Energy Mosaics

In June, Maine enacted LD 1868, “An Act to Advance a Clean Energy Economy by Updating Renewable and Clean Resource Procurement Laws” The following are my remarks to the House in support of this bill.

I rise today in strong support of LD 1868, which is a necessary evolution in how we define and pursue our clean energy goals in Maine.

Maine’s Renewable Portfolio Standard, or RPS, was adopted in 1999 to support hydro and biomass generation. In 2007, we expanded it to include wind and solar, setting a 10% renewable energy goal by 2030. In 2019, we raised that target to 80%. We ultimately established a goal of 100% zero greenhouse gas emissions by 2050.

These were all important milestones. This year, with the release of the State Energy Plan, we were able to take a more expansive perspective on how we achieve our goals.

 LD 1868 adds Clean Energy Standard sources to our target at 1% per year, beginning in 2031, with an additional 1 percent each year until it achieves 10% of our portfolio by 2040.

The reality is this: while the terms “renewable” and “zero GHG” were once treated as interchangeable, we know that not all renewable sources are zero-emission, and not all zero-emission technologies are renewable.  Biomass, for example, is renewable, but its greenhouse gas profile depends on the feedstock. On the other hand, advanced thermal processes or clean hydrogen fuel cells may produce near-zero emissions, but they don’t qualify as renewable under our current rules.

This leads us to the logic behind LD 1868 and the Clean Energy Standard, or CES.

Mr. Speaker: Rather than limiting ourselves to a fixed list of technologies, as we do under the RPS, the CES asks a different question:

Does the electricity source reduce greenhouse gas emissions?  If the source can meet the test of being zero or near-zero GHG and clean, determined by verifiable performance criteria to be established by the DEP, it can qualify—whether it’s fusion, advanced geothermal, hydrogen, or next-generation nuclear, or even technologies that haven’t been commercialized yet.

We are planning for a future more than a decade away. We know there are multiple ways to reach our emissions targets.  e challenge is we don’t yet know which mix of technologies will get us there most efficiently or economically.  The technologies we’ll rely on in 2040 or 2050 may not even be fully developed today. A technology-neutral standard gives us technology diversity, the flexibility we need, and a much greater likelihood of success.

LD 1868 is a smart, measured step in the right direction. It gives us the structure and vision to expand what’s possible without abandoning the progress we’ve already made.

Mr. Speaker, LD 1868 is not about abandoning our commitment to renewables. It’s about aligning our tools with our goals, ensuring that as we move forward, we stay focused on what really matters: affordable, reliable, and low-carbon energy for Maine’s future. It gives us the structure and vision to expand what’s possible, building on the progress we’ve already made.

I urge you to join me in voting ought to pass.

I sponsored a bill, LD 1726, “An Act to Enhance the Coordination and Effectiveness of Integrated Distribution Grid Planning” which was signed into law on June 12. The following is my presentation to the House:

The process for planning our local electric distribution grid is one of the most important tools we have to meet Maine’s goals for electricity affordability, reliability, resilience, and climate.  This bill aims to achieve a higher level of coordination among multiple agencies and initiatives that influence the grid planning process.

A distribution grid plan is a blueprint for building and maintaining the local grid, determining the optimum way to serve our growing needs for electricity, whether through new infrastructure, reducing demand, or adding local generation that avoids the need for new power plants. It also seeks to optimize how that grid operates, minimizing new investments, allowing the grid to operate more like a network and permitting far higher utilization of the wires that are there, ensuring that the grid operates at maximum capacity.

Every single one of these factors directly impacts what customers pay for electricity.

Over the last 6 years the state has begun multiple initiatives and strategies that impact grid planning, conducted by several state agencies, such as electrification, energy storage, demand management, and new energy procurements. They all tend to be managed as distinct programs, sometimes without formal coordination.  Many have a direct impact on grid plans

This bill does not alter the current planning cycle but applies to future cycles. I see this bill as a “tune-up” of the process to better coordinate and manage future planning.

Consistency of forecast methods. The forecast of load is an essential element to grid plans. 

The bill ensures that forecast methodologies used by the grid planning process and state agencies are consistent with the Energy Plan when possible.

Integration of new technologies improving efficiency of grid operation. There are now technologies that improve the efficiency and reliability of the grid. With them we can get more power to consumers using the existing grid reducing the need for new power sources. For example, the Governor’s Energy Office is pursuing a program that uses software and hardware to enhance grid stability, regulate voltage, and increase transmission capacity on existing lines. Additionally, the bill encourages the incorporation of grid monitoring measures through the use of sensors checking for power quality, reliability, state of the infrastructure, and distributed generation output. The bill promotes their use and incorporation in grid plans.

Coordination of grid plans into power procurement decisions. When procurements of local power sources are conducted in isolation from the grid planning process, unintended consequences can occur.

Maine has already experienced this in its solar program through procurements that did not optimize project location to minimize infrastructure investments. While some level of coordination among agencies that direct procurement does occur, there is no formal requirement for close linkage between the attributes of these procurements and grid plans. The bill ensures such coordination occurs.

Review of Non Wires Alternative Program. In the 129^th, legislation established a “nonwires alternative” program, requiring proposals for new infrastructure to serve demand to consider alternatives such as meeting that demand with local power sources or managing that demand through load control and efficiency measures. Nonwire alternatives and demand management are in fact essential tools used to formulate a grid plan. Currently the PUC is in charge of the planning process, the lead for non-wire alternatives is in the Office of Consumer Advocate, and the lead for demand management is Efficiency Maine. The bill requires the three agencies involved to assess the current situation and develop recommendations on how that process could be improved.

As to arguments that greater coordination between the State Energy Plan and grid planning erodes the independence of the PUC- Its independence is preserved through its quasi-judicial function. Infrastructure investment, and new technology introduction, as well as energy procurements, are policy-driven questions, and it is appropriate that our legislatively mandated energy plan guide that direction. And they all directly impact grid planning.

By integrating the energy plan into the planning process, we ensure that grid investments are not made in a policy vacuum or create costly unintended consequences, as what happened in the disconnect with early solar procurements and infrastructure planning. The energy plan itself is subject to public input, legislative review, and regular updates, offering transparency and accountability. In contrast, a purely utility-initiated planning process can lack clear public priorities or coordination across sectors.

Increased coordination with the state energy plan enhances—rather than compromises—the quality and legitimacy of grid planning. It grounds utility decisions in a broader public interest framework, while preserving the PUC’s neutral role in reviewing and approving those decisions.

In summary, LD 1726 is a collection of measures to improve the grid planning process and strengthen the coordination between Maine’s energy agencies and the planning process by strengthening its governance by establishing more formal linkages to activities that have a direct impact on, or perhaps should be subject to, the findings of a grid plan.

LD 1726 is just good management. I urge a vote for “Ought to Pass.”

Last legislative session, I introduced a bill instructing the Governor’s Energy Office to assess whether modernizing Maine’s electricity grids by creating a statewide Distribution System Operator (DSO) could decrease electricity costs and enhance reliability. That study began earlier this year. The study’s first phase will determine whether a DSO would reduce costs, enhance reliability, and accommodate decarbonization goals. If these objectives seem attainable, the study’s second phase would outline the system’s design and recommend a roadmap for implementation. The first phase report is due in September.

So why is this important?

Our current grid, largely unchanged for a century, operates as a one-way power delivery system using outdated technology. Modern technology and operating systems, many of which are already installed but underutilized, can transform our local grid into a multidirectional network. In the future, we anticipate a significant increase in distributed energy resources, including generators, microgrids, vehicle-to-grid systems, and stationary storage. As the central grid planner, the Maine DSO could manage the deployment of these distributed energy forms efficiently and operate the market in which they bid and function.

The proposed DSO would:

• Manage and control our distribution grids as a unified system without owning them,
• Consolidate grid infrastructure planning currently scattered among multiple utilities and state agencies,
• Facilitate an open market in distributed generation.

Maine has only recently embarked on integrated system planning, currently overseen by various utilities and state agencies. Centralizing control, operations, and infrastructure planning with the DSO would ensure efficient and transparent statewide planning and implementation for the grid’s resilience, reliability, and new generation interconnectivity. Optimized grid operations could reduce both supply and delivery costs.

To meet its climate goals and ensure cost-effective, reliable distribution grids, Maine needs a shift in perspective on how its electricity delivery system operates, is controlled, and regulated. The technologies to establish a multidirectional, interactive, transactional grid are readily available. What is required now is a robust plan, determination to implement it, and readiness to become a leader in grid modernization.

The ongoing study was featured in a recent Portland Press Herald article on July 8: “Maine to study whether creating local electric grid operator could cut costs, improve reliability” .

Yesterday the Portland Press reported on the approval of a rate increase by CMP that included recovery of “subsidies” for solar amounting to an additional cost fo $5/month for the average customer.. I was quoted in the article. While no one likes increasing costs for electricity, focusing only on this cost number alone is like looking at Picasso’s 11 by 25 foot painting Guernica through a small tube. What you see is only a small part of the overall picture. That’s because there are significant, but not well understood, benefits to ratepayers that are far larger and offset these costs.

This cost of solar is real and comes from the fact that when Maine began encouraging local community projects and rooftop installations, an advantageous rate was offered. In fact most small local power markets began exactly this way, and Maine was no different. We passed a bill last year recognized that the advantageous tariff was no longer needed to spur the market and adjusted Maine’s program, closing it after this year. But that is just the cost side of the equation.

The benefits of distributed generation includes the commodity value of the electricity it produces and the value of its different attributes which it provides to the distribution grid. This is not a theoretical concept but is employed in other states. Our problem is that there is no way to show those cost savings on everyone’s bill, so they are unknown and all ratepayers see is the added cost. But these benefits are quite real and include:

· Reducing the cost of wholesale power. Every bit of energy produced by solar projects offsets power that would have otherwise been produced by expensive natural gas power plants. This impact can be seen in real time. If you go to https://www.iso-ne.com/isoexpress/web/charts, look at the upper left chart and click on the yellow orange square, you will see (this is yesterday’s chart). The top line is what electricity use would have been without solar. The blue line is what it really was. That gap, without solar, would have been filled with expensive power from natural gas fired plants,

· Reducing payments for power capacity. Our power grid pays certain power plants to guarantee they be available when called upon, and those payments are passed on through our power costs. Solar (and wind) reduce the number of these plants needed and lowers that cost.

· Reducing infrastructure costs. Utilities invest in poles and wires to meet the highest demand for power anticipated. Local solar power reduces that demand, and that translates to lower investments. Substations and other facilities need to be maintained. Lower peak demand reduces their need for service. By promoting local power sources, NEB helps to create a more robust and flexible grid, better equipped to handle disruptions and extreme weather events. This is particularly important for Maine’s rural communities, where access to reliable energy is essential for economic and social well-being.

· Environmental benefits. Since these local renewable sources of power offset fossil power, emissions of pollutants as well as greenhouse gases are reduced. By promoting clean, renewable energy sources like solar, NEB contributes to a healthier environment for current and future generations. The report quantifies these benefits, estimating that NEB led to a reduction of over 600,000 tons of CO2 emissions in 2023, equivalent to taking over 130,000 cars off the road.

The bill that ends this program at the end of 2024 also required the PUC to do a cost benefit analysis of NEB. Last April the study was completed and the findings were clear: NEB has yielded considerable financial benefits. For instance, in 2023, the program cost $130.76 million but its benefits amounted to $160.33 million. These are not merely abstract numbers but translate directly into cost savings for Maine’s ratepayers. This study shows that every dollar of solar “subsidy” generates a benefit of $1.25.

This is not to say that NEB is perfect. Over time we need to move to a system where energy costs reflect their true value. In the case of electricity, that amount varies significantly by location and the time it was produced. We have a long way to go to transition our existing regulatory structure to one that reflects reality. And, in fact the PUC report acknowledges the challenges associated with NEB, including the need to ensure equitable access for all Mainers. But these challenges are not insurmountable. Expanding community solar projects, exploring innovative financing models, and investing in grid modernization can address concerns about equity and grid resilience.

Most importantly, we need to reform our regulatory structure in a way that recognizes both the costs and benefits of local generation, allowing us to see the whole picture.

(Text of op-ed published 11/20/2023 Portland Press Herald by me; Kay Aiken, CEO Of Dynamic Grid; and Rebecca Schultz of Natural Resources Council of Maine https://www.pressherald.com/2023/11/20/commentary-maine-can-incentivize-cmp-versant-to-do-the-right-thing/)

Now that voters have spoken on the Pine Tree Power referendum, it is time for us to come together, roll up our sleeves, and get to work making Maine a leader in clean energy and innovation in the power sector.

We deserve a 21st-century grid to meet our goals outlined in Maine’s ambitious climate action plan “Maine Won’t Wait” and a future of a decarbonized, decentralized, and democratized electrical grid that works for everyone.

The keystone of this plan is the electrification of building heating and transportation. In a recent address, Gov. Mills accelerated the urgency of achieving this vision by setting a goal of 100% clean electricity in the state by 2040.

Adding clean energy sources from large scale down to residential and electrifying heating and transportation demands a radical transformation of our electricity delivery system in both its engineering and regulation. Our electricity grid must evolve from a one-way delivery system to a multi-directional network optimized for efficiency, balancing supply and demand, and, most important, providing value to consumers.

The investor-owned utilities, Central Maine Power and Versant, will continue to own and maintain Maine’s electric grid, but there are crucial regulatory reforms that can help create the right incentive structures to motivate the investments, planning and operations that we need from these companies.

The challenge of redesigning such an advanced electrical system is considerable. Still, the urgency of climate change and the economic benefits of a clean energy economy necessitate swift and decisive action.

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A full expression of how that redesign might look goes beyond what can be covered in this op-ed; what we discuss here is the regulatory framework in which it should operate. The campaign to take over the utilities happened for a reason: Customers were and continue to be deeply unhappy with the cost and performance of their utilities. But we sometimes forget that our regulatory structure is our means of local control; our immediate priority is to underscore the need to fully exercise that control through regulatory reforms that address these ratepayer concerns.

Over the last 100 years, utility regulation was designed to ensure monopoly providers, regardless of ownership, achieve established goals. These rules successfully encouraged the buildout of electric utility infrastructure. The past is not a template for our future.

Deregulation, which began in the late 1980s, introduced competition in the retail and wholesale electricity markets, leading to customer service and reliability declines. In response, states started implementing performance-based ratemaking (PBR) to address these issues. Early PBR efforts sometimes missed the mark due to utility exploitation of weak incentives. However, lessons learned have led to more effective PBR adoption. At least 18 states have already implemented PBR.

Maine took an initial step toward PBR in 2022, creating a utility scorecard to enforce standards in reliability, customer service and billing accuracy, with penalties for non-compliance. The Maine Public Utilities Commission has spent a year developing a system to measure performance which only recently has begun influencing rate cases. An upcoming legislative session will consider bills to enhance the scorecard by requiring the commission to assess performance annually and issue incentives or penalties based on performance relative to established goals. New standards should include metrics related to:

• Effectiveness of infrastructure investments and regulation supporting new local power sources and electrification

• State of grid resiliency against extreme weather events

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• Customer accessibility to affordable electricity

• Speed and efficiency in connecting new local power sources

• Measures taken to encourage shifting the use of electricity to times when it is most abundant and at the lowest cost

• Quality of utility strategic long-range planning

As Maine forges ahead in the design of its future electricity grid, regulatory reform is a critical tool to address ratepayer dissatisfaction. Enhanced PBR can help us shape a utility sector that actively drives our climate goals forward while keeping costs as low as possible. PBR isn’t just regulatory reform; it’s a new commitment to our environment, our economy and the well-being of every Mainer.

Proponents of Pine Tree Power make some big promises if the referendum passes. Unfortunately, many voters do not have the expertise to distinguish between genuine facts and the misleading assertions behind these promises. Frustrated by unsatisfactory utility performance and costs, some might easily be swayed by seemingly compelling yet baseless arguments. So, let’s test the accuracy of the two central claims made by Pine Tree Power proponents.

Claim 1: Since some consumer-owned utilities (COUs), on average, have better reliability and lower costs than investor-owned utilities (IOUs), changing the ownership of Maine’s IOUs into a COU will result in improved performance.

This claim makes a false equivalence. Pine Tree proponents cite data from over 2,000 primarily small urban municipal utilities. They conspicuously exclude data from rural cooperatives that more closely match our current utilities and their reliability. The Frankenstein of Pine Tree Power, where two IOUs with 21,000 square miles of largely rural territories serving 800,000 customers would be combined, stands in stark contrast to existing COUs. Unlike these urban COUs, which built their own infrastructure, Pine Tree would integrate systems developed and overseen by two different IOUs. Additionally, Pine Tree begins operation with the onus of a massive mortgage of tens of billions and the extra expense of hiring a third-party manager. It would keep the existing union and workforce, implying no labor cost savings. It would forego its exemptions from property taxes.

“Apples and oranges” doesn’t begin to capture the disparities in this comparison.

However, the one legitimate comparison with a COU that can be made is with the Long Island Power Authority (LIPA). LIPA is the sole COU formed by a complete private utility takeover and mirrors Pine Tree’s characteristics. LIPA customers must repay a massive mortgage and pay a third-party company for operations. And LIPA’s performance? After the 13 years it took to create, followed by 24 years of operation, it boasts the nation’s highest commercial rates and highest residential rates in NY and NJ. A recent JD Powers survey ranked LIPA similarly to CMP. Currently, it’s deliberating the replacement of its third third-party operator. Due to persistent customer dissatisfaction, the NY State Legislature twice initiated evaluations for improvement. The Long Island Chamber of Commerce proposed LIPA revert to a private utility only last year. With public hearings in progress, LIPA’s fate remains uncertain. Regrettably, Long Island customers have had miserable service and high rates for 37 years.

Claim 2: Pine Tree will save customers $367 annually for 30 years, starting immediately.

This is the most egregious of Pine Tree’s claims. The source of this savings is based on using 4-year-old assumptions in a computer simulator – assumptions both woefully out of date and found to be deeply flawed by experts – which concluded that the total savings would be $9 billion ($367 per customer per year, beginning in January 2024).

The fact is that Pine Tree proponents have never done a current, peer-reviewed comparative analysis, one that addresses the uncertainties in such an analysis, to support any savings claims.

So, where did the $367 “savings” come from? Four years ago, the Legislature hired a consulting firm to evaluate whether there would be savings from a takeover. Their analysis concluded that a takeover would result in added costs to ratepayers during the first ten years of operation with eventual savings later. However, they stressed significant uncertainties in such a forecast, and a wide range of outcomes were possible. Pine Tree proponents took the consulting firm’s 4-year-old forecasting model, manipulated it with favorable assumptions (subsequently determined to be deeply flawed by other experts), ignored uncertainty analysis, and declared ratepayers would cumulatively save $9 billion over three decades, or $367 annually per customer. The consultant’s forecasting model used by Pine Tree proponents assumed a future that bears no resemblance to what we see today.

A credible analysis would consider variable start dates for the Pine Tree takeover, potential buyout prices, ranges of possible costs for a management company, fluctuating interest rates, and differing economic parameters likely over 30 years. A credible analysis would present a range of outcomes expressed as probabilities. You don’t need a Ph.D. in economics to understand that it is pure nonsense that an analysis with these uncertainties would result in the forecast of any single number. An organization that wants to take over a complex system like an electric utility should know this.

A competent assessment of the cost implications of a takeover, accounting for the uncertainties, would conclude that the most probable outcome is a wide range of added costs, not savings, to ratepayers that range in the billions.

Whether Pine Tree’s baseless arguments are deeply misinformed or deliberate misinformation does not matter. Voters must ask themselves: “Could I trust any group that would make such arguments to run my electric utility?”

While it’s undeniable that our utilities need to be better, the solution isn’t Pine Tree Power. Pine Tree Power might be emotionally satisfying in the near term but will likely make matters far worse. Maine only recently enacted reforms to address performance, with more to come. A “no” vote allows these reforms to take effect and avoids the disaster ensuing if this referendum passes.

The following was published in the Portland Press Herald on September 22, 2023

The ads flooding the airwaves about the November referendum on Pine Tree Power Company make it sound like there are two choices: vote “yes” to takeover CMP and Versant and form Pine Tree, or vote “no” and keep the status quo. Proponents claim that replacing CMP and Versant with Pine Tree will result in lower rates and higher reliability. Opponents of the referendum say that maintaining the status quo is the low-cost option for ratepayers in the future. Neither argument squares with reality. The process to set up Pine Tree represents an existential threat to the achievement of Maine’s climate and grid modernization goals. If it operates, ratepayers will be worse off than now. But a “no” vote is not choosing to keep the status quo. A “no” vote allows very recent utility regulatory reforms to take effect and permits the Legislature to strengthen those reforms in the future– reforms that will correct the poor cost, reliability, and customer service Mainers have been enduring for years. 

Mainer’s dissatisfaction with utility performance is warranted. What Mainers don’t realize is that poor performance is primarily the result of inadequate and anachronistic regulation. Thirteen other states use performance-based ratemaking (PBR), where what utilities earn depends on their performance. Maine only implemented a version of PBR last year – it is a critical first step that the Legislature should further strengthen over time. But it will take time to see the results. Unfortunately, Pine Tree advocates opposed implementing PBR. They blocked a bill I introduced to strengthen the existing law in this session. Frankly, had some members of the Legislature worked on regulatory reforms rather than a utility takeover over the last five years, we’d all have been better off.

Many of our climate action goals necessarily involve our electric utilities. If the referendum passes, the State faces years of uncertainty regarding who is in charge, putting climate and grid initiatives on hold until Pine Tree is fully operational or fails to be established, which could take years, if not a decade, to determine. The takeover of an entire private utility to form a public one only happened once: Long Island Power Authority took 13 years to complete. Many small municipalities have tried to carve themselves out of their current utility- the latest example, Boulder, Colorado, gave up after ten years.

Uncertainty would also delay grid modernization. Last session, we passed a bill to change how our electricity grid is planned and controlled, optimizing its operation for the least cost and highest efficiency. This future grid will encourage local power generation, offering enhanced control over electricity consumption and flow. However, designing this integrated system is complex. It cannot be done until all the uncertainties of Pine Tree are resolved.

And it’s not worth the wait. Claims that Pine Tree would reduce costs and reliability are pure conjecture. If one were to create an electric utility from scratch, the data on public utility costs and performance clearly suggest that a public ownership model would be ideal. But the takeover and then combination of two different utilities with three different service territories, one of which is not even connected to the New England grid, keep the union intact, continue to pay property taxes, pay an outside company – likely a utility – to run the company and pay an enormous sum to acquire them is a totally different set of circumstances. As an example, Long Island Power Authority, now in its 24th year of operation, was rated just behind CMP in the most recent JD Powers customer satisfaction survey. Pine Tree would begin its operation with a mortgage costing tens of millions. This mortgage will need to be recovered from ratepayers in addition to its operational costs. The reality is that any reasonable analysis of the cost impact of a takeover – one that considers the uncertainties in a 30 or 40-year future look – is additional ratepayer costs that range in the billions.

Passing the referendum might be emotionally satisfying in the short term; however, it would also undermine Maine’s climate and grid objectives for years. And if Pine Tree Power became operational, we would be worse off than we are now. I urge voters to reject the referendum, give regulation time to work, and let your legislators know you are counting on them to continue to modernize our grid and reform the ways utilities are regulated.