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Governor’s Address: Bad decisions in Augusta result in higher electric prices

Bad decision-making in energy policy is expensive. These bad decisions show up on your electric bill, and they’ve been holding Maine back for 30 years.

Dear Maine Taxpayer,
In the 1970s, environmentalists, like NRCM, blocked the expansion of hydropower, which had been vital to Maine’s economy and manufacturing base.
Meanwhile, the Province of Quebec decided to pursue hydro development. Quebec is now ready to be a huge exporter of electric power to New England. We could benefit from their low rates.
The 1980s were really bad. The Legislature gave contracts to independent generators at the equivalent of the future price of oil. They got the future price of oil very wrong, and Mainers paid $2 billion in above-market contracts. These are called “stranded costs.” We are still paying millions for that decision.
In 1987, Maine rejected a long-term contract and transmission project with Hydro Quebec in favor of higher-priced generators at home. But Vermont moved forward with a hydroelectricity project with Quebec. This hydro project is helping Vermont lower its high cost of electricity.
In the 1990s, Maine broke up the utilities and sold our hydroelectricity assets to the highest bidder. Brookfield is now the largest owner of our hydro dams, and they have made millions selling power back to the Maine people—even though these projects were supposed to benefit the public.
The idea of this effort, called “restructuring,” was to create a market-based system and avoid the mistakes of the 1980’s. Instead of allowing the markets to work, lobbyists have created expensive renewable energy credits, long-term contracts for wind and costly carve-outs for solar. The entire model is broken.
The bad decisions continue today. In 2009, the Legislature created a requirement to sign contracts for 10-cents a kilowatt—which was double the market price—for community renewable projects. This is expected to cost $300 million over the lifetime of the contracts.
Instead of admitting this pilot program was incredibly expensive and a massive failure, the Legislature determined the State should try to get even more above-market contracts. They expanded the program in 2015 over my veto.
Bad decisions are very expensive. Last month, rates increased between 7 and 20 percent for all electric customers, whether they were an elderly couple or a company trying to put Mainers to work. “Stranded costs” increased by 363 percent!
Poor decision-making by politicians in Augusta is increasing your electric bill and making it harder for companies to compete in Maine. Our past is full of bad decisions, but it does not have to be our future.
I favor all forms of energy, including natural gas, hydro, wind, solar and nuclear—but only at market rates. The Legislature must stop approving long-term contracts that enrich lobbyists at the expense of Maine people and Maine companies.
These bad decisions are costing Mainers money and jobs. It’s time to get smart about energy policy.
Thank You,
Paul R. LePage

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