Maine experienced years of controversy about long-term energy contracts at high prices before the state's electricity system was revamped and a "competitive" market for the sale of electricity was created in the late 1990s.
Apparently, however, the Public Utilities Commission has forgotten the lessons learned from that experience. Maine has embarked on the approval of long-term contracts for certain favored sources, such as renewable energy and offshore wind energy, relying on vague, unsupported and unenforceable public policy purposes.
As a result, residential ratepayers pay relatively short-term prices based on wholesale market contracts for Standard Offer Service plus surcharges of these long-term contracts that distribution utilities, such as Central Maine Power Co., pass along to ratepayers.
Last week, the Public Utilities Commission deliberated a "term sheet" from Statoil Hywind Maine Project that states that the terms were negotiated between the commission and the distribution utilities (CMP, Bangor Hydro and Maine Public Service).
The PUC approved this term sheet for a 20-year contract that will begin upon the commercial operation of one to four wind turbines located off the Maine coast, probably not until 2016. The commission directed the Maine utilities to buy the energy and capacity from Statoil's wind turbines in an amount up to 12 megawatts annually, a negligible amount needed to serve Maine homes and businesses.
The PUC has not yet issued its formal written order on this contract.
The price for the energy delivered by this project is far in excess of the market price for electricity being paid by Maine consumers now and for the foreseeable future.
The contract price in the term sheet starts out at 27 cents per kilowatt hour, but this price will change annually. In contrast, the current comparable price in the wholesale market for energy is about 5 cents per kWh.
Continue reading here: http://www.kjonline.com/opinion/columnists/puc-approval-of-offshore...
Barbara R. Alexander of Winthrop was the director of the Maine PUC's Consumer Assistance Division from 1986-1996. Since 1996, she has been a consultant for state and national consumer advocates for a wide range of public policy issues associated with utility regulation.
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