Maine RGGI report 2015: price impact "relatively modest", programs helpful

For 8 years, states in the Northeastern U.S. have participated in the Regional Greenhouse Gas Initiative.  RGGI, the first market-based greenhouse gas regulatory program in the United States, represents a cooperative effort by participating states to cap and reduce greenhouse gas emissions from the electric power sector, coupled with a market for auctioning and trading emission allowances.  While some groups feared that the RGGI program would increase electricity prices, a recent report by the Maine Public Utilities Commission found that the impact of RGGI on electricity prices in Maine has been relatively modest -- while finding that RGGI-funded programs contribute to economic development and reduce greenhouse gas emissions.

RGGI formed in 2007, when ten states -- Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont -- agreed to first cap, and then slowly reduce, the greenhouse gas emissions of their electrical energy sectors by 10% by 2018.  While New Jersey withdrew in 2012, the program has remained strong; in 2014, the remaining states subsequently tightened the RGGI cap for 2014 from 165 million short tons of carbon to 91 million short tons, then further declining 2.5% per year from 2015 to 2020.

While each participating state adopted its own laws implementing RGGI, in general the RGGI laws require certain generators of electricity to track their carbon emissions and acquire an “allowance” for every ton of carbon dioxide or its equivalent that they emit.  States conduct periodic auctions of allowances, and market participants are free to engage in secondary market trades.  Generators must purchase or trade for enough emissions allowances to match the number of tons of CO2-equivalent emitted.  The cost of acquiring these allowances gives generators an incentive to improve their efficiency or switch to fuels with a lower carbon intensity.

Each state also adopted its own laws governing the use of funds raised by state auctions of RGGI allowances.  In Maine, most funds go to the Efficiency Maine Trust for purposes including measures, investments and arrangements that reduce electricity consumption or reduce greenhouse gas emissions and lower energy costs at commercial or industrial facilities, and for investment in measures that lower residential heating energy demand and reduce greenhouse gas emissions.

RGGI has conducted 27 quarterly allowance auctions since September 2008, through which Maine has received a cumulative total of $ 62.22 million in RGGI auction proceeds.  Maine’s auction proceeds in 2014 totaled $11.37 million. According to the Maine Public Utilities Commission's report:

the annual cost to Maine ratepayers of the RGGI program was approximately $0.0024 per kWh. For the average Maine residential customer using 530 kWh per month, the 2014 RGGI program cost was approximately $ 1.27 per month. For a commercial customer using 25,000 kWh per month the 2014 RGGI program cost was approximately $60.00 per month. A large commercial or industrial customer using 500,000 kWh per month would have had a 2014 RGGI program cost of approximately $1,200 per month.

On the benefits side of the ledger, the Commission's report cites a finding that "all RGGI proceeds since 2008 are expected to return more than $2 billion in lifetime energy bill savings to more than 3 million households and more than 12,000 businesses across the eight states taking part in RGGI."  The Commission also cited its July 2014 report to the Legislature quantifying the increases in employment, real personal income, and gross state product expected to occur in Maine as a result of the cap tightening and other changes implemented in 2014.  That report found:

economic impacts for the New England region include a cumulative increase in Gross Regional Product of over $2 billion, a cumulative increase in employment of 38,900 job-years, and a cumulative increase in real personal income of $1.5 billion including a cumulative increase in Maine Gross State Product of $200 million, a cumulative increase in employment of more than 5,000 job-years, and a cumulative increase in real personal income of $100 million.

Based on these observations, the Maine Public Utilities Commission's 2015 report on RGGI concludes that "the impact of RGGI on electricity prices has been relatively modest, while RGGI-funded programs contribute to the gross state product, job growth, and personal income, and also reduce greenhouse gas emissions."

Maine enacts energy bill to promote natural gas, energy efficiency

The Maine Legislature has enacted an omnibus energy bill designed to save consumers over $200 million per year.   For reasons ranging from a reliance on oil for home heating to inadequate natural gas pipeline capacity into New England, Maine’s energy costs are well above the national average. In response, a bipartisan group of legislators pulled together a package of measures to cut energy costs.

The Maine State House, Augusta, Maine.

The resulting bill, LD 1559, "An Act To Reduce Energy Costs, Increase Energy Efficiency, Promote Electric System Reliability and Protect the Environment", brings together elements of over ten other bills that came before the Joint Standing Committee on Energy, Utility, and Technology this year.  Last week, the Legislature enacted the bill by wide margins in both chambers: it received a vote of 131-7 in the House, and 29-6 in the Senate.

Highlights of the bill as enacted include:

Requires the Public Utilities Commission to help cut electricity costs:

• For the first time ever, requires the Public Utilities Commission to work to minimize the cost of energy to Maine’s consumers and to set rates to achieve economic efficiency

Expands heating options:

• Extends utility pilot programs to offer efficient electric heat pumps

Improves energy efficiency:

• Gives the Public Utilities Commission and Efficiency Maine Trust a revised policy directive to reduce energy costs and improve security of the state and local economies by pursuing all cost-effective energy efficiency for homes and businesses, including conservation in both electricity and heating fuel consumption
• Directs Regional Greenhouse Gas Initiative proceeds to lower commercial and industrial energy costs, reduce residential heating energy demand in a fuel-neutral way, and provide rate relief
• Caps electric efficiency spending at no more than 4% of total retail electricity and transmission and distribution sales in Maine
• Gives the Public Utilities Commission improved tools for overseeing efficiency programs
• Uses Maine Yankee litigation settlement funds for energy efficiency investment and rate relief
• Approves the Trust’s contract with Maine utilities for energy efficiency

Lowers electricity and natural gas costs:

• Authorizes the Public Utilities Commission to execute or direct utilities to execute energy cost-reduction contracts if necessary and appropriate to reduce the “basis differential” cost of natural gas in New England and thus to reduce the cost of electricity in Maine
• Protects ratepayers from cost increases resulting from the energy cost-reduction contracts
• Creates the Energy Cost Reduction Trust Fund to hold energy cost-reduction contract revenues, to be held in trust for the purposes of reducing the energy costs of Maine consumers

Improves controls over the cost of electricity transmission:

• Establishes a least cost electric transmission policy that gives the Public Utilities Commission improved tools to evaluate whether non-transmission alternatives can   address identified needs at lower cost

Improves the Regional Greenhouse Gas Initiative:

• Aligns Maine’s carbon emissions budget with other RGGI states’ budgets
• Adopts the new RGGI reforestation offset to benefit both large and small Maine forest owners.
• Directs the Department of Environmental Protection and Public Utilities Commission to develop incentives for consumers to reduce greenhouse gas emissions by switching from oil and coal to alternative fuels such as natural gas, biomass, or other renewables

Brings competition into municipal streetlighting:

• Requires transmission and distribution utilities to give municipalities options to participate in the ownership and management of their own streetlighting systems

Expands ocean energy options:

• Gives consideration to the University of Maine’s deepwater floating offshore wind pilot project and potential ocean energy projects, in addition to Statoil’s proposal

With the bill enacted as an emergency measure, absent a procedural roadblock it will become law later this month.

August 26, 2010 - more tidal; subsidies in question

I'm continuing to follow the successes of tidal energy developer ORPC.  This article quotes ORPC President and CEO Chris Sauer as calling Eastport the “Kitty Hawk” of the tidal power industry.  (Add this to Maine's list of comparative titles, including the Saudi Arabia of wind, the Saudi Arabia of biomass and forestry and the Silicon Valley of ocean energy.)


Here's a letter to the editor of the Bangor Daily News pointing out the subsidies applied to fossil fuels versus renewables.  The author agrees with a previous editorial's claim that fossil fuel subsidies were 12 times higher than alternative energy subsidies, but adds additional figures from the Energy Information Agency.  The author claims that natural gas or petroleum-produced electricity gets a subsidy of $0.25 for every million megawatt hours produced -- yes, that's a reward of one shiny coin per million MWh produced -- while wind gets a subsidy of $23.37 per MWh.  (I suspect there is a typo here, because the author concludes that the wind subsidy is "100 times more than fossil fuels", whereas these numbers would appear to support a less credible claim of wind being subsidized "100 million times more" than gas/oil.  The author then claims that recent home weatherization and efficiency improvements have been made "without government subsidies but with free market forces."

I suspect quasi-governmental entities like the Efficiency Maine Trust and the Maine State Housing Authority might argue that subsidies, incentives, and other state government spending programs deserve significant credit for residential efficiency improvements.  Rather than argue those points here, it's worth noting that the author of the editorial raises interesting policy questions about which tools are appropriate to achieve state energy, environmental and social goals.  Due to the complex layering of both energy production businesses and federal and state governments, an exact calculation of the subsidies available for various resources can prove challenging.  This debate is a fine illustration of the challenges of an apples-to-apples comparison of various resources' costs to society.


It's great to hear that here in Augusta, three hiking trail systems are about to be interconnected:
the Augusta Greenway Trail running along the Kennebec River's east bank, the Kennebec River Rail Trail along the river's west bank, and ultimately the Viles Arboretum trails on the east side.

Maine energy efficiency grants

Right now, there are a number of energy efficiency grants that are up for grabs in Maine. In particular, three Requests for Proposals (RFPs) I'm following are:

RFP#201004675: Commercial Project Grants

• $1.4 million in total program funding this round
• Grants matching up to $50,000 of eligible investment
• eligible activities include energy efficiency improvements, boilers and steam systems including biomass fired, combined heat and power, waste heat recovery, geothermal, and renewables
• RFP issued May 6, 2010
• Proposals due 2:00 p.m., June 21, 2010

RFP#201004668: Large Greenhouse Gas Reduction Projects

• $3 million in total program funding this round
  
• Grants from $100,000 to expected maximum of $750,000
• bang for the buck in reducing greenhouse gas emissions, on the basis of short tons of CO2 equivalent avoided per year per award dollar requested
  
• RFP issued April 30, 2010
• Proposals due 2:00 p.m., June 25, 2010

RFP#201004668: Large Electrical Efficiency and Conservation Projects

• $3 million in total program funding this round
  
• Grants from $300,000 to expected maximum of $750,000
• bang for the buck in reducing kWh per year per award dollar requested
• Applicants must show that the project results in a decrease in net source Btu.
  
• RFP issued April 30, 2010
  
• Proposals due 2:00 p.m., June 25, 2010

I'm working with a number of applicants to pursue these Maine energy grants.

4/14/10

Preti Flaherty hosted a very successful Climate Matters breakfast event this morning. Our guest, Efficiency Maine Trust executive director Michael Stoddard, spoke to about 60 guests about energy policy and Maine's efforts to implement an unprecedented amount of energy efficiency measures. Michael presented on the Efficiency Maine Trust's triennial plan, federal stimulus money, the state's conservation programs funded by the systems benefit charge and other mechanisms. The bottom line is that Maine has over $100 million in money to spend on energy efficiency and greenhouse gas reduction projects over the next few years. What are you doing to get your business a piece of the money?

March 3, 2010: the new Efficiency Maine Trust director is...

Blogging live from the March 3, 2010 meeting of the Efficiency Maine Trust. After a national search lasting months, the Trust announces its new Executive Director today. Stay tuned for details!


Update 11:57 AM: Congrats to my good friend Michael Stoddard, the new executive director of Efficiency Maine.