State of Energy Infrastructure in Maine 2012

By Kaitlyn Bernard, Jackson Broadbent

Executive Summary

The State of Energy Infrastructure in Maine is the second chapter in The State of Maine’s Environment 2012, a collaborative report produced by Environmental Policy students in the Environmental Studies Program at Colby College in Waterville, Maine. This is the seventh State of Maine’s Environment report published since 2004.

This chapter examines the current state of energy infrastructure in Maine and focuses primarily on the transmission of electricity and natural gas. We describe the process of electricity and natural gas transmission in general and discuss how it relates to the production and consumption of energy in Maine and New England. We identify a number of trends in energy transmission and analyze how specific infrastructure developments have contributed to these issues. We evaluate the role the energy infrastructure has on a number of environmental concerns, most notably climate change and greenhouse gas emissions. Additionally, we consider how energy infrastructure is affected by command-and-control and market-based policies aimed at reducing emissions. Maine and New England have a number of infrastructure development projects on the horizon. We identify some of these proposed projects and discuss their possible implications for Maine and New England’s energy future. Based on our research, we recommend upgrading Maine’s electricity transmission network to accommodate for a growth in renewable electricity generation and transmission of clean energy throughout New England. In terms of natural gas development, we recommend cautious and incremental expansion of Maine’s natural gas transmission network to aid in a transition away from oil and ultimately towards a sustainable energy future.

Introduction

Energy use in the US can be characterized by three interconnected systems: production, transmission, and consumption. Energy production is the first step in the system, where renewable and nonrenewable resources are converted into energy. The type and source of production tend to dominate the national and international political media regarding energy. At the end of the system, the consumption sector deals with energy consumers. It includes the electricity and heat powering households, the fuel burned in vehicles, and the energy used by commercial and industrial facilities to produce goods and services (Wolfson, 2008). Individuals are generally most familiar with this part of the system, with concerns about their energy bills and individual use. In between these two parts is the transmission network, dealing with the overall energy infrastructure and moving energy from its source to the end user. Transmission infrastructure not only directly influences the types of energy we have available, but it also dictates future energy developments (Turkel, 2012b). A consideration of the current status of energy infrastructure is necessary to understand the broader challenges and analyze the nation’s energy system.

Maine’s unique geographic location between the rest of New England and the Canadian Maritime Provinces makes it important to the regional energy transmission network. The regional network is characterized by interconnected pipelines and electricity transmission lines which distribute energy across the state and region. In this context, Maine serves as an energy corridor for the region by moving energy from source to end-user across state lines and the Canadian border (Turkel, 2012a). Maine is essentially the “last frontier” in the nation’s natural gas network, with an open market, high consumer demand, and significant opportunities for statewide expansion. Maine’s current natural gas pipeline network links the state to the Maritimes and Northeast pipeline and the Portland Natural Gas Transmission System, both of which carry natural gas from Canada (Dickerson, 2012).

The state’s network of electricity transmission lines is aging and can no longer efficiently handle the electricity the network demands. Most of these electricity lines were constructed in the 1960s and 70s, making the network roughly 40 years old (Polestar Communications & Strategic Analysis, 2007). These conditions create challenges for electricity transmission by reducing power reliability, creating bottlenecks which limit electricity transfer from source to demand, and constrain the potential for new renewable development.

We identified these emerging trends in transmission as salient issues in the state of Maine. In our research, we compare the role of natural gas pipelines and electricity lines and how each drives changes in Maine’s energy portfolio. Our overall focus is on the electricity sector of the energy landscape, but we also discuss the use of natural gas to provide heat to consumers in Maine.

Goals and Objectives

In this chapter we examine the state of energy infrastructure in Maine with particular emphasis on electricity transmission and natural gas networks. First, we examine the historical context of energy development in Maine. Next, we identify the current state of natural gas pipelines and electricity transmission lines and explore future development proposals in each infrastructure type. Based on these findings, we identify relevant drivers of change, including businesses and utilities, market-based policies and incentives, and environmental concerns. We summarize these findings as a series of conclusions about the state of energy infrastructure in Maine. Finally, we conclude with a set of policy recommendations based on our analysis and research.

Historical Context

Energy development in Maine is associated with the evolution of Maine’s economy. As early as 1680, abundant water resources allowed industries to operate mills run by hydropower. The availability of hydropower encouraged development along Maine’s rivers in the timber, agricultural, and textile industries (Smith, 1951). These mills were isolated systems generating enough power to cover local demand (MaineASCE, 2008).  The shift from isolated, water-dependent energy sources to larger scale electricity transmission influenced Maine’s development trajectory, allowing communities and industries to move away from the riverbanks and closer to raw materials and markets (MaineASCE, 2008).

As Maine’s population grew, energy needs shifted towards filling consumer needs. There became an economic incentive to merge these small, isolated industrial energy producers into larger utility companies. Mergers lowered individual operating costs and opened up the transmission system to more end-users. The original isolated energy producers grew into the three main electric service providers in Maine: Central Maine Power (CMP), Bangor Hydro Electric (BHE), and Maine Public Service Company (MPS) (MaineASCE, 2008). Through this merger period, these utilities operated under a vertically integrated paradigm, owning both the generation facilities that produced electricity and the transmission systems to deliver it. This gave them substantial monopoly power within their geographic service territories (Polestar Communications & Strategic Analysis, 2007).

Initially the three large electricity utilities remained disconnected from each other and dominated their respective areas. The state resisted out of state connections, with the state government maintaining the strict doctrine of “Maine power for Maine people” through the early 1900s (Smith, 1951). During this time, the state legislature blocked several attempts to open Maine’s energy markets by connecting to power grids in other states and Canada. However, as electricity demand increased, the main electric utilities connected their transmission systems to improve electrical reliability and reduce the costs of operating independently. BHE increased their transmission network to connect with CMP, and they both connected to New Hampshire’s transmission network. This connection was instrumental in connecting Maine to the rest of New England’s electrical grid. MPS in northern Maine connected to New Brunswick’s transmission network and still operates independently of the New England power grid system (MaineASCE, 2008).

This expansion of the transmission system in New England was mostly constructed in the 1960s and early 1970s, so the power lines which make up the regional electricity grid are about 40 years old (Polestar Communications & Strategic Analysis, 2007). Initially, these connections were only used to provide increased system reliability and share excess power generation. The utilities had no obligation to allow other companies to transport electricity over their transmission lines and rarely coordinated (Polestar Communications & Strategic Analysis, 2007). In 1965, a major blackout sparked coordination between New England utilities to increase reliability and security. This initial coordination was organized by the New England Power Pool and was a voluntary system to maintain the day-to-day supply and demand balance of the region’s grid (Polestar Communications & Strategic Analysis, 2007).

Substantial changes in the electricity industry happened as a result of the federal Energy Policy Act of 1992. The Federal Energy Regulatory Commission (FERC) forced electric utilities to restructure and allow open access to their transmission networks (Polestar Communications & Strategic Analysis, 2007).

Maine’s Electric Industry Restructuring law was enacted on March 1st, 2000. This law required electricity utilities to divest from generation facilities, creating an open electricity market. Electricity utilities maintain the transmission and distribution systems, but no longer have affiliation with electricity generating sources (PUC, 1997).

Disconnecting electricity generating plants from utilities operating the transmission network improved the competitiveness of the electricity market. With this ownership shift, independent system operators (ISO) were needed to monitor the competitive electricity market. The ISOs are responsible for managing the procurement of energy generation and overseeing efficient transmission and distribution of energy (ISO New England, 2012b). This open, regional market is how energy is allocated throughout the region today.

In addition to developments in electricity transmission networks, the emergence of natural gas in Maine has been a major driver of changes to the state’s sources of energy. Prior to 1999, natural gas did not exist as a source for electricity generation in Maine, and electricity came from petroleum, coal, nuclear, hydro power and biomass sources (EIA, 2010b). Maine had one nuclear power facility, Maine Yankee Atomic Power Company in Wiscasset. Maine Yankee started generating power in 1972, but was decommissioned in 1996 because it was no longer economically viable to operate (Maine Historical Society, 2010). At that time, Maine Yankee provided the second largest share of electricity generating capacity in the state (EIA, 2010b).

In 1999 Maine connected to the region’s natural gas transmission network with the development of the Maritimes and Northeast Pipeline (M&NP) and the Portland Natural Gas Transmission System (PNGTS). Both of these pipeline networks carry natural gas from sources in Canada and merge into one jointly owned pipeline in Portland, Maine. This jointly owned line connects into the regional transmission network in the Boston area (Maritime and Northeast Pipeline, 2009). The new influx of natural gas quickly changed the composition of sources used in the electric power industry, and by 2001 natural gas had the greatest installed generating capacity of all sources in New England (EIA, 2010b). Figure 2.1 shows the change in the electricity generating capacity of primary sources in Maine between 1995 and 2010.

 

Figure2.1

Figure 2.1 Electricity generating capacity by primary source in Maine from 1995 to 2010 (Source: US Energy Information Agency, 2010)

These historic infrastructure development trends directly influence the types of energy we have available and dictate our energy future. Maine must be deliberate in energy infrastructure development so we can build effectively for tomorrow’s energy needs.

Methods

We first conducted a literature review to gather information about stakeholders and regulatory bodies involved with Maine energy policy. We also drew on reports detailing energy projects in Maine to provide an understanding of the current state of energy development in Maine. Of special note is a book published in 1951 about Maine’s energy policy, which aided us in developing the historical context (Smith, 1951).

We attended the GrowSmart Maine 2012 and Sustain Mid-Maine conferences to gather information and establish contacts with energy experts. We also met Colby alumnus Matt Kearns, Vice President of Northeast Business Development for First Wind and spoke with him about specific aspects of wind energy development. This provided us with insight into the permitting process for wind projects. Mr. Kearns also shared the Maine Department of Environmental Protection (MDEP) permit application for the Bowers Mountain wind project. We spoke with Dylan Voorhees and Emmie Theberge with the Natural Resources Council of Maine (NRCM) about current trends in natural gas development and Maine’s current energy landscape. Tom Tietenberg, Colby Economics Professor emeritus and expert on the Regional Greenhouse Gas Initiative (RGGI), provided information about Maine’s role within regional energy markets and the benefits Maine has garnered from RGGI.

Our data highlights a number of trends in energy use in Maine, New England and the US. A majority of the data comes from the US Energy Information Administration website and shows trends in electricity generating capacity, natural gas consumption by sector, prices of fuel, and carbon dioxide emissions. We also reviewed ISO-New England’s interconnection queue to gather data on transmission investment in Maine and New England. Our GIS data came from the Maine Office of GIS and the US Fish and Wildlife Service.

This report is focused on statewide trends in electricity and natural gas infrastructure. Electricity and natural gas consumption are often divided by consumer group (residential, commercial and industrial) but our study does not explicitly differentiate among these three groups. Additionally, we did not consider energy data on transportation, as it is beyond the scope of this report. Our study focuses on the electricity sector of Maine’s overall energy profile, but we consider the role of natural gas in both electricity generation and consumer heating.

Laws and Institutions

Maine’s electricity portfolio is regulated by federal and state laws relating to energy infrastructure, investment, and development. These laws address a range of issues and policy objectives, including regulating the energy market, setting standards for different types of sources, and investments and incentives for energy efficiency and renewables.

Transmission of both electricity and natural gas are regulated by different government bodies and laws. New England’s electricity transmission network is regulated regionally, but both federal and state laws have oversight for portfolio standards and incentives. Trends in natural gas development incorporate Maine and New England into the interstate and international transmission network of natural gas. Maine laws are responsible for regulating the state’s management of existing pipelines and the development of new pipelines that could shape the future of Maine as an energy corridor.

Federal Laws

The Federal Energy Regulatory Commission (FERC) has authority over utilities and regulates the production, distribution, and market of various sources of energy. FERC and other regulatory bodies like the North American Electric Reliability Council (NERC) ensure fair and reliable distribution of electricity.

The Energy Policy Act of 1992 entirely restructured the country’s electricity market. This law gave FERC the authority to force electricity utilities to divest from generating facilities and allow open access to transmission networks (Polestar Communications & Strategic Analysis, 2007). This restructuring opened up the electricity market in order to increase competition and lower consumer prices (PUC, 1997).

Another relevant law impacting energy infrastructure development is the production tax credit (PTC) for renewable energy. The PTC was initially implemented in 1992 and has been renewed and expanded multiple times. It incentivizes renewable energy development by providing a per-kilowatt-hour tax credit for all renewably generated electricity. This is one of the most critical components of the future of the wind energy industry (Kearns, 2012). These tax credits were most recently reinstated in 2009, but are set to expire in 2013 unless Congress renews them. If the PTC was extended, wind energy development would have significant potential to develop rapidly by decreasing costs of development, increasing incentives to invest in wind projects, and providing a sense of stability to the entire industry (Kearns, 2012). The future of these tax credits will have a huge impact on renewable energy development across the country and in Maine.

Table 2.1 Selected Federal Laws Regulating Energy Infrastructure and Development

Law

Year

Description

Location

Public Utility Holding Company Act (PUHCA) 1935 Broke up large PUHC trusts that controlled the electric industry, gives FERC regulatory control over them and requiring transparency. 15 USC §79
Natural Gas Policy Act 1978 Grants FERC authority over inter and intra state gas production. Established price ceilings with eventual phase out. 15 USC §3301
Renewable Electricity Production Tax Credit (PTC) 1992 Incentivizes renewable energy production by providing a per-kilowatt-hour tax credit for electricity generated by qualified energy sources. Has been renewed and expanded multiple times, most recently in 2009. 26 USC §45
Energy Policy Act of 1992 1992 Restructured electric utilities by disconnecting generational facilities from electricity service providers. Opened up electricity market and increased competition. 42 USC §13201
FERC Orders 888 and 889 1996 Requires wholesale transmission of electric energy be unbundled from the sale of power
Energy Policy Act of 2005 2005 Created the North American Electric Reliability Council (NERC), a self-regulatory “electric reliability organization” to develop and enforce reliability standards and monitor the bulk power system.  42 USC §15801
American Recovery and Reinvestment Act 2009 2009 Extended tax credits for renewable energy production (until 2014) and provided funding for energy infrastructure and investment in energy efficiency and renewable energy research. 42 USC §16516

State Laws

State laws influence where infrastructure developments can be located and set statewide goals and incentives. The Natural Resource Protection Act designates Maine’s natural resources as significant assets for the state and formally establishes that these assets are worth protecting. The law has a mandated permitting process for any development that will impact protected natural resources or wetlands (DEP, 2011b). These permits dictate where energy transmission developments can occur. More recently, the state legislature passed “The Act Regarding Energy Infrastructure Development” in 2011, which sets up a process for companies to develop energy pipelines or transmission lines along I-95 and two other right of way corridors (Table 2.2).

State energy policies also provide economic subsidies and incentives which drive changes in energy infrastructure development. There has been a recent overall shift towards supporting more green energy development, with mechanisms like Renewable Portfolio Standards (RPS) and the Efficiency Maine Trust Act (DSIRE, 2012).

Renewable Portfolio Standards (RPS) set targets for increasing the share of renewable energy in state energy portfolios. These standards vary in scale and implementation deadlines from state to state and set minimum levels of renewable energy that must serve each state (Yin & Powers, 2010). Maine has a strong RPS target when compared to other New England states, setting a goal of 40% renewable energy sources by 2017 (Figure 2.2). This target is broken up into two different classes: Class I consists of the new renewables developed after 2005; Class II includes renewables that existed before 2005. Maine’s Class I standard for new energy generation requires 10% of development to be sourced by renewables by 2017 (DSIRE, 2012).

Figure2.2

Figure 2.2 Comparison of New England Renewable Portfolio Standards (DSIRE, 2012)

Maine is part of the Regional Greenhouse Gas Initiative (RGGI), a market-based emissions reduction program. RGGI sets a regional cap on the amount of carbon dioxide emissions that power plants are allowed to emit. Each plant is given tradable emissions allowances which are bought and sold at RGGI auctions. These auctions create incentives for facilities to operate efficiently and promote a shift towards more renewable electricity generating capacity (RGGI Inc., 2012a). In Maine, the revenue from these auctions is used to support energy efficiency through The Efficiency Maine Trust. Efficiency Maine uses this funding to help businesses invest in energy-efficient equipment, help low-income households weatherize their homes, and promote programs designed to reduce energy demand (RGGI Inc., 2012b).

Table 2.2 Selected State Laws Regulating Energy Infrastructure and Development in Maine

 Law

Year

Description

Location

Natural Resource Protection Act 1988 A permit is required when an activity will impact any protected natural resource or wetland. 38 MRS §480
An Act to Restructure the State’s Electricity Industry 1997 Forced vertically integrated electric utilities to divest from their generation facilities and maintain control only over transmission of electricity in order to create a fair and competitive electricity market system. 35-A MRS § 3204
Voluntary Renewable Resources Grants 1997 Provides grants to non-profit and community organizations for the development of renewable energy. 35-A MRS §3210
The Efficiency Maine Trust Act 2009 Establishes the Efficiency Maine Trust responsible for Maine’s energy efficiency and renewable energy programs. 35-A MRS §10101
Revised Statutes Regarding Natural Gas Utilities 2010 Declares that natural gas transmission is of public concern. Regulates process for constructing pipelines. 35-A MRS c.45 §4502
Renewable Portfolio Standards 2011 Sets the state goals for renewable energy’s share of the energy market. By 2017, Maine must have 40% renewable energy sources. 35-A MRS c. 32. §3210
An Act Regarding Energy Infrastructure Development 2011 Sets up a process under which companies/developers can apply to the State to build pipelines, transmission lines or other energy infrastructure along I-95 and two other corridors. 35-A MRS c. 45. §4501

Stakeholders

Maine’s energy field has a diverse range of stakeholders involving federal, regional, and local governments, industry, NGOs, and consumers. Each stakeholder group has a role in facilitating the success of the regional energy infrastructure system across New England and eastern Canada.

Federal Stakeholders

Department of Energy

The US Department of Energy is charged with addressing federal energy, environmental and nuclear policies (US DOE, 2012). The DOE is especially focused on supporting research and development in new energy science and technology. It is one of the six federal agencies which provide about 97% of all federal academic research and development support in science and engineering (National Science Foundation, 2012). In Maine, the DOE has been involved in funding renewable energy development research, especially the offshore wind technology program at the University of Maine (Graff, 2010).

Federal Energy Regulatory Commission (FERC)

FERC is an independent agency that regulates the transmission of electricity, natural gas, and oil. It oversees siting of interstate natural gas pipelines and storage facilities and monitors energy markets across the country. It also provides oversight in environmental matters associated with interstate energy transmission (FERC, 2012).

Environmental Protection Agency (EPA)

The Environmental Protection Agency enforces all federal laws protecting human health and the environment. It ensures that environmental protection is part of any federal policy, especially with policies concerning industry, energy, and natural resources. In addition to developing and enforcing regulations, the EPA studies environmental issues and provides grants to state environmental programs, non-profits, and educational institutions (EPA, 2012c).

Army Corps of Engineers

The US Army Corps of Engineers provides oversight for any projects or developments impacting wetlands and waterways.  It has permitting power over any type of development that has potential wetland impact (US Army Corps of Engineers, 2012). This is especially important in determining locations of natural gas pipelines and electricity transmission lines. It is much easier to implement projects that avoid wetland impacts altogether because the US Army Corps permit process is extensive (Kearns, 2012).

Regional Stakeholders

Independent System Operator- New England (ISO-NE)

Regional electricity transmission for Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont is operated by ISO-New England. ISO-NE is responsible for managing electricity demand and reliability across the entire region and ensuring competitive markets for electricity. ISO-NE also forecasts future energy demand and plans development projects in New England (ISO New England, 2012b). ISO-NE does not regulate the electricity utilities in northern Maine.

Northern Maine Independent System Administrator (NMISA)

The electric utility companies serving consumers in Northern Maine operate under the Northern Maine Independent System Administrator. These four companies include: Maine Public Service Company, Eastern Maine Electric Cooperative, Houlton Water Company, and Van Buren Light and Power District. New Brunswick Power, the utility serving the province of New Brunswick, is also a member of this regional network. NMISA is responsible for the administration of the northern Maine transmission system and electricity markets, similar to ISO-NE’s regional oversight (NMISA, 2012).  

Regional Greenhouse Gas Initiative (RGGI)

RGGI is a cooperative effort among Maine, Connecticut, Delaware, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont to reduce carbon dioxide emissions produced by electricity generating facilities. It is the first mandatory, market-based emissions reduction program in the United States and establishes a regional cap on the amount of CO2 that power plants can emit (RGGI Inc., 2012a). Each plant is given tradable emissions allowances which are bought and sold at RGGI auctions. This initiative provides an economic incentive for industrial energy producers to operate as efficiently as possible because the amount they emit influences the amount they have to pay at the auction (Tietenberg, 2012).

Portland Natural Gas Transmission System (PNGTS)

The Portland Natural Gas Transmission System is an interstate natural gas pipeline that connects to the TransQuebec and Maritimes Pipeline at the Canadian – New Hampshire border. The pipeline carries gas through New Hampshire into Maine and then connects with the Maritimes and Northeast Pipeline in Westbrook, ME. Since it was completed in 1999, the PNGTS has provided utilities, industrial plants and electricity generating facilities across New England with natural gas (Portland Natural Gas Transmission System, 2000).

Maritimes and Northeast Pipeline (M&NP)

The Maritimes and Northeast Pipeline was built in 1999 and transmits natural gas from offshore developments in Nova Scotia to Atlantic Canada and New England. The M&NP crosses the Canadian – Maine border near Baileyville, ME and connects to the Portland Natural Gas Transmission System in Westbrook, ME. At this connection point, the two pipelines become a jointly owned pipeline that continues into Massachusetts. (Maritimes and Northeast Pipeline, 2009).

Maine Stakeholders

Maine’s Energy Companies

The largest electricity providers in Maine are investor owned utility companies: Central Maine Power, Bangor Hydro Electric, and Maine Public Service. These utilities serve the majority of end-users and consumers in the state and drive electricity development and transmission system changes and upgrades (MaineASCE, 2008).

Maine has 10 small consumer owned utilities operating at the community level across the state: Monhegan Plantation Power District, Eastern Maine Electric Company, Houlton Water Company, Kennebunk Light & Power District, Isle-Au-Haut Electric Power Company, Van Buren Light & Power District, Swans Island Cooperative, Fox Islands Electric Cooperative, Town of Madison, and Matinicus Plantation Electric. These companies have a smaller overall impact on the state electricity market because they serve smaller and more localized consumer bases. Consumer owned utilities have more operational flexibility because they are not influenced by stockholders and larger corporate interests.

Figure2.3

 

Figure 2.3 Electricity service providers by region (Source: Maine Office of GIS)

Three natural gas distributors currently operate in the state: Unitil, Bangor Gas Company, and Maine Natural Gas. These companies are authorized and regulated by the Maine Public Utilities Commission (PUC) to provide local distribution of natural gas. Unitil serves consumers in the greater Portland area, Lewiston and Auburn, and Kittery. It is based out of Hampton, New Hampshire and is serviced by the Granite State Pipeline, which crosses into Maine from Portsmouth, New Hampshire (PUC, 2008b).

Bangor, Brewer, Veazie, Orono, and Old Town are served by Bangor Gas Company. Bangor Gas is a subsidiary of Energy West and gets its gas supply from the Maritimes and Northeast Pipeline (PUC, 2008b).

Maine Natural Gas serves the southern Maine communities of Windham, Gorham, Bowdoin, Bath, West Bath, Freeport, Pownal, Topsham and Brunswick. The company distributes natural gas for heating to businesses and residences in these communities, and is seeking to expand its distribution network to Augusta and the Kennebec Valley region (Maine Natural Gas, 2012).

Summit Utilities is looking to develop a natural gas consumer base in Maine, but still needs approval from the Maine PUC before it can begin the construction process. They have opened a subsidiary office, Summit Natural Gas of Maine, but they currently operate exclusively in Colorado and Missouri. Summit has been planning a natural gas pipeline development project to bring gas to the Kennebec Valley area (Summit Utilities Inc., 2012).

Governor’s Energy Office (GEO)

In Maine, the Governor’s Energy Office (GEO) plays a significant role in directing the state’s energy resources and goals. Their mission is “to create effective public and private partnerships that advance Maine’s energy security, economic development, and environmental health (Fletcher, 2012).” Currently, the GEO is working under the main goals outlined in the “Maine Energy Action Plan”, which consists of five main components:

  1. Decreasing electricity prices and overall energy costs
  2. Extending natural gas services and transmission infrastructure to Maine residential, commercial, and industrial consumers
  3. Strengthening energy efficiency, conservation and weatherization and fostering renewable energy
  4. Reducing oil use by 50% by 2050
  5. Preparing an energy assurance and emergency preparedness response plan (Fletcher, 2012)

Development in terms of natural gas expansion and electricity infrastructure upgrades fall under these goals.

Local Governments

Local governments determine zoning laws, which have significant regulatory power in the siting of energy development. Local approval is needed for the development of transmission lines or new pipelines. As wind developments continue to pop up across the state, local and municipal governments are enacting ordinances to regulate all aspects of wind facility development (Dickerson, 2012). Differences among these local regulations can impact the success and location of energy development projects in Maine.

Efficiency Maine

Efficiency Maine is an independent trust working to implement energy-saving programs across the state. Their efforts to decrease electricity and heating fuel demand and costs are cost-effective – every dollar spent on their programs provides more than 2.5 times the benefits. The Efficiency Maine Trust is funded through a surcharge on electricity rates and support from the Regional Greenhouse Gas Initiative (RGGI). Using a combination of educational and technical programs, Efficiency Maine sets specific targets in electricity, natural gas and heating fuel consumption and administers energy efficiency and alternative energy programs in Maine (Efficiency Maine, 2012).

Land Use Planning Commission (LUPC)

Maine’s Land Use Planning Commission has jurisdiction over planning and zoning for the Unorganized Territory of the state of Maine. Previously, LUPC was responsible for approving development permits for large projects proposed in the state’s Unorganized Territory. In 2012, the Land Use Regulatory Commission was reorganized into LUPC under the Department of Agriculture, Conservation and Forestry (Livesay, 2012). Since then, site law permits for development in the Unorganized Territory are handled by the Maine Department of Environmental Protection, and LUPC plays more of a consulting (rather than regulatory) role (Kearns, 2012).

Maine Department of Environmental Protection

After the reorganization of LUPC, the Maine DEP became the lead permitting authority for energy upgrades in Maine. Its site law permits determine what types of infrastructure upgrades and projects can be developed. The Maine DEP processes applications for project permits (including wind power projects), and is also responsible for enforcing Maine’s environmental laws to protect against air, water, and land pollution (DEP, 2011a).

Maine Public Utilities Commission (ME PUC)

The Commission regulates electricity and natural gas utilities to maintain reliability, safety, and fair utility rates. It also regulates electricity transmission and natural gas distribution (PUC, 2008a). MPUC does not regulate smaller scale electricity projects like small wind development unless they exceed a certain size megawatt generation size (Kearns, 2012).

Non-governmental Organizations (NGOs)

Maine has strong environmental NGOs which monitor and shape state policy. The Natural Resources Council of Maine (NRCM), Environment Maine, and 350 Maine are just a few of the active groups engaged in energy transmission issues. These organizations oppose the tar sands pipeline proposal in Maine and are wary of natural gas expansion across the state (350 Maine, 2012; Environment Maine Research & Policy Center, 2011; NRCM, 2012a).

The State of Electricity Transmission in Maine

Maine’s electricity transmission system is on the verge of significant infrastructure development. The network of power lines crossing the state and connecting Maine’s grid to eastern Canada and the rest of New England is aging, and the grid is no longer able to efficiently handle the loads demanded (Polestar Communications & Strategic Analysis, 2007). These conditions create challenges for electricity transmission by reducing power reliability, creating bottlenecks which limit electricity transfer, and constrain the potential for more renewable electricity development.

Electricity transmission is a regional issue, with an interconnected grid of electricity generating sources and utilities delivering the power to end-users. Due to federal and state restructuring laws, electricity generating facilities are entirely disconnected from the utility companies which deliver the electricity (PUC, 1997). Utility companies are regulated by each state’s Public Utilities Commission, with federal oversight from the Federal Energy Regulatory Commission (FERC). Electricity generation and supply companies are not affiliated with utility companies.

Electricity utilities in Maine can be divided into two different types: investor owned utilities and consumer owned utilities. The three largest electricity providers in the state are investor owned utility companies: Central Maine Power, Bangor Hydro Electric, and Maine Public Service Company. Maine also has ten small consumer-owned utilities operating at the community level across the state (PUC, 2008c). These consumer owned cooperatives have more operational flexibility because they aren’t influenced by stockholders or larger corporate interests. Surplus earnings are typically used to invest back into the organization (Miller, 2008).

Independent System Operators (ISOs) serve to balance the supply and demand of electricity and ensure efficient transmission and distribution across regional grid networks. These independent, non-profit institutions serve as an umbrella over both electricity generation facilities and electric utilities distribution systems (ISO New England, 2012b).

Maine is unique because it is the only New England state with two ISOs managing the electricity market. Four electric utility companies in Northern Maine operate under the Northern Maine Independent System Administrator (NMISA). NMISA is a FERC-approved sub-control area of the New Brunswick System Operator (NBSO), which administers regional transmission access and monitors electricity markets in Northern Maine (Maine Public Service Company, 2007). Maine Public Service Company and the Eastern Maine Electric Cooperative are the largest utilities operating under NMISA, along with two smaller utilities: Houlton Water Company and Van Buren Light & Power District. NMISA is not directly connected to the rest of the electricity transmission grid in Maine or the rest of New England, but is indirectly connected through New Brunswick (Maine Public Service Company, 2007).

ISO-New England manages the regional electricity network connecting Maine to Connecticut, Massachusetts, New Hampshire, Rhode Island and Vermont (ISO New England, 2012b). The other nine electric utilities in the state of Maine operate under ISO-New England, so the majority of Maine’s electricity market and transmission are subject to ISO-New England’s oversight.

There are a number of market-based policies that have driven energy infrastructure development. Maine’s 40% Renewable Portfolio Standard (RPS) goal by 2017 demonstrates the state’s commitment to renewable electricity generation and will necessitate infrastructure changes to accommodate new renewable sources. Incentives from the Regional Greenhouse Gas Initiative (RGGI) encourage Maine to produce electricity from less carbon intensive sources, and the revenues from the carbon auction are used to support energy efficiency programs across the state. The federal Production Tax Credit incentivizes renewable energy development and makes renewable energy sources more competitive against fossil fuels in the electricity market. These policy and economic incentives have driven the electricity transmission system and will continue to shape the future of Maine’s energy infrastructure.

These incentives are driven by Maine’s natural resources. The state can commit to these strong clean energy goals because it has potential for renewable energy development. Taking advantage of Maine’s renewable resources will provide social, economic, and environmental benefits for the state. These conditions drive energy infrastructure development.

The State of Natural Gas Transmission in Maine

The transmission of natural gas in New England is achieved through several interstate and international pipelines. The Tennessee Gas Pipeline and the Algonquin Gas Transmission Pipeline carry natural gas from domestic sources in the South and Midwest US to processing facilities in the Boston area (EIA, 2008). Meanwhile, the Maritime and Northeast Pipeline and the Portland Natural Gas Transmission System carry natural gas from sources in Eastern and Western Canada through Maine and down to the Boston area (Maritimes and Northeast Pipeline, 2009; Portland Natural Gas Transmission System, 2000). Along the way, these major pipelines connect to local distribution companies and natural gas is dispersed through smaller transmission networks or burned by electricity generating facilities and then mixed into the regional supply of electricity.

Since 1999, only a portion of the natural gas imported from Canada has been consumed in the Maine and the state acts as a corridor for the transmission of natural gas to the rest of New England. Figure 2.4 shows the amount of natural gas imported into Maine from Canada, the amount of natural gas transmitted from Maine to the rest of New England, and the total amount of natural gas consumed in Maine.

Figure2.4

Figure 2.4  Natural gas imports from Canada to Maine, net interstate trade of natural gas from Maine to New England and total consumption of natural gas in Maine between 1997 and 2010 (Source: US Energy Information Agency, 2010)

This figure shows the effects of transmission developments that occurred in 1999, as well as the surplus of imported gas that is not consumed in Maine and moves out of state to serve the rest of New England. The recent growth in imported natural gas does not appear to have affected the quantity of gas consumed in Maine. Total consumption has been relatively stable since 2005, despite greater quantities of gas moving through the state (EIA, 2010a).

The influx of natural gas allowed by the infrastructure developments in 1999 has had lasting effects on the region’s energy profile, and these changes are shown most clearly in the electric power sector (EIA, 2010b). Figure 2.5 shows the changes in electricity generating capacity by different sources of energy, and it highlights the effects of the completion of the M&NP and the PNGTS in 1999.

Figure2.5

Figure 2.5 Electricity generating capacity by primary source in New England from 1995 to 2010 (Source: US Energy Information Agency, 2010)

New England is now dependent on natural gas imported from Canada and transmitted through Maine to meet their electricity needs, and the infrastructural changes that occurred in Maine were drivers of this transition.

More recent changes in the domestic and global energy markets have also shifted how natural gas is used as an energy source in Maine and New England (American Petroleum Institute, 2012). Considering the differences between natural gas and other fossil fuels, namely petroleum and coal, helps to explain the market forces that have shaped the region’s current energy profile and driven changes in energy infrastructure.

Consumption of natural gas generates less carbon dioxide emissions than petroleum, and the two can be interchanged without extensive infrastructure changes (Committee on America’s Energy Future, 2009). As a result, policies such as the Regional Greenhouse Gas Initiative have created an incentive for electricity generating facilities to shift their demand away from petroleum and towards natural gas (ISO New England, 2012a). Figure 2.6 shows the changes in carbon dioxide emissions produced by the electric power across New England, as well as the emissions contributed by each fuel source.

Figure2.6

Figure 2.6 Total carbon dioxide emissions from electricity generating facilities across New England, separated by fuel source, between 1997 and 2010 (Source: US Energy Information Agency, 2010)

Total carbon dioxide emissions from the electric power sector across New England have decreased by 26% since 1997 (EIA, 2010c). This trend is partly attributable to the substitution of petroleum in favor of natural gas as a fuel source, as well as regulations for generating facilities that mandate new efficiency standards and emission control measures (ISO New England, 2012a). It is also worth noting that this decrease in emissions occurred over the same time period as a 28% increase in generation capacity across the regional system (EIA, 2010b). The transmission developments that increased regional supply of natural gas allowed for both an increase in generating capacity as well as a transition away from petroleum and coal and therefore a decrease in emissions.

Changes in available supplies of fossil fuels have led to price fluctuations in the global energy market and subsequently created a shift in demand in the US. While global supplies of petroleum are projected to decline, current petroleum prices continue to rise (American Petroleum Institute, 2012). Meanwhile the development of previously unexploited domestic sources of natural gas has flooded the market with cheap fuel that can be transmitted efficiently and is not subjected to influence from the global market or dependent on foreign supplies (Energy Watch Group, 2007). Domestic production of natural gas reached an all-time high in 2011 and is projected to continue to increase (ISO New England, 2012a).

These changes in supply of fossil fuels are reflected by the prices of natural gas and petroleum delivered to consumers. Figure 2.7 shows the relative price changes of petroleum heating oil and natural gas heating fuel prices in the US starting in 1992. As of 2006, natural gas is the cheaper option for heating fuel (EIA, 2012b, 2012c).

Figure2.7

Figure 2.7 Relative change in price of petroleum heating oil and natural gas in the US between 1992 and 2010 (Source: US Energy Information Agency, 2010)

This decrease in price, along with findings that suggest that the unexploited domestic supply of natural gas could meet domestic demand and allow the US to become a net exporter, have created motivation to invest in recovering natural gas from unconventional sources like gas shales and offshore reserves (Coleman, 2011). However, because the growth in domestic production is a relatively new development it remains uncertain whether further investment is viable. A study by the Committee on America’s Energy Future (2009) found that if demand continues to grow moderately, and prices moved toward the low end of the predicted range, exploiting unconventional sources would not be economic. On the other hand, if prices moved toward the high end of the predicted range, there would likely be significant private investment put towards developing all possible sources of natural gas (Committee on America’s Energy Future, 2009).

Additional uncertainty is presented by the need for new transmission infrastructure to accommodate a growth in production. Specifically, in the Appalachian Basin, which has been the center of the boom in domestic production, there has been a rise in new pipelines and interconnections to distribute the gas and capitalize on the growth in production (ISO New England, 2012).

A lack of natural gas transmission infrastructure in Maine has prevented consumers in the state from transitioning away from petroleum fuel oil in favor of natural gas as a heating fuel (ISO New England, 2012). Figure 2.8 shows the changes in consumption of natural gas in Maine, broken up by end use sector.

Figure2.8

Figure 2.8 Consumption of natural gas in Maine by end use sector between 1997 and 2011 (Source: US Energy Information Agency, 2012)

The electric power sector and the industrial sector have historically consumed the largest portions of the natural gas consumed in the state (EIA, 2012a). The development of the international pipelines in 1999 increased access to natural gas for regional electricity generators and industrial plants, but a broader distribution network servicing Maine’s geographically dispersed communities has yet to be developed (EIA, 2008). In 2011, only 5% of households in Maine used natural gas for home heating and 69% of households used petroleum fuel oil. Across the rest of the country, on average, 50% of households in each state used natural gas while only 7% used petroleum fuel oil (EIA, 2011).

Implications

The overall energy landscape in Maine is in a transitional period. Maine’s electricity transmission lines are in need of overall upgrades and there are significant constraints in the system that should be addressed. Natural gas companies are lining up to provide natural gas as an energy source both for heating and electricity generation throughout the state. This climate of development pressure from each of the drivers of energy infrastructure development has implications for Maine’s energy future.

One of the most obvious limitations to the overall electricity transmission system is the aging power line network. The constraints associated with bottlenecks and congestions points in the system challenge the ability of Independent System Operators (ISOs) to balance supply and demand across the regional network (ISO New England, 2012c). In a study prepared for the New England Energy Alliance assessing Electricity Transmission Infrastructure in New England, six locations were identified as “congestion areas of concern”. Two of these identified congestion points are the critical links connecting Maine to the rest of the regional transmission system: the New Brunswick to Maine interface and the Maine to New Hampshire interface (Polestar Communications & Strategic Analysis, 2007).

The transmission gap between northern and southern Maine also poses a challenge to regional electricity development. Wind energy developers have identified northern Maine as an area with significant wind development potential, but without the ability to connect into the regional network these projects are not economically viable (Emera, Bangor Hydro Electric Company, & National Grid Transmission Services, 2012).

As demonstrated by the gap in Maine’s transmission grid, the proximity of generation facilities to the “load-centers” where there is high electricity demand is important in regional efficiency. New power plants are often located in Maine because the resources are available, the land is cheap, and labor costs are low (Polestar Communications & Strategic Analysis, 2007). This abundance of electricity generated in Maine is not matched by local demand and transmission out of the state is limited by line inefficiencies. Connecticut and Massachusetts are the regional “load-centers” in New England, but since the connection interface linking Maine and New Hampshire is a congestion point, Maine’s abundance of electricity cannot be delivered where it’s needed (Polestar Communications & Strategic Analysis, 2007). These areas are weaknesses in the regional systems that have implications for the entire electricity grid.

Regional policies and institutions also influence Maine’s energy markets. The other New England states have Renewable Portfolio Standards and RGGI standards to comply with, but have limited opportunities for in-state generation of renewable energy (Emera et al., 2012). These other New England states also contain the regional load-centers, with higher populations and energy demands. Maine is already a net electricity exporter, so the state could benefit from generating and exporting renewable energy to other states (Dickerson, 2012).

Given the increasing importance of natural gas as an electricity source in the state, the development of natural gas transmission infrastructure has implications for Maine’s energy future. Transitioning to natural gas for electricity generation has been effective in reducing the region’s dependence on petroleum and coal for electricity generation, but has not addressed the state’s dependence on petroleum in the heating sector of the overall energy portfolio.

Natural gas can be easily and efficiently transported by pipeline and can be stored underground without significant losses in capacity (Mokhatab, 2012). These qualities make it well suited for a region with varying seasonal demand and geographically dispersed end-users. During summer months, when electricity demand peaks in southern New England, natural gas imported to Maine can be transmitted to the areas of high demand and used to generate electricity (Augustine, 2006).

During winter months, natural gas imported to Maine could be stored and used to supply the state’s seasonally high demand for heating fuel. However, because the state lacks a transmission network to provide natural gas for household heating, it is not feasible to keep natural gas stored in Maine during the winter. Natural gas in Maine serves primarily as a source of electricity and does not play a significant role in Maine’s heating energy demand.

The lack of transmission infrastructure leaves residential and commercial consumers unconnected to the major natural gas pipelines crossing the state. However, given the high demand for natural gas in Maine, both from electricity generating facilities looking to cut cost and reduce emissions, and from consumers who are still dependent on petroleum heating oil, expanding natural gas transmission networks will be an important topic in Maine’s energy future.

These pipeline issues are playing out throughout the state in very public, controversial debates. Two of these debates involve pipeline infrastructure, specifically the expansion of the natural gas pipeline network and the role Maine will play in transporting Canadian tar sands oil. These two issues and their potential implications for the state are highlighted in the following case studies.

Case Study: Natural Gas Development in the Kennebec Valley

The opportunity to expand the natural gas transmission network in central Maine has led to a competition for state approval to construct new pipelines and fill the demand for cheaper heating fuel for Maine residents, businesses and industrial consumers. Maine Natural Gas has been operating in Maine since 1998 and currently provides natural gas to a handful of communities in Southern Maine (Maine Natural Gas, 2012). The company proposed extending its transmission network to Augusta in order to provide state buildings with natural gas. Maine Natural Gas also acquired a contract with the Maine General Medical Center to fill their heating needs for 10 years. With these anchor customers in Augusta, Maine Natural Gas has started moving forward with planning and siting for their pipeline expansion (Edwards, 2012).

But the prospect of capitalizing on an under-supplied market with high demand for cheap fuel has attracted another gas provider with a more ambitious plan and a larger financial investment. Summit Natural Gas, a nationally operating company, has proposed developing an extensive pipeline network that will serve approximately 15,000 consumers in the Kennebec Valley area. The expansion would make natural gas available to business and households from Augusta, to Waterville and up to Madison (Summit Utilities Inc., 2012).

Both companies see the current lack of infrastructure and the high demand for cheap heating fuel as a promising opportunity for development. If the state’s natural gas transmission network is expanded it is likely that the share of natural gas consumed (Figure 2.8) will shift so that the commercial and residential sectors make up a greater portion of the total share. The battle that has unfolded between the competing proposals has drawn significant media attention, and is a strong example of the public and private interests that are at stake in the current energy marketplace.

In the near future, Maine consumers with have the opportunity to connect to the natural gas network, but will face a dilemma between reducing their heating bills as well as their carbon footprints on one hand, and supporting the environmentally damaging practices involved in exploiting domestic sources of natural gas on the other.

Case Study: The Threat of a Tar Sands Pipeline in Maine

In 2008, the Canadian oil giant Enbridge started plans for a project called “Trailbreaker” that included the reversal of a multiple segments of a pipeline in Ontario and an existing pipeline between Portland and Montreal. The ultimate agenda of “Trailbreaker” was to provide tar sands oil from Alberta to large portions of the US. The project would transport the oil via a trans-boundary pipeline which terminates in Casco Bay, Maine where the oil would be loaded onto tankers and shipped down the east coast (NRDC, 2012).

Currently, the Portland-Montreal Pipeline pumps crude oil from Casco Bay, through Maine and into Canada. As part of Enbridge’s plan, the Portland-Montreal pipeline would be expanded and its flow would be reversed to pump tar sands oil from Canada into Maine (NRCM, 2012b)

The original plan was extensive and ambitious, and was eventually derailed by unfavorable economic conditions. However, Enbridge has not given up its pursuit of expanding its network and a new route that includes Maine is still in the works (NRDC, 2012).

The proposed Line 9 Reversal Phase I would retrofit the 37 year old, 500 mile pipeline that is currently carrying conventional light oil from Sarnia, Ontario to a refinery in Montreal, Quebec (Enbridge Inc., 2012). When Phase I is complete, Enbridge will focus on their plan to reverse the Portland-Montreal Pipeline to transport this oil into Maine (NRCM, 2012b).

The transmission of tar sands oil raises a number of environmental concerns that ought to be considered as infrastructure development is pursued. This combustible fuel product called bitumen is nearly solid at room temperature. In order to pump it through a pipeline it must be diluted and mixed with other liquid petroleum products. Diluted bitumen is viscous, abrasive, hot, and acidic – qualities that dramatically increase the corrosion rate of a pipeline (Woynillowicz, 2005). In the event of a spill, the bitumen separates from the lighter petroleum products and sinks to the lowest point where it sticks and starts to solidify (NRDC, 2012).

These characteristics make tar sands oil dangerous, especially since the Portland-Montreal Pipeline crosses some of the state’s greatest natural resources: our pristine lakes and healthy rivers (Portland Water District, 2012). The Portland-Montreal Pipeline currently crosses both the Androscoggin Crooked Rivers and the Sebago Lake watershed. These water bodies provide valuable services to the people of Maine (NRCM, 2012b; Portland Water District, 2012). Under Enbridge’s proposal, the current pipeline flow would be reversed to carry exported oil from Canada to tankers in Casco Bay, Portland.

Critics of the project are concerned with the possibilities of pipeline corrosion, damages to Maine’s environment from oil leaks, and the risks of spills from the oil tankers in Casco Bay (NRDC, 2012). Environmental advocacy groups like the Natural Resource Council of Maine, Environment Maine, and 350 Maine will play a key role in addressing these concerns.

Scenarios

Based on our evaluation of the current state of energy infrastructure in Maine as well as some of the prospects for development on the horizon, we considered three possible scenarios for the development of Maine’s energy infrastructure.  While the future is largely uncertain, these scenarios present some potential implications of three different paths of energy infrastructure development.

Large-scale natural gas expansion, limited opportunity for renewable energy

If the natural gas pipeline expansion proposed by Summit Natural Gas were given state approval, the company would deliver large-scale, profit-driven investment to Maine’s energy infrastructure. The natural gas pipeline network would extend into Central Maine and consumers would have to option to switch to natural gas for home heating. Summit Natural Gas would build a customer base across the state in residential, commercial and industrial sectors. The pipeline network would continue to expand and Maine would transition to depend primarily on natural gas as the source of heating fuel, following national trends.

The Portland Natural Gas Transmission System and the Maritimes and Northeast Pipeline would continue to pump natural gas into and through Maine, but most of the capacity they delivered would be devoted to serving the region’s growing electricity needs. The increased demand for natural gas would be met by domestic sources of natural gas. These sources have been increasing in recent years.

The increase in demand for domestically produced natural gas would encourage further development of unconventional sources of natural gas in areas like the Marcellus Shale in the Appalachian Basin. Hydraulic-fracturing, the method used to extract natural gas that is locked in underground rock formations has environmental risks for water and soil quality, as well as potential to create unpredictable seismicity and habitat degradation (Coleman, 2011). Stricter environmental regulations would likely be imposed as the impacts of hydraulic-fracturing become more apparent. This would ultimately increase the cost of producing natural gas from unconventional sources (Committee on America’s Energy Future, 2009).

Additionally, if domestic sources are developed extensively, it is predicated that the US will become a net exporter of natural gas, and the fuel would be subjected to fluctuations in the global market. Exporting natural gas would likely increase the price at the cost of consumers while big energy companies see growing profits (Committee on America’s Energy Future, 2009) .

Finally, increasing dependence on natural gas, both from domestic and international sources, perpetuates the emissions of carbon dioxide as well as diverts investments away from increasing renewable capacity and therefore is not part of a sustainable long term agenda. This emphasis on natural gas over renewable development discourages large-scale electricity transmission projects which would increase opportunities for renewable energy development in rural regions of the state. More electricity generating plants would convert to natural gas, and the added incentive of connecting renewable projects would no longer drive electricity transmission upgrades.

Small-scale natural gas expansion, renewable energy encouraged

If the natural gas pipeline expansion proposed by Maine Natural Gas is given state approval and the company extends its network to Augusta, natural gas would be provided to state buildings and the MaineGeneral Medical Center. The state would see moderate economic growth as the project is carried out and small groups of consumers would gain access to cheaper heating fuel.

Additionally, if state electricity utilities invest in connecting the transmission gap between northern and southern Maine there could be significant opportunities for rural renewable energy projects to develop. If the project used a High Voltage Direct Current (HVDC) transmission line to connect the two grids, it would increase regional efficiency, reliability, and security and allow electricity to flow efficiently throughout.

After addressing the transmission challenges in Maine’s electricity grid, renewable energy projects would become economically viable. Wind development would increase in northern Maine, where population is sparsely distributed and siting conflicts are much less of a challenge. Maine’s offshore wind development projects and tidal energy development could also be easily connected to this upgraded system. A boost of renewable energy into the ISO-New England grid would allow other New England states to meet their Renewable Portfolio Standard commitments and potentially even increase their renewable targets. Providing renewable energy to the grid could generate a significant amount of revenue for Maine, especially since the other New England states would pay additional fees for the renewable energy credits.

Successful transmission upgrade projects might generate demand for a more extensive electricity grid instead of increasing the natural gas pipeline network. With natural gas projects, the state might face an unpredictable regulatory framework as environmental regulations on domestic production of natural gas and economic volatility in the emerging natural gas market. Taking these conditions into consideration, Maine might deem natural gas expansion too economically and environmentally risky.

However, the possibility of transitioning away from petroleum-based heat sources and towards natural gas would likely remain on the table. Natural gas has the benefit of reducing Maine’s heating costs and greenhouse gas emissions, making it a lucrative option. If increasing pipeline capacity were limited, the demand for natural gas for heating fuel would have to be met by a surplus in capacity left by the electricity generating facilities replaced by the new in-state producers of renewable energy. If Maine and New England started to fill more of their electricity needs with renewable sources, generating facilities that once consumed natural gas could be decommissioned. The excess natural gas could be re-routed once it reached the distribution center in Southern Maine and pumped into a smaller network of pipelines to serve heating needs in the state.

If renewable sources of electricity increase, Maine could continue to develop natural gas infrastructure but focus more on developing a network to serve heating needs than increasing electricity generation from natural gas. Increasing the share of natural gas in Maine’s heating portfolio would reduce Maine’s dependence on petroleum and significantly lower average energy costs to consumers and reduce Maine’s emissions substantially.

Staying the course

If Maine rejected both proposals to expand natural gas transmission networks and continued to receive natural gas imports from Canada, the energy picture would remain much like it is today. The growing electricity demands in New England and Maine would be served in part by the natural gas transmitted through Maine, but there would be no change in the installed pipeline capacity.

Renewable energy projects would be developed where they are determined to be convenient or economically viable. Because Maine already meets its Renewable Portfolio Standard, it does not have a pressing need to develop more renewable energy projects. Therefore, the state government would continue along the same energy policies and not undertake any new initiatives to expedite renewable permitting or provide additional incentives.

Under this scenario, Maine’s electricity transmission network would be incrementally upgraded in the areas of greatest need. No large-scale infrastructure projects would be developed, and the gap between northern and southern Maine’s transmission grids would remain a challenge. Old electricity generating facilities would be phased out naturally, while facilities still burning petroleum might continue to slowly transition to natural gas. New, industry-implemented efficiency measures may be adopted gradually to keep costs down and ensure compliance with RGGI.

Recommendations

Improvements to Maine’s electricity transmission network would benefit both regional electricity stability and support natural gas development in the state. Continually assessing and updating the transmission system will help increase power reliability and reduce congestion problems, lower electricity prices by opening up the market to fair competition, and provide increased opportunities to incorporate renewable energy sources (Polestar Communications & Strategic Analysis, 2007).

Electricity utilities should coordinate and invest in connecting the gap between Northern and Southern Maine. Sparsely populated rural areas have been identified as key development opportunities by wind companies, but must have the ability to connect to the regional grid to be economically viable (Emera et al., 2012). Connecting these two disjointed grids would also alleviate a bottleneck in the system where power from New Brunswick meets the distribution center in Orrington, ME and gets distributed into the Maine transmission system (Polestar Communications & Strategic Analysis, 2007).

All major electricity development projects (including the connection between northern and southern Maine) should focus on using high voltage and efficient power lines and co-locating their projects with other utility corridors in order to address the problems with Maine’s transmission system. In 2011, the Maine state legislature passed “The Act Regarding Energy Infrastructure Development”, which designates land along the I-95 and I-295 highways for underground energy transmission infrastructure (Stone, 2012). Future projects should take advantage of this law and co-locate projects to reduce environmental and aesthetic impacts of typical energy infrastructure projects and improve the efficiency of the regional system.

In addition to addressing electricity transmission challenges, utility companies in Maine should continue to incorporate natural gas as a transition fuel in their path towards a more sustainable energy future. Natural gas allows electricity generating facilities to stop burning petroleum and coal, which will reduce their carbon emissions in the short term and allow for more flexibility in the long term (Committee on America’s Energy Future, 2009).

We recommend a moderate and incremental development plan for expanding the natural gas transmission network into central Maine. Visions like the one proposed by Maine Natural Gas, the smaller of the two competing plans, commit to a slower adoption of natural gas as a heating fuel and provide more security in a volatile market. As domestic natural gas continues to develop there is potential for high price fluctuations which could make large and hasty investment in Maine’s transmission network a risky move (ISO New England, 2012a).

In addition to infrastructure changes, Maine should continue to support federal, state, and regional programs encouraging appropriate infrastructure developments that shift towards sustainability. In Maine, the Regional Greenhouse Gas Initiative (RGGI) generates about $7 million per year from RGGI auctions, and the revenue is invested in energy efficiency projects throughout the state (Tietenberg, 2012). Maine has a strong Renewable Portfolio Standard, but could increase its goal if appropriate infrastructure upgrades allow for increased renewable energy generation.

Maine’s congressional delegation should work to continue the federal Renewable Production Tax Credit to support renewable energy development in Maine. These credits make renewable sources of electricity more competitive with traditional carbon intensive sources of energy (Kearns, 2012). Additionally, supporting renewable energy projects helps bring more jobs to the state and move Maine towards energy independence. Energy independence would cushion consumers from fluctuating oil and gas markets and save money on energy bills (Committee on America’s Energy Future, 2009).

Maine is already a net exporter of electricity, but through these recommended transmission upgrades and continued state support for programs like RPS and RGGI, the state could derive significant benefits from selling renewable electricity to other states in the region. Other New England states are committed to Renewable Portfolio Standards and RGGI goals, but must rely on imported clean energy to meet their criteria (Dickerson, 2012). Maine could support these states and increase its influence in the New England electricity market.

Transmission development should not be based exclusively on the potential for economic growth and rapid expansion. Instead, Maine should implement collaborative development that considers a full range of present and future stakeholder concerns. All infrastructure changes in Maine ought to be considered within a long-term vision of developing diverse and local energy sources.

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