ELECTRICITY WOES

An alternative electricity pricing scheme, endorsed last week by most utility regulators in New England, is not an improvement over a controversial federal plan to encourage more power generation by paying electric companies, whether they produce more power or not. Both plans harm Maine consumers for the benefit of those in southern New England, highlighting a long-term problem that state lawmakers should begin to address.

The problem is that Maine, being a small state with a deregulated electricity system, has little power to change the regional situation. This has led to calls for Maine to consider withdrawing from the regional power grid, known as ISO-New England. Such a possibility and the different scenarios that would results – Maine on its own, Maine working with the Canadian Maritimes, for example – should be investigated by the Public Utilities Commission.

Beyond what such a review concludes, there are two major problems that lawmakers are grappling with now.

One is that Maine is heavily reliant on natural gas for its electricity generation. As natural gas prices continue to climb, so will electricity prices. Alternative energy, such as wind and solar, and conservation will help but are not the entire solution. The governor’s energy policy and a bill sponsored by Sen. Philip Barlett, D-Gorham, seek to encourage efficiency. The governor’s bill also calls for more renewable power production here.

The other problem is that Maine deregulated its utilities but other states have not. This puts Maine at a disadvantage because electricity prices and supply are determined by market forces, not state regulators. Because other New England states have not deregulated, state officials have more control over utilities there.

Maine is not likely to recreate the old system where companies such as Bangor Hydro-Electric Co. owned power generation facilities and the lines that transported that power to homes and businesses (they now only own the latter). But, lawmakers should consider taking action to spur more in-state power generation or to allow long-term contracts to ensure an adequate power supply. The latter is also included in the governor’s energy proposal. This is especially important if Maine seriously considers leaving ISO-New England, because the state would need enough back-up electricity to meet demand, especially during emergency situations such as equipment failures.

The agreement reached last week would establish a single price zone for all of New England and would pay all generating companies, even those that are extremely profitable, to encourage them to produce more power. Maine regulators walked out on negotiations of the agreement last month and Massachusetts officials oppose the plan.

An alternative, crafted by the Federal Energy Regulatory Commission, also included large payments to all generation companies but it divided New England into different zones with higher rates in zones where it is more expensive to build and operate power plants. It is up to FERC to decide whether to accept the new plan or move forward with its own.

Either way, Maine consumers will pay more. That’s why lawmakers should support energy efficiency programs, alternative energy production and long-term electricity contracts.