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Maine’s volatile electricity costs spike again for businesses

By: Charles Eichacker |

In his office overlooking the Union River, James Marcos was venting about energy costs.

He’s the general manager of Maine Shellfish Co., a seafood processing and freezing company on Water Street where forklifts and yellow box trucks often jockey for space. It includes a lobster-picking plant, coolers and a freezer kept around negative 10 degrees all year long.

In November 2014, the company’s electric bill was 50 percent higher than in the same month a year earlier.

Even worse, that bill will seem like chump change when this month’s arrives. In January, the standard offer electricity rate for medium-sized businesses on Emera Maine’s grid will be 16 cents per kilowatt hour (kWh) — almost double that of November.

“That’s going to put our electric bill up another 50 percent,” Marcos said. “It’s nuts.”

While the company has installed more energy-efficient lighting in the last year, Marcos explained, “our biggest draws are refrigeration equipment, and there’s not a hell of a lot you can do to cut that back.”

Unable to close for winter, the company’s only option is to pass those costs on to the consumer in the form of higher prices, he said.

Like Maine Shellfish, businesses and residents across the state and region are steeling themselves for electricity costs that will likely spike in winter.

The hardest hit may be those in energy-intensive industries such as seafood processing, health care and manufacturing. Such expenditures are one of the reasons Verso Paper Corp. gave for closing its Bucksport paper mill in December.

It’s not yet clear if residential ratepayers are in for a comparable sticker shock. Early in 2015, the Maine Public Utilities Commission (PUC) will announce a new annual standard offer rate for residents and small businesses, effective March 1.

That number will be more stable than it is for medium-sized ratepayers such as Maine Shellfish, whose rates change every month. Until costs level off in spring, those larger operations are now doing their best to keep up.

The reason for those exorbitant costs is in their timing.

Electricity Chart

New England has grown more reliant on natural gas for the generation of electricity over the last couple years. The region has become less dependent on coal, oil and nuclear as the mining technique known as hydraulic fracturing —“fracking” — has opened untapped natural gas reserves.

Just this week, the Vermont Yankee nuclear facility went offline, depriving the region of over 500 megawatts of low-cost generating capacity.

Natural gas now accounts for more than 50 percent of Maine’s electricity. Yet the region’s natural gas pipelines can’t handle the peaks of that new volume, according to one top energy official.

Patrick Woodcock is director of the Governor’s Energy Office. In an interview, he explained that some city-dwelling Mainers traditionally used natural gas as a home heating source. As a result, the contracts of distributors such as Bangor Gas have long given them dibs on any liquid gas entering the state.

What gas remains is then delivered to the state’s several gas-fired generators, where it’s converted into electricity.

But with so many Mainers firing up their heaters in winter, Woodcock said, only a limited amount of gas remains for plants to convert to electricity. They then must pay for expensive oil or gas shipped from Canada or overseas, translating to costlier electricity.

With Woodcock at his flank, Governor Paul LePage has made the state’s high energy costs one of the banner issues of his second term. Among other measures, he supports a bill before Congress to fast-track the permitting for interstate pipelines.

Opponents worry that such pipelines could increase our dependence on fossil fuels and grant eminent domain to the companies proposing them.

But Woodcock countered that “natural gas can displace dirtier sources of energy” and help transition the state to more renewable energy systems. His office currently is completing a study of the economic potential for expanding hydropower across the state. They’re also considering the benefits of tapping into Canadian hydropower.

It may be several years before any of those efforts shake out, leaving many ratepayers shaking their heads and wondering how to use less electricity.

According to Kelli Grover, the quality assurance manager at Maine Shellfish, the company began replacing its lighting system last summer using a rebate from Efficiency Maine, a quasi-state agency that subsidizes investments in better heating and lighting systems.

The greatest beneficiaries of those investments are the individual ratepayers, explained the organization’s executive director, Michael Stoddard. For example, a grocery store might save $200 a year with new LED lights in its parking lot, he said.

But those investments also benefit ratepayers as a whole, Stoddard added, because they reduce demand on the grid.

Participation in Efficiency Maine’s rebate programs has grown considerably since last winter, Stoddard said. The resulting investments lowered Maine’s overall electricity costs by an estimated $185 million in fiscal year 2014, he said.

Funding for their rebates comes from utilities, federal grants and regional initiatives, Stoddard said.

At Maine Shellfish, Grover described their Efficiency Maine rebate as a “good program,” but said an analysis of savings wouldn’t be available until next summer.

Discussing the regional efforts to reduce costs and subsidize more renewable energy sources like wind, Marcos sounded a wary note.

“Energy costs in Maine are a killer, an absolute killer,” he said. “All these projects and promises, the bills just keep going up.”