Is more ratepayer support available for offshore wind than previously thought?

A few days before Statoil announced it was pulling the plug on its $120 million offshore wind energy project in Maine, the Maine Public Utilities Commission raised the possibility that a larger pool of money is available to support offshore wind projects than previously thought.

This is significant because one of the challenges the PUC faced was having two proposed projects — Statoil’s and the new one from the UMaine-affiliated Maine Aqua Ventus — but only enough money to successfully support one.

At issue is an amendment passed last session to the law that governs how much ratepayer money is available to support these offshore wind projects, and how that new amended law should be interpreted.

“When Statoil was still in the game, they pretty much used up all the funding available,” Tom Welch, chairman of the PUC, told me Wednesday morning. “Arguably, if you read the new law in a certain away it would increase it by a certain amount.”

This may be a bit too deep in the weeds for some people, but stick with me if you’re interested in the deeper discussion over supporting the renewable energy industry through ratepayer support, which is the method in which everyone sees a small charge increase on their electricity bills to help subsidize development of next-generation technology.

The original statute capped the amount of ratepayer support available for offshore wind projects to the amount ratepayers are already assessed to support the Efficiency Maine Trust. Currently, only residential and small and medium-sized businesses are charged an assessment to support Efficiency Maine. Large industrial customers — the power plants and paper mills, for example — do not. Therefore, the PUC determined back in 2010 that the large industrial customers would not be charged an assessment to support offshore wind development.

Still with me? Good.

However, the language was changed in the omnibus energy bill passed during the last legislative session to remove any connection between the offshore wind assessment and the Efficiency Maine Trust assessment. The new language simply reads: “The commission may not approve any long-term contract under this section that would result in an increase in electric rates in any customer class that is greater than $1.45 per megawatt hour.”

Any customer class? Really?

One way to interpret this new language is to say that large, industrial customers should now also be charged an assessment to help grow the offshore wind industry.

Hence, the questions the PUC raised on Thursday: “This change in the rate impact limitation provision raises two questions: (1) should the funding limit be calculated as $1.45 times the megawatt hour sales of all customer classes, including transmission and sub-transmission customer classes” — read: large, industrial customers – “and (2) should the costs of the contracts be allocated to all customer classes, including transmission and sub-transmission?

“If so, the amendment would have the result of increasing the amount of ratepayer funding available to ocean energy projects and allocating the costs to customer classes that were previously exempted,” the PUC document reads.

Now, whether the new interpretation would increase the increase the amount of money in the pool enough to support both ocean energy projects is unknown, though Welch doubts it.

“Even if the statute does represent a change in the size of the pool of money, it might not have been enough,” Welch said. “Candidly, I don’t think it would have been enough to double the amount, but of course we don’t know what the new proposal” — Maine Aqua Ventus’ proposal — “would cost.”

It’s now a moot point with Statoil’s official departure, but it’s still relevant because it would change how much is available to Maine Aqua Ventus if the PUC determines that its project meets the standards in place for it to received ratepayer support, Welch said.

Jeff Thaler, UMaine’s attorney in the offshore wind issue, declined to comment as he said the university is still evaluating the question.

The PUC is accepting comments on the request until Oct. 21. Welch said the PUC would like to make a determination on the legal interpretation of the statute by the end of the year, which is about the same timeframe it has for making a decision on Maine Aqua Ventus’ proposal.

I placed some other calls to try to understand what the intent of the legislators were when they changed the language, but I haven’t been able to nail anyone down yet. I’ll update the post when I do.

 

Whit Richardson

About Whit Richardson

Whit Richardson is Business Editor at the Bangor Daily News. He blogs about Maine business, entrepreneurs and the economy.