LePage blames renewables, Mills blames fossil fuels — here’s why energy prices are really so high
In this week’s Pulse: energy prices, uncertainty of Ukraine aid, Golden woos biz groups, and a campaign cash update. Hint: there's still a lot.
Electricity prices are sky high in Maine, and that has made for fertile campaign material this election season.
Republicans, particularly former Gov. Paul LePage, have blamed Maine’s rising electricity rates on the policies of Democratic Gov. Janet Mills.
“In 2010 when I took over, the state of Maine was 10th highest energy costs in the United States,” LePage said during a debate this week. “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.”
Mills fired back with her own aspersions on her predecessor and would-be successor’s own record.
“Our energy prices have increased because of our dependence on fossil fuels, pure and simple, like natural gas,” Mills said during the debate co-hosted by WGME/CBS-13 and the Bangor Daily News. “We are so dependent on natural gas because Mr. LePage, in my view, failed to diversify our energy sources during his eight years in office. So if you want to look at the reason why prices are so high, look at my opponent.”
So who is right?
Well, LePage is definitely exaggerating or conflating the role that renewables play in recent price spikes. He may be correct down the road if current policies enacted during the Mills administration aren’t changed, however. We’ll get into that later.
But the data is clear that fossil fuel prices, not renewable energy subsidies, are largely to blame for the recent surge in electricity prices in Maine.
“The supply side, to oversimplify a complicated market, is driven by the high price of natural gas,” said Bill Harwood, who leads Maine’s Office of Public Advocate, which represents ratepayer interests on utility issues. “We generate about half of our electricity in New England from natural gas and there are constraints and limits on the amount of natural gas we can get into New England. And when you have constraints on supply and demand remains the same, prices go up.”
The “spot price” for natural gas at a key national hub nearly tripled between Aug. 2020 and Aug. 2022.
New England generated 53% of its electricity from natural gas last year, compared with 38% nationally. That means New Englanders are paying 36% more for the juice that powers our lives than they were in Sept. 2020, compared with a 22% jump nationwide, according to federal data.
But prices are far from level across New England despite the regional power grid. And prices can rise, or fall, at dramatically different rates, even within states, depending on when and how often utilities set rates. (For an excellent explanation of why rates vary so widely within the ISO New England grid, check out this piece from New Hampshire Public Radio and WBUR.)
Here in Maine, most customers of CMP and Versant saw the supply portion of their rates increase 83% and 88%, respectively, earlier this year largely in response to the higher natural gas costs. Those rates were set by the Maine Public Utilities Commission through “standard offer” contracts with the companies that actually generate the electricity. Because of electricity deregulation in Maine, CMP and Versant are not allowed to generate power but are, instead, responsible for transmission and delivery of electricity. But the companies have increased the “distribution” rates that typically comprise half of electric bills to cover the costs of infrastructure upgrades and repairs. And both companies are seeking additional distribution rates increases but face opposition from Mills’ and Harwood’s offices.
So why have natural gas prices risen so steeply?
Like so many commodities, gas production decreased in the early months of the COVID-19 pandemic as demand slumped. While demand has recovered, supply has yet to catch up.
The war in Ukraine only increased the price volatility because Russia is one of the world’s largest exporters of natural gas. With their supplies now threatened, European nations have been buying (and stockpiling) gas from the U.S. and elsewhere, including liquified natural gas, or LNG, that New England power plants rely on when demand outstrips pipeline capacity.
“On the coldest days of the year, the ships arrive ... and they inject natural gas into the New England system instead of importing it through a pipeline from Pennsylvania,” Harwood said. “And that worked pretty well for the last several years until war broke out in Ukraine. And now ... we are competing with Europe for a limited supply of LNG. And as a result, prices go up.”
What about renewables?
Last year, more than 70% of the electricity generated within Maine came from renewable sources, led by hydropower and wind power. But Maine is part of the ISO New England grid, so the state’s electricity generation, usage and pricing are all wrapped up in the regional grid.
When it comes to renewable energy, Mills and LePage are pretty much polar opposites.
Mills created the Maine Climate Council and has set a goal of obtaining 80% of in-state electricity from renewable sources by 2030 and to reduce greenhouse gas emissions by 80% by 2050. LePage says his top priority is lowering costs, and development of renewable energy slowed significantly during his two terms because of his administration’s policies.
In recent years, the Maine Public Utilities Commission has negotiated contracts with larger wind and solar power generators that are lower than the current rates Mainers are paying because of the spike in natural gas prices.
But LePage is correct in at least one respect as he tries to link higher electric rates to renewable energy.
Solar farms are proliferating across Maine thanks to a Mills-backed law that provides financial incentives, such as electricity bill credits, to solar power projects. With hundreds more solar projects in development, there is legitimate concern that the “net energy billing” subsidy program will substantially increase electricity costs for all ratepayers in the next several years.
Harwood’s office has repeatedly expressed concerns about the issue, and he is part of a working group organized by the Governor’s Energy Office to recommend legislative changes next year.
“There is a problem and the Legislature has started to address it, and they need to address it further with net-energy billing,” Harwood said.
Windmills? No. But oil rigs? Yes ...
“I’ll go where the oil is. Period.”
That was LePage, again, during the WGME/BDN debate earlier this week after Mills pressed him on drilling for oil off the Atlantic coast.
It turns out, LePage has not changed his position since the Trump administration first proposed reopening 90% of the Atlantic and Pacific seaboards to oil exploration. Not only did LePage support Trump’s proposal, which would have allowed two offshore oil leases in the North Atlantic, he served as chairman of the Outer Continental Shelf Governors Coalition.
But that position puts him at odds with the many Maine fishermen who fiercely opposed Trump’s offshore oil drilling plans.
“Allowing the exploration of oil and gas … could devastate our fisheries, our fishermen and our communities,” Kristan Porter, a Cutler lobsterman who was at the time president of the Maine Lobstermen’s Association, said during a March 2018 press conference in Augusta. “Maine’s fishing industries are dependent on Maine’s clean water. Even minor spills could irreparably damage the Gulf of Maine.”
Those plans for the North Atlantic never came to fruition amid fierce opposition from East Coast governors and members of Congress, both Democratic and Republican. Mills opposes exploration in the Atlantic and withdrew Maine’s involvement from the pro-offshore-oil governors group soon after taking office in 2019.
But LePage’s position on offshore oil drilling in the Atlantic also seems to conflict with his most recent stated reasons for opposing offshore wind power.
The former governor has stood firmly by a vocal contingent of fishermen who oppose nascent plans to one day deploy floating wind turbines in the Gulf of Maine. Fishermen, and particularly lobstermen, fear the massive contraptions could force them off valuable fishing grounds or disrupt their industry.
Under pressure from fishermen, Mills has imposed a moratorium on development of offshore wind in state-controlled waters with the exception of a demonstration project and future pilot project involving technology developed at the University of Maine. But Mills supports offshore wind in federal waters.
The uncertainty of Ukraine aid
This week’s controversy in the Democratic party over U.S. aid to Ukraine was largely framed as an intraparty fracas between the House Progressive Caucus and mainstream Democrats. But it also highlighted how the upcoming election could shape future American intervention efforts in Russia’s unprovoked invasion of its European neighbor.
To recap, 30 progressive House Democrats, including Maine Democratic U.S. Rep. Chellie Pingree, on Monday sent a letter to the White House urging it to engage in direct ceasefire negotiations with Russia alongside its ongoing military and humanitarian assistance. The letter was ostensibly designed to express concerns about U.S. involvement in a protracted war and what the letter described as “its attendant certainties and catastrophic and unknowable risks,” including a nuclear conflict. But it was widely criticized by fellow Democrats, and Ukrainian officials, as appeasement of Russian President Vladimir Putin and his colonialist quest to wipe out Ukrainian sovereignty and identity.
The backlash was so fierce that the Progressive Caucus rescinded its letter 24 hours after sending it. Pingree, for her part, described the retraction as the right move and she quickly clarified that her signature should not be misconstrued as her wavering support for supplying Ukraine aid and arms.
“I would never presume to force the Ukrainians to negotiate with a monstrous dictator whose government’s policy is the deliberate immiseration and butchery of Ukrainians,” she said in a statement. “Vladimir Putin cannot be trusted to negotiate in good faith.”
Pingree’s re-election opponent, Republican Ed Thelander, was quick to criticize his rival, saying in a statement, “This is what happens when you stick your finger in the wind and allow politics to influence our foreign policy.”
Thelander had more to say about Pingree, but he has been less clear about whether he would vote to approve future aid packages to Ukraine. So have other Republicans, particularly in the U.S. House, where minority leader U.S. Rep. Kevin McCarthy, R-Calif., has warned that aid to Ukraine would not flow so readily if the GOP can obtain a majority in November.
McCarthy’s warning is precisely why the Progressive Caucus letter received so much criticism from Democrats. There are real questions about whether a Republican-led Congress will support future aid packages and Trump Republicans, in particular, have already opposed ones that managed to pass. Many of them have parroted talking points from influential TV personalities, who are accused of amplifying pro-Kremlin talking points.
Rep. Pramila Jayapal, who leads the Progressive Caucus, sought to clarify that the letter should not be conflated with McCarthy’s recent statements, but it already had been by the time she moved to retract it.
Golden woos biz groups
Democratic 2nd District U.S. Rep. Jared Golden continued to garner accolades from business groups this week when he was given the Advocate for American Business Award from the U.S. Chamber of Commerce.
The award itself is arguably less meaningful than the centrist Democrat’s ongoing inroads with groups that traditionally favor Republican candidates. Golden has touted them all in his race against former Republican congressman Bruce Poliquin and independent Tiffany Bond.
While not an endorsement or commitment of spending to bolster Golden’s bid for a third term, the U.S. Chamber’s award for Golden is a continuation of efforts to promote his votes in Congress. Last year, the group ran digital ads on behalf of Golden when he and centrist Democrats voted for the bipartisan infrastructure bill. The advance of the infrastructure bill coincided with the scuttling of President Joe Biden’s Build Back Better spending initiative. Golden opposed BBB. So did the U.S. Chamber.
The recognition from the Chamber then, and now, reflects a broader, if somewhat tepid, shift in the group’s relationship with Democrats and Republicans. In the not-so-distant past, the Chamber had been viewed as a virtual arm of the GOP, boosting the party in elections and honoring Republican politicians with awards like the one Golden received this week. But there has been a shift since 2016, when immigration hardliners and anti-free-trade populism fueled the rise of Trump. The Chamber has publicly expressed its willingness to engage more often with business-friendly Democrats, and in turn, some Republicans have taken a hostile view of the Chamber, so much so that the House GOP is reportedly threatening investigations of the group if it takes power in November.
Golden’s award also comes amid campaign support from anti-tax billionaire and GOP mega donor Jeff Yass, which the Pulse highlighted last week.
Campaign cash update: Still a lot
Today is the deadline for candidates, party committees, political action committees and ballot question committees to submit 11-day pre-election finance reports, but we already know that groups engaged in legislative, congressional and gubernatorial races are spending money like crazy to influence outcomes.
Races for the State House, including governor, have drawn $22.4 million in spending from groups that operate independently of the candidate campaigns. That figure is dominated by $16.6 million spent so far on the governor’s race, which continues to draw large expenditures for media messaging on TV, radio, digital and print platforms. The continued spending comes amid polling showing Mills leading LePage, sometimes by double digits.
The sustained intensity of the spending suggests a couple possible scenarios about the governor’s race: Either it’s closer than public polls suggest, or it’s not that close, but groups still think they can affect the outcome with less than two weeks remaining.
Meanwhile, the prolific spending in the battle for the state Legislature continues apace, with increased targeting of House district races. Spending on swing Senate districts has been going on for a while now, with the most expensive one, a contest between Democratic Senate President Troy Jackson and Republican Rep. Sue Bernard in Aroostook County’s Senate District 1 in Aroostook County, approaching $1 million from outside groups. You read that right — $1 million. For the roughly 39,000 residents in the Senate district. The spending is roughly one-eighth of the annual budget for Aroostook County government.
Maine's Political Pulse waswritten this week by chief political correspondent Steve Mistler and State House correspondent Kevin Miller, and produced by digital reporterEsta Pratt-Kielley. Read past editions or listen to the Political Pulsepodcast at mainepublic.org/pulse.