don't want to depend on gas for generation of electricity,” Mills told a few dozen students and other attendees. “We want to be a little more self-sustaining and a little more kind to our climate and not burn fossil fuels which emit carbon dioxide and other gases into the atmosphere."

LePage counters that his focus is on the cost to Maine ratepayers.

“Folks, I am agnostic to the technology that is used to create electricity,” LePage said during a News Center Maine debate. “What I am not agnostic to is pricing.”

LePage is correct, however, that one renewable energy policy in particular could drive up electric rates in Maine.

The state's practice of providing electricity bill credits to solar projects could substantially increase costs for all ratepayers in the next year or two as solar farms proliferate across Maine. Both the PUC's Bartlett and Harwood, the state's public advocate, are part of a group that will recommend changes to the "net energy billing" program later this year.

But Dan Sosland, who is president of the nonprofit Acadia Center that works on energy and climate policies, said wind and solar are often now cheaper than natural gas. So Sosland said the data simply don't support LePage’s arguments that renewable energy is behind the recent surge in electricity prices.

"We need more renewables,” Sosland said. “And if we do more renewables, many studies show including ones here in New England show that prices will go down over time, that there will be increased public health benefits, there will be ratepayer benefits. And it all makes sense because we import fossil fuels and we have wind and solar here. And we have efficiency here.”

In fact, Sosland added, efficiency is the cheapest way to reduce energy and electricity bills. And he said there is still "enormous potential" in Maine for reducing electric bills through efficiency.