What Would be the Downstream Impacts of a Proposal in the Maine Legislature for a State Takeover of Utilities?
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- Dec 26, 2019 12:14 pm GMT
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The state of Maine has gotten a lot of things right in the energy department. Cumulative 2018 figures from the U.S. Energy Information Administration show nearly 35.2% of power generated in the state originating from natural gas with only 27.5% from coal. This aligns with the overall trend for natural gas being the primary fuel source for American utilities, dispelling any myths that coal is, or likely will ever gain the top spot again if current socioeconomic factors hold. Factor in renewables, and the story becomes even more interesting. Three-fourths of Maine's net electricity generation came from renewable energy resources, an enviable amount by any standard. Of those renewables, clean and reliable hydroelectrcity contributed the lion's share at 31% with biomass and wind trailing closely behind. Up for debate today now is a state bill that would have the state takeover private electric companies and what the downstream impacts would be for end-user rates and generation sources.
Typically, residential customers in the United States have 13 percent cheaper rates than customers of Investor-Owned Utilities according to the American Public Power Association. This is due to consumer owned utilities not having the same profit component as IOUs, not paying their exectuives stratospheric salaries, and being classified as nonprofits and therefore not paying federal income taxes. In Maine, however due to a few unique factors, IOUs in the state have average rates that are actually cheaper the state's nine consumer owned utilities. One reason is because of the expensive rates in powering remote islands and rural swathes of the state.
In the same vein, some key questions to be answered would revolve around rates and what would exactly happen if all Maine IOUs were taken over by the state. Would rates somehow be the average of current consumer-owned and IOU rates? Would residents in Portland be subsidizing energy operations in more rural parts of the state?
From a generation perspective, the hope is that any state takeover would continue leveraging Maine's abundant natural resources for generation including their hydroelectric power. Making the most of renewables that are reliable and don't require new infrastructure build-outs as is the case with solar and onshore wind, hydropower would likely make the cut as a preferred generation source regardless of what the state legislature decides.