July 19, 2016

Historic Decision by Maine Regulators Will Benefit New England’s Electricity Consumers

Portland, Maine, July 19, 2016—Today’s decision by the Maine Public Utilities Commission is historic for Maine and New England and a tremendous step forward for New England’s electricity consumers.

The significance of this decision is that the Maine PUC, after more than two years of consideration, voted to authorize its electric utilities to buy natural gas pipeline capacity so that electric rates could go down.

Anthony Buxton, partner and chair of the Energy and Utilities Practice Group at Preti Flaherty, speaking on behalf of the Industrial Energy Consumer Group, explains that the region needs access to natural gas. “Natural gas is coming out of the ground 400 miles from Maine in Northern Pennsylvania equivalent on a BTU basis to gasoline in your car at 10 to 20 cents a gallon. With the exception of New England, all of the United States has access to that gas. New England does not have access exactly when we need it most during the cold of winter.”

For many decades, energy prices have hollowed out the New England economy, especially in rural areas, which include most of Maine. Towns that had one or two large employers now frequently have none, as consumers have succumbed to the long-term drain of high energy prices.

With this decision by the Maine PUC, if four other New England states follow suit, the region will have access to adequate supplies of natural gas on all but the very coldest days of the winter and will not need to rely on expensive coal.

“New England remains the most oil-reliant region of the country, at great expense to our economy and our environment,” Buxton explains. “For example, sixty percent of Maine homes and forty percent of New England homes still heat with oil. The alternatives are gas heat and heat pumps, both of which require more natural gas. Moving from less reliance on oil and coal and greater reliance on gas will save New England between approximately $2 and $4 billion per year. Some of this savings can be used to increase reliance on renewables and energy efficiency.”

Buxton points to the fact that, “Maine has lost five paper mills in the last three years. This is due in large part to the region’s high and unpredictable electricity prices.” Buxton’s clients include Maine’s larger energy consumers and others in the Industrial Energy Consumer Group.

Buxton also calls the PUC’s decision “extremely careful and conservative.” Furthermore, he notes, “The commission used a standard that is unprecedented in utility regulation for its conservativism. The commission required that the benefits over a ten-year period of such a gas pipeline contract must outweigh the cost over twenty years—making it a certainty that consumers will benefit. Further, the commission highlighted the fact that Maine consumers are already paying an extra $200 to $300 million per year because of inadequate pipeline capacity. In contrast, the PUC committed to only $75 million per year or less of pipeline capacity costs, which will eliminate about $200 million per year in existing energy costs.”

Regarding today’s decision, Buxton states, “Thus, there is light at the end of the energy tunnel, and for once it’s not another train.”