Third in a five-part series

Mainers live in a cold climate and are burdened by above-average rates for heat and electricity. So the choices that the next governor makes about energy policy will affect everyone who pays to keep the lights on and the house warm.

But energy policy is about more than just paying bills. Decisions made by state government are intertwined with big-picture issues ranging from economic development to climate change.

Specifically, the next governor will appoint two of the three members on the state Public Utilities Commission. That agency decides, for instance, whether ratepayers should help expand natural gas pipelines and support offshore wind power.

However, the next governor will help set Maine’s direction on energy matters. One course, generally favored by Democrats, including U.S. Rep. Mike Michaud, would revive Maine’s push for energy from wind, solar, biomass and local resources, and put a greater emphasis on conservation and efficiency. Another path, championed by Republicans and Gov. Paul LePage, would maintain support for natural gas expansion and a preference for energy alternatives with a faster payback – namely heat pumps – rather than wind or solar.

Forging somewhat of a middle path, Eliot Cutler, the independent candidate, favors natural gas as a shorter-term “bridge” fuel, while making investments in a clean-energy, high-efficiency future.

Two recent events highlight the urgency and importance of getting the policies right for Maine.

Electricity rates are set to rise steeply this winter because half of New England’s electricity is generated by natural gas. When wholesale gas prices rise, electric rates go along for the ride, something every Maine household will notice.

For similar reasons, the pending closure of the Verso Paper mill in Bucksport connects high natural gas prices with the future of the state’s manufacturing sector. So the success of the next governor’s energy policies will be judged in part on how he tackles the natural gas dilemma.

Here’s a look at where the three candidates stand on key energy issues:

HOME HEATING COSTS

Helping Mainers with home heating costs will top the to-do list for the next governor. On average, oil heat customers spent $3,000 last year to keep warm. The falling price of crude oil this fall appears to be bringing some relief, as does the ongoing shift to alternative heating sources, but six out of 10 Maine homes still burn oil as the primary means of keeping warm.

LEPAGE has identified home heating as the biggest burden for most Mainers and has embraced high-efficiency, electric heat pumps as a way to get Mainers off oil. He even installed them at the Blaine House. He considers the move to heat pumps as his biggest single energy-policy success. LePage pushed for a funding shift at Efficiency Maine that gives residents a $500 rebate to buy heat pumps. More than 5,000 have been installed, saving an average of $900 a year. If re-elected, LePage said he wants to do more to bring those savings to people who rely on government fuel assistance. “There are cost-effective options available today,” he said. “Instead of simply getting through the winter, we should devote a higher portion of funding to help them invest in modern heating technology.”

MICHAUD has been promoting his goal of cutting Maine’s use of home heating oil in half by 2030, achieved in part by reducing heat loss and burning fuel more efficiently. “The number one thing we can do to cut heating oil bills and energy costs at home and for our businesses is to invest in weatherization and energy efficiency,” he said. Efficiency, Michaud said, can return more than four dollars for every one invested. Installing a programmable thermostat for $100 is an example, he said; it can save a homeowner $180 in the first year.

CUTLER would redouble Maine’s conservation and energy-efficiency efforts. He would review existing programs and incentives offered by Efficiency Maine and the Maine State Housing Authority for fuel-switching, weatherization and other measures. He’d also consider new incentives and programs to help lower-income Mainers convert to heat pumps, pellet stoves and other alternatives. Cutler wants to take better advantage of the “smart” electric meters now in most homes to speed up time-of-day pricing, which offers lower rates for using power during off-peak hours. “Winter heating and electricity costs claim a big portion – more than half in some cases – of most Maine families’ household operating budgets,” he said.

GAS PIPELINE EXPANSION

The collapse last summer of a New England-wide plan for utility customers to help pay for natural gas pipeline expansion has shifted the focus to a process underway at the Maine PUC. Advocates say boosting supply would lower gas and electric rates. Critics say the region already is too dependent on natural gas.

LEPAGE has repeated his commitment to expanding natural gas pipeline capacity as a way to lower the cost of the fuel for New England’s power plants and industries. “We must move forward with the infrastructure to bring competition to Maine’s energy markets,” he said. Since he took office, LePage has hammered the message that high energy costs are hurting Maine. Asked what’s the most significant thing a governor can do to lower energy rates for homes and businesses, LePage cited efforts to bring more natural gas and Canadian hydroelectricity to the state. He also said electric costs can be lowered “if government avoids picking specific forms of energy,” although that’s precisely what he has been doing by seeking to fast-track natural gas.

MICHAUD is taking a more cautious and nuanced approach to natural gas. He appears to be straddling the issue, torn between the effect that natural gas supply has on electric rates and the preference of many of his supporters for a strong shift to renewable energy. Michaud says he recognizes the need to increase pipeline capacity for power production and industrial use, but wants more diversification to offset the region’s reliance on natural gas. “I’m not opposed to using a ratepayer subsidy, as long as there is a reasonable guarantee that the investment would lower energy costs for consumers and lead to price stability,” he said.

CUTLER says Maine should pressure the other New England governors, especially the governor of Massachusetts, to forge a regional solution. But it’s a two-step approach for Cutler: He supports regional efforts to bring more natural gas into New England now, but also wants to create a Maine Energy Finance Authority within the Finance Authority of Maine. The authority would encourage the formation of energy-service provider companies, which could bring gas to more communities or start innovative ventures, such as energy-storage projects. Energy storage could make off-peak renewable generation, such as wind power, more cost-effective, he said. “It is important that the structure of whatever we do not act as a disincentive to longer-term solutions built on clean, renewable energy sources,” Cutler said.

RENEWABLE ENERGY

The three candidates each see renewable energy as either part of the solution, or the problem, when it comes to state policies that promote solar, ocean and wind power. They differ greatly on whether existing tax credits and incentives should be expanded or eliminated.

LEPAGE has made it clear that he opposes virtually all rebates and incentives for renewable energy, seeing them as contributing to higher electric rates. LePage introduced a bill to do away with the state’s target goals for wind power output. He vetoed a broadly supported bill to restore a $2,000 rebate for buying solar panels, paid for with a fee on electric bills that would have averaged a nickel a month for an average customer. His disdain for wind power culminated with his actions against Statoil, the Norwegian energy conglomerate that had planned a $120 million offshore wind farm. The company canceled the demonstration project and left Maine after LePage held up a landmark energy bill in the Legislature until the PUC reopened the bidding process. “The old way of thinking in New England has been to subsidize special interests with long-term contracts, and pick winners and losers in the energy markets,” the governor said.

MICHAUD noted that Maine is the only state in New England without a solar-power incentive program. He proposes a business investment plan to make solar power common in Maine. “At today’s prices and without any tax subsidies, a solar installation will provide electricity for 25 years at 4 cents/kilowatt-hour,” he said. “That’s less than a third of the current price of delivered electricity (and) has become cost-competitive with other sources of electricity. Despite the obvious benefits of solar power, Maine is lagging behind the rest of the country in solar panel installation.” It’s true that Maine trails in installations, but Michaud failed to mention the 30 percent federal tax credit for solar panels. Also, 4 cents/kilowatt hour is very aggressive, and doesn’t reflect the typical output of solar-electric panels in Maine. A more-reasonable, life-cycle cost assumption is between 6 and 8 cents/kilowatt hour. Details aside, Michaud’s support for renewables would signal to green-energy industries that Maine is a welcoming place, a distinction that has suffered following the LePage-Statoil incident. “Gov. LePage’s successful efforts to drive off hundreds of millions of dollars in private investment dollars by Statoil is by far the biggest lost opportunity we’ve seen in Maine in a long time,” Michaud said, “and undercuts years of effort by many in private industry to attract major companies to Maine.”

CUTLER echoed Michaud’s take on LePage and Statoil. He called it Maine’s biggest failure in energy policy. “Gov. LePage’s parochial, insular and ham-handed handling of this matter sent all of the wrong signals to anyone thinking about investing here,” he said. Asked about Maine’s biggest energy-policy success, Cutler cited the Grid Solar project on the Boothbay peninsula. It’s a pilot program approved by the Maine PUC that uses solar panels and efficient lighting, among other things, to eliminate the need to build a new transmission line. Cutler also would target the transportation sector, which is New England’s largest and fastest-growing contributor to the emissions associated with climate change. He’d propose a regional clean-fuels standard to reduce carbon emissions and join other states in increasing the number of zero-emission vehicles to 15 percent of all new cars by 2025. The regional clean-fuels standard is under discussion in 11 Northeast and mid-Atlantic states, with the goal of discouraging investment in high-carbon fuels, such as oil derived from tar-sands deposits. A commitment to zero-emission vehicles would be a change of direction for Maine – LePage declined to join an eight-state coalition promoting electric and fuel-cell vehicles.