1. Women In Government Benefits of Energy Diversity Friday September 30, 2016 2:15 pm Session

2. Maine Energy Fun Facts (and Some Not-So-Fun Facts) Maine has the lowest electricity use per customer of any state in the US. Maine has the highest per capita energy usage in New England. Maine is the most heating oil dependent state in the US (64% in 2013). Maine’s industrial sector accounts for nearly one-third of the state’s energy consumption and is the only New England state in which industry is the leading energy- consuming sector. Maine’s industrial sector produced more than one-fifth of Maine’s net electricity generation, the highest proportion of any state, except Louisiana. Maine had the lowest average retail electricity price in New England at the end of 2015. Nearly 90% of Maine is forested, so wood products, including biomass fuels, are an important part of the state’s rural economy. Nearly two-thirds of Maine’s electricity generation comes from renewable resources, more than any other New England state. 2 Sources: EIA and ISO-NE

3. Maine’s Electrical Generation is Diverse Data Source: EIA Maine generates nearly two-thirds of its net electrical generation with renewable resources. Nearly 90% of Maine is forested so wood products, including biomass fuels, are an important part of the state’s rural economy. 3

4. Maine’s Renewables As Compared to New England 4 Source: EIA data

5. Industrial Electric Load in Maine Maine has significant renewable energy resources, but it has the highest percent of electrical load dedicated to industrial users in New England, so it is highly susceptible to natural gas price volatility which drives the New England market prices. Industrial Electricity Sales as Percent of Total Electricity Sales (2014) 5 Source: EIA data

6. Maine has the lowest electricity use per customer of any state in the US. Maine has the highest per capita energy usage in New England. Maine is the most heating oil dependent state for home heating in the US (64% in 2013). Maine’s industrial sector accounts for nearly one-third of the state’s energy consumption, and is the only New England state in which industry is the leading energy- consuming sector. Nearly two-thirds of Maine’s electricity generation comes from renewable resources, more than any other New England state. Maine’s industrial sector produced more than 1/5 th of Maine’s net electricity generation, the highest proportion of any state, except Louisiana. Maine had the lowest average retail price in New England at the end of 2015. Nearly 2/3 rds of Maine’s electricity generation comes from renewable resources. Almost 90% of Maine’s GHG emissions come from transportation and heating, not electricity. Energy Really Matters to Maine (the Not-So-Fun Facts) So the stakes are very high for Maine when it comes to energy policy! 6

7. Maine’s Renewable Energy Policy Programs  Renewable Portfolio Standard (RPS) Competitive Electricity Provider Compliance Market (Class I & II) Maine Green Power Offer Voluntary Market  Net Energy Billing  Community Renewables Program Feed-in Tariff Renewable Energy Credit Multiplier  Long-term Contracting (LTC) Standard Offshore Energy Development Biomass Generation Or, “been there, done that…” 7

8. Maine Renewable Portfolio Standard Requirement Original Class II RPSNew Class I RPS Established in 1999 Established in 2007 No certification of units required Requires MPUC to certify generator as eligible. 30% of load requirement 1% of load requirement in 2008. Increased by 1% per year, topping out at 10% starting January 1, 2017. Suppliers can either purchase RECs or pay Alternative Compliance Mechanism (ACM). ACM adjusted upward annually by inflation (US Consumer Price Index). Eligible generation (< 100 MW): o Fuel cells o Tidal o Solar o Wind o Geothermal o Biomass/landfill o Hydro o Municipal Solid Waste Eligible “New” generation (< 100 MW, except wind): o Fuel cells o Tidal o Solar o Wind o Geothermal o Biomass/landfill o Hydro that meet fish passage requirements o Municipal Solid Waste 8

9. Lessons Learned – RPS Requirements  RPS Requirements: Original Class II RPS did not have desired effect of incentivizing renewables because the 30% requirement was too far below existing resource mix;  Vague legislative language setting Class I RPS eligibility standards (Title 35-A, §3210) has caused issues: “Was refurbished after September 1, 2005 and is operating beyond its previous useful life or is employing an alternate technology that significantly increases the efficiency of the generation process.” There have been many proceedings, and legal challenges, to establish the intent of refurbishment language. It is sometimes very difficult to identify “refurbishments” from maintenance. As a result, the policy may compensate generators that are not really “new.” 9

10. Maine Green Power Option Maine Green Power Option Offer: Half block: 250 kWh per month - 4.95/mo. 1 block: 500 kWh per month - $8.95/mo. Roughly equivalent to the average households usage 10 blocks 5,000 kWh or more per month – $6.45/block/mo. The Commission established a State-wide green power offer by selecting, through a competitive bid process, a “green power provider” (currently 3Degrees Group, Inc. http://www.3degreesinc.com/);http://www.3degreesinc.com/ Maine Voluntary Green Power Offer is a voluntary mechanism for customers to purchase RECs. http://www.maine.gov/mpuc/greenpower/http://www.maine.gov/mpuc/greenpower/ The Green Power supplier allows customers to purchase RECs that correspond to all, or a portion, of the customer’s electricity usage (above and beyond what customers already pay as embedded in their electricity rates from the RPS compliance requirements). 10

11. Lessons Learned – Maine Green Power Option  Program is successful and has had no problems in implementation. This number has now grown to 2,900 customers currently enrolled.  Because the program is voluntary, there are no concerns that the program has increased rates for consumers that do not participate. 11 Data Source: MPUC

12. Net-Energy Billing Current Rule  Net Energy Billing customers are allowed to offset (or “net”) electrical usage in a month with excess future or past electrical generation in other months. In Maine, NEB customers can carry a balance for up to 12 months;  Pursuant to Maine Public Utilities Commission Rule, Chapter 313.  Available to small renewable generators (currently <660 kW); 12 Proposed Rule: The Maine Public Utilities Commission recently issued a proposed rulemaking (Docket No. 2016- 00222) to modify Chapter 313. Proposed rule would:  Increase limit for eligibility to 1 MW;  Define “existing customers” as those with arrangements prior to December 31, 2016 and allow them to net 100% of T&D charges through 2031.  Reduce the amount of netting of T&D charges allowed for “new” NEB customers by 10% per year through 2025.

13. Lessons Learned – Net-Energy Billing  Originally implemented as a way to reduce metering costs for small renewable generators and, later, as a way to incentivize small renewables. Essentially pays full retail rate for generation.  NEB policies are being examined across the United States with 22 states taking 35 actions in the first quarter of 2016 alone. Recent, significant growth in NEB installations is making it clear that the current level of subsidies provided by other ratepayers under the current policy is unsustainable in the long run and that NEB policies must be revisited. 13

14. Renewable Contracting The Maine Public Utilities Commission has authority to direct utilities to enter into long-term contracts under a variety of legislative initiatives:  Long-term Contracts for Traditional Resources (35-A M.R.S. 3210-C) : Designed to reduce electricity costs and/or serve as a hedge against market volatility (preference for renewables). RFPs issued in 2008, 2009, 2010, 2012, 2014, and 2015.  Long-term Contracts for Deep-Water Offshore Wind Energy Pilot and Tidal Demonstration Projects (35-A M.R.S. 3210-C and 38 M.R.S. 631(3)) : Designed to promote development of off-shore wind and tidal projects. RFP issued in 2010 and then supplemented in 2013  Biomass Resources (2016 session, P.L 2015, ch. 483) : Designed to promote biomass generators in the short-term (two-year contracts). RFP issued in 2016.  Community-Based Renewable Energy Projects (35-A M.R.S. §§3601 - 3610) : Designed to encourage the sustainable development of community-based renewable energy. RFP issued in 2011, 2013, and 2015. Long-term contracts must be consistent with Maine’s greenhouse-gas reduction policies and goals (preference for renewable sources). Maine has run solicitations for long-term contracts for: Traditional resources in RFPs in 2008, 2009, 2010, 2012, 2014, and 2015 Deep-Water Offshore Wind Energy Pilot and Tidal Demonstration Projects; Biomass Resources 14

15. Community Renewables Program  Allows contracts of up to 20 years;  Incentive based on either: Renewable Energy Credit (REC) multiplier of 150%; Long-term contract (feed-in tariff) capped at 10 c/kWh;  Eligible Resources: Fuel cells, tidal, solar, wind, geothermal, hydro, biomass;  Project may not exceed 10 MW;  Must be at least 51% owned by Maine residents; Overall capacity limitation of 50 MW (program is fully subscribed)  Designed to encourage development of community based renewable energy resources 15

16. Lessons Learned – Community Based Renewable Pilot  As market prices have dropped relative to the feed-in tariff rate of 10 c/kWh and technology of renewables have improved, program has increased in activity.  However, while program is fully subscribed at 50 MW, only about 6 MW is under development. Actual development is hindered by lack of financing. Number of entities willing to finance projects is still limited; Requirement for 51% of local ownership further limits financing opportunities. 16

17. Lessons Learned – Long-Term Contracts  While long-term contracts can provide a hedge against market price volatility and can promote renewable generation, forecasts are often wrong and can result in consumers paying significantly above market prices for contracts.  Utility rates in Maine still reflect above-market prices from contracts signed under PURPA policies of the 1980s and 1990s. It is estimated that the biomass plants under contract with Central Maine Power Company alone have resulted in Maine ratepayers paying more than $2 billion in above-market costs over the period 1995 - 2015. 17 Source: Central Maine Power Company

18. Renewable Policy Overall Lessons Learned  Maine does not have an integrated, inclusive, renewable energy policy.  The cumulative impact of these programs is that ratepayers are paying (and have paid) millions annually in above-market costs, and these costs increase each time a new program is adopted or expanded.  We need to review future policies from a comprehensive view to make sure that the programs accomplish their goals without over-burdening ratepayers. 18 Lear ning ?

19. Questions? Angela Monroe Deputy Director Maine Governor’s Energy Office angela.monroe@maine.gov (207) 624-7446 Website: http://www.maine.gov/energy 19