Image courtesy of shoothead @ flickr

In the past two weeks, Maine’s energy efficiency programs received two significant votes of confidence – votes that will save customers money, will reduce energy use, and help Maine businesses.

The Maine Public Utilities Commission (PUC) recently recommended approval of a $10 million electricity energy efficiency long term contract to fund a program of the Efficiency Maine Trust’s serving industries such as Maine’s paper mills and other large electric energy consumers. Last week, the PUC unanimously approved the Trust’s Triennial Plan and supported funding for the Trust’s electric efficiency programs that could more than double it from current levels.

Both of these approvals are important steps in the right direction: they reflect the PUC’s recognition of the value of Maine’s energy efficiency programs and the need for more funding to maximize their benefit to ratepayers. Unfortunately, the ultimate decision of how much funding the programs approved by these decisions will receive has been left to the Legislature. This politicization of energy policy results from a combination of flaws in Maine law and our PUC’s willingness to defer to politicians in Augusta.

The long term contract could provide up to $10 million in funding to help some of Maine’s largest electricity consumers to purchase technology and equipment that would reduce their energy consumption, such as more efficient motors and lighting. Historically, this successful program has saved more than three dollars for every dollar invested. In 2012 alone, $4.5 million in grants leveraged over $8.6 million of private investment in these largely industrial facilities, creating jobs associated with the individual efficiency projects but also helping to retain employment at the facilities where the projects were installed through the bottom line benefit of savings on energy costs. See the Efficiency Maine Trust’s 2012 Annual Report here.

The approval of the Trust’s three-year efficiency program plan will allow the Trust to maintain its most effective programs and possibly enhance its biggest programs related to electric efficiency, by increasing funding in this area from current levels of approximately $39 million over the next three years to over $96 million. These programs will decrease the amount of energy used in Maine, saving Maine ratepayers millions of dollars by suppressing the price of electricity, limiting the amount of energy that needs to be purchased and helping avoid the construction of new transmission projects. Equally important, the Trust will be less reliant upon the uncertain and limited federal monies that have funded a large chunk its programs over the past three years. The increased certainty of available funds means efficiency contractors and grant recipients will be more likely to invest in their businesses by hiring new employees and stimulating Maine’s economy.

While we generally applaud these decisions, any successful outcome from them is entirely dependent upon funding approvals from the Legislature. This reliance on our political process to assess the value of programs for Maine ratepayers must change. Our PUC must be more bold and must lead on matters of energy policy. Maine law designates the PUC as the sole authority on energy efficiency long term contracts of the sort requested by the Trust. Consequently, the PUC could and should have not only recommended, but approved, the long term contract without the need for subsequent legislative approval. Similarly, though the PUC is legally required to recommend to the Legislature how much funding is needed to maximize energy efficiency in the state, certain Commissioners appear hesitant exert this authority, as reflected in the Commission’s recent Triennial Plan deliberations. As the state’s energy experts, the PUC must use the full extent of its administrative powers to guide on energy policy, not leave such questions to partisan politics.

Indeed, politics should be removed from energy efficiency funding altogether. To achieve this, the Maine law implemented last year shifting final say on certain energy efficiency funding from the PUC to the Legislature must be amended to direct that authority back to the PUC where it belongs. A bill proposing just such a change will be before the Legislature this session. We encourage our legislators to recognize their limitations in this highly complex regulatory area and to restore this efficiency funding decision-making authority to our energy experts at the PUC. That kind of leadership will help steer Maine on a path to better energy policy.

Photo courtesy of Lhoon @ flickr.com

The concept of a private East-West highway that would cut across Maine is a proposal that CLF has had significant reservations about, for various reasons, since its inception. Recent events and discussion have only heightened those reservations.

The East-West Highway has been an on-again, off-again proposal since at least 1937. The concept last came under serious scrutiny in 1998, resulting in a report that the costs of building an East West highway outweighed the benefits, and that report’s focus was largely on the economic costs and benefits and not the environmental or community costs. The most recent proposal has generated a storm of criticism. A recent panel discussion of transportation experts that included Peter Mills, former State Senator and the current head of the Maine Turnpike Authority and former rail executive Matt Jacobson laid out the various economic and environmental problems with the proposal. See a video of that presentation here.

During the last legislative session, we at CLF believed that the decision by the Legislature to fund a study of a proposed private East West Highway to the tune of $300,000 was a waste of scarce state resources, both in the $300,000 that was allocated for the study and in the amount of time that the Department of Transportation staff would have to spend on designing the scope of that study. The proposal has proved so unpopular that the sponsor of the legislation, State Senator Doug Thomas, recently asked the Governor to suspend the study until more trust could be established with local people as noted in these articles here and here. Rather than slow down the study, as the Governor has proposed or propose new legislation to prevent a private party from exercising the power of eminent domain as Senator Thomas has done (a thinly veiled effort by Senator Thomas to change the subject to one he is more comfortable with although just as much of a red herring), Maine would be better off in evaluating how to increase the amount of traffic on its rail system.

As others have noted, Maine has an East West Highway: our railroads.  Rather than throw good money and time after bad, we should be spending time and money on how we can create better incentives and improve efficiencies in order to increase the flow of goods that leave and enter Maine via rail. The recent news that the Maine Northern Railway has tripled its volume of traffic is indicative of the economic value that rail can bring to Maine, especially for its natural resource industries.

In addition, the environmental benefits of not only using an existing system and avoiding all of the impacts that constructing a major new highway would have but also the reduction of greenhouse gas emissions by transferring the shipping of freight from highway to rail are enormous. So perhaps the best result of this timeout would be for the money originally allocated to yet another study of an East-West highway to be reallocated to a study of maximizing the use and benefits of Maine’s existing infrastructure that can move goods across Maine.

With the passage of the state budget this week, the Maine legislature put politics ahead of the people in rejecting the Efficiency Maine Trust’s effort to maintain its funding for electrical efficiency programs. The Trust was proposing to increase a charge to electricity ratepayers in order to to sustain its funding levels for electric efficiency over the next three years and replace drained federal stimulus funds.

This was the perfect opportunity for our elected officials to help fulfill their campaign promises to produce growth and economic development in the state. How surprising then, that when presented with a chance to invest in a program that provides at least three dollars of return for every dollar invested, create thousands of jobs in Maine and stimulate commerce, the legislature’s Republican majority and Governor LePage openly rejected it.

Unfortunately, it would appear that the vote was at least in part a product of bias among  conservatives against a program that, because it happens to be good for the environment and was widely supported by Democrats, is perceived to have liberal leanings. In reality, the Trust and its programs are just as much about energy cost savings and economic development, goals to which both parties should aspire. The Trust is the public entity that helps to fund projects that enhance the energy efficiency of Maine’s homes, businesses and industries.

The work of the Trust is important for several reasons.:

• The financing provided by the Trust inspires the replacement of outdated technologies, from machinery to light bulbs, in favor of more energy efficient alternatives that reduce overall energy consumption.
• Less energy consumption means lower electrical bills for the recipient, lower energy prices and less frequent costly upgrades to our electrical transmission infrastructure to accommodate increasing demand, savings that are shared by all Mainers.
• The funding provided by the Trust is only a portion of the overall efficiency investment. The Trust’s “seed money” results in significant private investment, borrowing from banks and other forms of financing. In short, the added push of the Trust’s funding for a project results in a commercial ripple effect that benefits many sectors of our economy, providing jobs and demand for products.
• Greater energy efficiency means less electricity needs to be produced, which translates into reduced consumption of fossil fuels and reduced pollution.

But increasing electricity charges can’t be good for Mainers you might suggest. Therein lies the rub. First, the proposed increase was small, approximately one dollar a month for the average household—the cost of a cup of coffee. Second, the economy is not going to rebound while we stand by idly wishing for a miracle, it takes investment to get a return and the Trust is proven to produce returns. In 2010, the EMT saw its $17 million investment in efficiency projects render a lifetime energy savings valued at $95.7 million and serve as the impetus for an additional $76.9 million in private investment in businesses and homes across Maine. Efficiency spending not only saves money– it is an economic driver. Indeed, the Trust funding that the Legislature just denied was predicted to produce an $840 million benefit to Maine energy consumers.

So why would our governor and the legislature effectively defund a program that could generate such significant financial benefits to the state? The answer appears to be party politics that defy logic and economic policy and theory. Perhaps worst of all, it also happens to deviate from state law which requires that Maine, through the Trust, fund and pursue maximum achievable cost-effective levels of energy efficiency.