As we celebrate the solstice on Dec. 21 – the darkest day of the year, except for April 15 – take comfort in knowing that state officials are doing all they can to make it even darker. And, like Tax Day, more expensive.
OK, don’t take comfort. Be like that.
You can’t blame the high cost of electricity in Maine – we currently pay 59 percent more than the national average – on unrest in the Middle East. We’ve had unrest in the Middle East for longer than you’ve been alive, and we haven’t gotten fried every time the arrival of the Central Maine Power or Bangor Hydro Electric bill coincided with some international short circuit.
In 1975, for instance, OPEC got in a snit and jacked the price of crude by 10 percent. Our light bills, which were only 13 percent higher than the average in the rest of the country, barely budged.
In 1985, Israel was engaged in one of its periodic invasions of Lebanon, and Palestinian terrorists were killing tourists on a cruise ship in the Mediterranean. Meanwhile, Maine’s power costs were actually declining relative to the rest of the U.S., dropping to just 9 percent above average.
In 1995, the oil-producing parts of the Middle East were relatively stable. Our cost per kilowatt hour was anything but, shooting up to 49 percent above what the average household was paying.
If, as expected, the cost of keeping the juice flowing jumps by more than $300 million a year in the near future, don’t blame George W. Bush just because he decided to invade Iran.
The cause of this sticker shock is closer to home.
As Carroll Lee, the former chief operating officer of Bangor Hydro, put it in a November speech to the Bangor Rotary Club, the problem is a “lack of reasoned and stable government policies.” By which he means state government. The feds, like the Saudis, have blundered around on the fringes of electrical production and distribution, but the major impacts on your light bill have been the result of decisions made in Augusta.
“With the increased government activism in the 1980s,” Lee said, according to a copy of his speech, “(Maine Public Utilities Commission) regulations mandated rate increases to encourage and pay for conservation and to purchase power from non-utility generators at extremely inflated rates, typically double prevailing prices. The required subsidies would ultimately cost customers hundreds of millions of dollars.”
In 1980, Maine utilities generated 20 percent of their power from hydro. Another 20 percent was imported from Canada. About 40 percent was produced at the Maine Yankee nuclear plant. Just 20 percent was imported fossil fuels. That mix could be shifted if one source of energy got too expensive, thereby providing price stability.
By 1990, CMP and Bangor Hydro were buying 40 percent of their power from non-utility generators (NUGs), mostly small operators who produced pricey power. But there was no shifting away from them, because state law required the two companies to purchase all the juice the NUGs could turn out.
Eventually, the PUC allowed the utilities to buy out most of the stupid contracts they were forced to sign with NUGs. To replace that power, the state turned to natural gas from Canada. That fuel now accounts for more than 40 percent of our electrical generation. Trouble is, natural gas has doubled in price, and under clever rules developed by the PUC, that hike makes other fuels more expensive. Instead of averaging the costs of all sources of power, as utilities did in 1980, the cost of producing a kilowatt hour is now determined by the cost of the most expensive fuel.
Other factors have also forced up electric bills. The Legislature is requiring that, in the near future, 40 percent of our power come from renewable sources – the highest percentage of any state. There are also mandates to reduce greenhouse gases.
Altogether, Lee said these government edicts, combined with the federally funded removal of low-cost hydro dams and other changes, will boost costs by $1 billion annually by 2015.
What’s the PUC doing about that?
Well, it might sign an agreement to get more power from New Brunswick, something like the deal the commission turned down with Quebec back in 1989. Except at less favorable rates.
The commission will definitely complain about the feds and the regional power grid. “Right now,” wrote PUC chairman Kurt Adams in a recent opinion piece in the Maine Sunday Telegram, “federal rules force Mainers to subsidize energy investments in larger, wealthier areas to our south.” That griping doesn’t help heat your house, but it does give the bureaucrats a warm fuzzy feeling.
Finally, the commissioners will do what they do best: nothing. They don’t have to worry about public discontent, because they’re not elected officials.
Although, Adams would like to be one. If he asks for your vote for governor in 2010, remember all he’s done to brighten these chilly winter nights. Then:
Go nuclear.
Shocked reaction can be e-mailed to aldiamon@herniahill.net.
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