Maine considers long-term contracting for renewables

The Maine legislature is considering several bills that would amend the statutory framework for Maine's procurement of energy resources.

Maine restructured its electricity sector in 1997 by deregulating generation and recasting electric companies as transmission and distribution utilities. As a result, competitive electricity providers or a "standard offer" provider selected by the Public Utilities Commission are the primary wholesale buyers and retail suppliers of energy. In this restructured environment, Maine's transmission and distribution utilities generally may not own, have a financial interest in or otherwise control generation or generation-related assets, and have no natural need to buy electricity.

However, several statutory programs do require Maine's transmission and distribution utilities to enter into multi-year contracts to buy capacity, energy, renewable energy attributes, or other products of electric generation. These programs include Maine's "capacity resource adequacy" statute, which authorizes the Commission to direct investor-owned transmission and distribution utilities to enter into long-term contracts for energy, capacity, and renewable energy credits when such contracts are in the best interest of customers. That statute requires the Commission to conduct a competitive solicitation for proposed contracts no less often than every 3 years if the Commission determines this to be cost-effective, and requires that all costs and direct financial benefits associated with these contracts be allocated to ratepayers. Recent procurements under this law include 75 megawatts from Dirigo Solar, LLC, at a price of 3.4 cents/kWh escalating at 2.5% annually for 20 years, and 100 megawatts from Three Rivers Solar Power, LLC’s solar project, with a price of 3.5 cents/kWh escalating at 2.5% annually for 10 years.

Other procurement programs under existing law include Maine's community-based renewable energy pilot program and Maine's Ocean Energy Act. By statute, the costs and benefits associated with a long-term energy contract are allocated to ratepayers -- so if the contract pricing is below-market, ratepayers receive a credit, whereas above-market contract prices lead to increased ratepayer costs. (In 2018, the average annual wholesale electricity price in New England was 4.354 cents per kilowatt-hour.)

Legislation proposed in 2019 could alter or add onto these statutory mandates to procure certain energy resources. Some of the bills calling for reforms to Maine's long-term contracting programs include:

• LD 41, An Act To Replace Net Energy Billing with a Market-based Mechanism: This bill would require the Commission to procure, to the maximum extent possible, 20 megawatts of large-scale community solar distributed generation resources under its existing capacity resource adequacy statute. It requires that the contract rate be calculated annually and that no contract may be for more than 6¢ per kilowatt-hour or the average wholesale electricity rate over the preceding 12 months, whichever is less.
• LD 273, An Act To Require Transmission and Distribution Utilities To Purchase Electricity from Renewable Resources at Certain Prices: This bill would require a transmission and distribution utility, at the request of the owner of a renewable resource, to purchase the resource's output at a price per kilowatt-hour that is 50% of the average cost per kilowatt-hour to generate electricity using a fossil fuel in Maine.
• LD 1127, An Act To Expand Community-based Solar Energy in Maine: This bill would require the Commission to direct Maine's investor-owned transmission and distribution utilities to enter into long-term contracts for up to 100 megawatts of "community-based solar resources." It limits eligibility to projects of 10 megawatts or smaller, and reserves 20% of the program capacity for projects less than 2 megawatts. It also requires the resource to be at least 75% owned by Maine residents. It would require contracts to specify a fixed rate for a term of at least 20 years, which must be less than 9 cents per kilowatt-hour.
• LD 1465, An Act To Diversify Maine's Energy Portfolio with Renewable Energy: This bill would require the Commission to hold a series of annual solicitations, select projects, and direct Maine's investor-owned transmission and distribution utilities to enter into long-term contracts for 800 megawatts from "grid-scale renewable resources," 90 megawatts from "community-based renewable resources," and 135 megawatts from "commercial and industrial renewable resources," all by 2025.
• LD 1494, An Act To Reform Maine's Renewable Portfolio Standard: The bill would increase Maine's Class I renewable portfolio standard to 50% by 2030, and would require the Commission to conduct competitive solicitations for long-term contracts to cover half of each year's annual increase in the standard.

Many of these bills combine long-term contracting with other measures, such as Maine's renewable portfolio standard.