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August 22nd, 2013

2013 Maine Omnibus Energy Bill

by Andrew Price, President & COO

Watching the 2013 Maine Omnibus Energy Bill come into existence was riveting theater – and not just for energy policy wonks. After the dust had settled from the late night votes and vetoes, An Act to Reduce Energy Costs, Increase Energy Efficiency, Promote Electric System Reliability and Protect the Environment - aka the Omnibus - became law on July 2, 2013. As its name implies, the Omnibus covers a lot of ground and is difficult to summarize concisely in a short blog post. A few good summaries of the law have been written, including one from the energy law group at Preti Flaherty that can be accessed here.  

A few key issues covered in the Omnibus include:

  • Increasing Natural Gas Pipeline Capacity: Authorizing the Maine Public Utilities Commission to contract for and resell new natural gas pipeline capacity in New England. This is a very unique and innovative initiative to seed the market for new natural gas pipeline capacity. New natural gas pipelines would greatly benefit electricity and natural gas consumers in New England. Pipelines are not currently being built at optimal rates due to a shortage of entities willing to enter into the type of long-term contracts required to obtain financing. The Omnibus seeks to address this mismatch by authorizing the State to contract up to 200 MMcf of natural gas per day at an annual cost of no more than $75 million. The bill speculates that this could reduce the cost of electricity and natural gas in Maine by upwards of $200 million per year.
  • Offshore Wind: The Omnibus, along with LD 1472, re-opens the door for the PUC to consider the University of Maine led deep-water floating offshore wind project. A second offshore wind project, backed by the Norwegian energy giant Statoil, had previously received term sheet approvals from the Maine PUC as discussed here. Statoil has put its Hywind project on indefinite hold as a result of the new legislation.
  • Efficiency Maine Trust (EMT): Providing at least $25 million in each of the next two years for the Efficiency Maine Trust. Directing the EMT to pursue ALL cost effective efficiency options with an expanded focus that includes heating fuels, as well as electricity savings, the primary focus of prior years. Expands EMT’s involvement in natural gas conservation programs to all gas distribution utilities in Maine.  
  • MPUC Charter: For 100 years the charter of the MPUC has been to provide safe, reliable, and adequate service. The Omnibus adds energy cost minimization on equal footing with these other priorities.
  • Regional Greenhouse Gas Initiative (RGGI): Allows for the reduction in the number of available carbon permits under the regional cap and trade program known as RGGI. The carbon cap was set well above current emissions levels, resulting in a very low price for carbon under the program. By reducing the number of permits, carbon prices should increase. This will increase costs on electric consumers but also return proportionally more money to Maine from its portion of the sale of carbon allowances.
  • Fuel Switching & Non-Transmission Alternatives: Directs the relevant state agencies to develop incentives for consumers to reduce greenhouse gas emissions by switching to lower carbon fuels and to give increased consideration to “non-transmission” alternatives. Non-transmission alternatives are alternatives to new power lines and could include distributed generation, efficiency and energy storage.

Special thanks to Tobias Grindal for assistance with researching this blog.  

(Tags: Preti Flaherty, Omnibus, Maine, Efficiency Maine Trust, Maine Public Utilities Commission, Regional Greenhouse Gas Initiative, University of Maine, Statoil)

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