Maine bill aiming to curtail flood of solar projects could also send electric rates soaring

Jun. 24—A bill approved by the Maine Legislature aims to control the number of medium-sized solar projects and avoid a further flood of electricity into the grid, but it also could raise electricity distribution rates by up to 30 percent.

The measure, which was passed on Friday and is now on Gov. Janet Mills' desk, would amend state laws around buying power and "net energy billing" incentives, which give small- and medium-sized solar generators credits for the excess power they supply to the grid.

It would require solar projects with 2 megawatt to 5 megawatt power output to meet criteria by certain dates before they are approved, including a signed interconnection agreement with an electric utility such as Central Maine Power or Versant Power.

Supporters say passing the measure will help control the number of new projects, which skyrocketed after Mills and the Legislature enacted incentives in 2019 to boost the state's renewable energy in line with the state's climate goals. Some bill opponents disagree that it will curtail projects significantly and argue the market will be flooded with expensive solar power and drive up distribution rates for electricity customers.

The Maine Public Utilities Commission has estimated that projects producing a total of 1,500 megawatts of capacity would cost ratepayers about $230 million per year, with an estimated delivery rate increase of 31 percent. The rate effect would be lower if fewer projects were approved.

A commission spokesperson said the regulator does not know the exact impact of the bill, but it expects the number of eligible projects and the associated megawatts to increase under the net energy billing incentives.

Supporters, including the solar industry, argue that the utilities commission numbers tell only part of the story, and need to be balanced with other aspects like jobs created by solar projects and the benefits of clean energy.

"If the bill is not passed, the total megawatt hours of community solar will be unlimited, and costs projected [by the utilities commission] will be far higher," Rep. Seth Berry, D-Bowdoinham, a co-chair of the Legislature's energy committee and the sponsor of the bill, said. He earlier proposed a temporary moratorium on new solar projects under net energy billing incentives, but it was unsuccessful.

The 2019 law allows for rates that target the smallest customers, so the rates are the most expensive, around 12 cents per kilowatt hour, said Tony Buxton, an energy lobbyist who represents the Industrial Energy Consumers Group. He said other projects, which he declined to name, can deliver solar power for 3.5 cents per kilowatt hour.

He said the 2019 law was a mistake that needs to be fixed, and he recommended that projects be frozen. Buxton said there's no evidence that the new solar project applications will be unsuccessful.

"You need to be a complete numbskull to not be able to build a project when you're getting paid 12 cents a kilowatt hour," he said.

Jeremy Payne, executive director of the Maine Renewable Energy Association, said the 3.5 cents for large, grid-scale solar includes only the price for supply, while the price for small- to medium-scale solar generators under the net energy billing program includes supply, distribution and transmission costs.

"That is precisely why the Maine Legislature saw fit to create two entirely different public policies," Payne said.

Solar policy has been heavily debated in the Legislature in 2021, but it has attracted less public attention than other landmark utility issues, including another Berry proposal that would send Maine voters a proposal to buy out CMP's and Versant's infrastructure and put it under the control of an elected board. CMP's $1 billion corridor also faces a November referendum from opponents of the project.

While Mills opposes that measure, it is unclear what she will do with the solar legislation supported by most of her fellow Democrats. Spokespeople for the governor did not respond to a Wednesday request for comment on the bill.

The head of AARP Maine, which has 200,000 members in the state, wrote a letter to legislators on June 2 outlining concerns about potential rate rise and recommending a moratorium on implementing the pending distributed generation projects, saying older Mainers on fixed incomes "are far more likely to feel the burden of even the smallest rate hike."

Steve Weems, executive director of the Solar Energy Association of Maine, said projects totaling 750 megawatts, which he considers a middle-of-the-road estimate, would cost $65 million per year instead of the $115 million estimated by the utilities commission. He arrived at his figure using solar energy production figures and lost utility delivery charges.

Weems said the rate increases estimated by the commission are inflated and only reflect revenues the utilities would lose when renewable energy projects are implemented under the net energy billing program.

"If you're concerned about costs, you should like this bill," he said. "You have to look at the whole picture, the monetary costs and the benefits."