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.

Feds pay damages in Yankee Atomic Power lawsuit

The Portland Press Herald reports that the federal government has partially paid damages awarded under a lawsuit filed by the owners of three former nuclear power plants for about $160 million in damages.  While final regulatory approvals remain pending, the companies plan to use the award to benefit ratepayers.

The nuclear plants -- Maine Yankee, Connecticut Yankee, and Yankee Rowe -- closed in the 1990s.  Federal law requires the federal government to develop a plan for long-term storage and disposal of radioactive waste.  While waste removal was supposed to start in 1998, the federal government has yet to designate a permanent waste repository or to remove the spent fuel.  As a result, the radioactive waste is stored in concrete casks at the sites of the former plants, at the plant owners' expense.  For Maine Yankee, those storage and maintenance costs range from $7 million to $11 million annually, with similar expenses for the other two plants.

The plant owners filed a lawsuit against the federal government in 1998, seeking damages for the cost of maintaining the spent fuel onsite.  After a series of awards and appeals,  a 2012 U.S. Court of Appeals decision upheld the award of $39,667,243 to Connecticut Yankee and $81,690,866 to Maine Yankee, and increased Yankee Atomic's damages award from $21,246,912.55 to $38,268,654.55.

These amount have reportedly now been paid, and the power companies are proposing how they will use the proceeds to benefit ratepayers.  Meanwhile, because the U.S. Court of Claims ruled that utility companies cannot receive damage awards for storage costs that have not yet been incurred, the Yankee Companies have filed a second round of damages claims for approximately $247 million, and anticipate filing a third round of damage claims before the end of 2013.

From 1972 until permanent shutdown in 1997, Maine Yankee operated a 900 megawatt pressurized water reactor in Wiscasset, Maine.  During its operations, Maine Yankee was the largest generating station in Maine.  The plant closed after its owners received a report by the Nuclear Regulatory Commission staff identifying safety problems that were deemed too costly to fix.  Even after closure, the unexpected costs of storing the spent fuel onsite only worsened the plants' economics.  The lawsuit judgment is designed to compensate the plant owners for these costs, although the litigation itself carries a price tag for both the companies and the U.S. taxpayer.

What role will nuclear power play in our energy mix in the coming years?  For now, no federal waste repository is planned.  Safety is paramount, particularly following the 2011 Fukushima disaster in Japan.  Nuclear power plants can produce cost-effective baseload electricity, but face the risk of surprise costs such as those faced by Maine Yankee.  Can a holistic legal and business solution enable the safe operation of nuclear power plants?

August 9, 2010 - new nuclear, flywheel storage, China energy efficiency crackdown

Nuclear power is a hot topic -- specifically the construction of new nuclear plants, something that most countries in the world have been slow to do in recent years.  Now the United Kingdom says it anticipates building its first new nuclear plant in 2018,  most likely on-site at existing nuclear facilities.

Meanwhile, in midcoast Maine, where the spent fuel from the decommissioned Maine Yankee nuclear plant has been stored on-site in Wiscasset, an editorial in the Brunswick Times Record calls for the nuclear waste to be shipped away.  The editorial notes that citizens were told that waste would be removed by 2010 -- and with Yucca Mountain no longer viable as a storage site, area residents see no prospect of the waste being taken away as promised.

Just as oil and natural gas tank storage capacity can be used to smooth out swings in the availability and market price of fuel, energy storage can play a major role in ensuring power service while dampening price swings.  Frequency regulation -- keeping the alternating current at 60 Hz, which essentially requires smoothing out the gap between supply and demand on an instantaneous basis -- is an important service that all electric grids need.  As more and more intermittent generation resources come online, like wind, grids need more and more frequency regulation.  Massive mechanical flywheels can provide this service. In today's news, Beacon Power Corporation has closed on a $43 million DOE-backstopped loan, completing the financing for the 20 MW flywheel energy storage plant Beacon is building in Stephentown, New York.  The plant, which is under construction and on budget, is projected to cost $69 million, about 80% of which represents direct facility costs.  The Federal Financing Bank, part of the U.S. Treasury, provided the $43 million loan. NYSERDA provided a $2 million grant, with Beacon putting up the remaining $26 million in cash, in-kind assets, and project costs.  Beacon is also planning two more 20 MW flywheel projects: one in Glenville, NY, and one in the PJM Interconnection.

Supporting renewable and energy efficiency projects through grant funding programs is one way to improve a state's energy efficiency and emissions.  In China, the world's largest energy consumer, the government is taking a different approach: ordering 2,087 industrial manufacturers rated as having low energy efficiency to close.  Affected facilities, which produce steel, concrete, paper, coke, and forest products, will lose their emissions licenses next month.  Just to be sure, the government will order utilities and banks to cease dealings with the sanctioned businesses.  The government's stated motivations include slippage on its five-year plan energy efficiency plan, as China's economic recovery and booming construction industry drive energy consumption up.

Maine is moving forward with PACE financing -- but municipalities need to take a bit of action to open the door to residential energy efficiency in their communities.

Two quick links to Lewiston Sun Journal pieces about wind.  First, a story by Naomi Schalit critical of the results of Governor Baldacci's pro-wind efforts.  Second, a letter from my friend and Leadership Maine classmate Paul Williamson providing a counterpoint to last month's Jonathan Carter column critical of Maine mountaintop wind.  More to follow on these stories soon.

June 15,2010 - Maine dam removal: Lower Montsweag Brook Dam

Two Maine dam removal projects recently won funding from nonprofit conservation organization American Rivers and the U.S. Commerce Department’s National Oceanic and Atmospheric Administration Restoration Program. The Maine Council of the Atlantic Salmon Federation won $65,000 to remove the West Winterport Dam on Marsh Stream, a Penobscot River tributary, in Winterport and Frankfort, which will open up 4.5 miles of the stream and restore 20 miles of river habitat.

The other grant was $100,000 to the Chewonki Foundation for the removal of the Lower Montsweag Brook Dam near Wiscasset and Woolwich. This removal will reopen three miles of fish passage and restore the 20 acres of riverine habitat currently flooded by the dam.

Lower Montsweag Brook Dam (map) was constructed by Maine Yankee Atomic Power Company in 1968. The purpose of the 30' tall dam was to impound a backup supply of emergency water for Maine Yankee's nuclear power plant operations.

Chewonki acquired the dam as part of the 2008 Natural Resources Damages Restoration Plan and Settlement Agreement (NRDAR) between Maine Yankee and the State of Maine. As part of that settlement, Chewonki committed to evaluate alternatives for restoring fish passage and riparian habitat in the lower brook.

A feasibility study by Stantec Consulting, Inc., of Topsham, showed that removal of the concrete dam is the most effective and least expensive way to restore fish passage for fish species such as river herring, rainbow smelt, brook trout, and American eel.

Chewonki plans to remove the dam later this summer at a cost of $750,000 to $800,000. A slow drawdown of the impoundment was scheduled to begin in May. This drawdown will allow contractors to inspect the upstream face of the dam and to begin revegetating the impoundment area. Demolition activities will be scheduled to coincide with the low stream flow period of late summer.