Five years ago, I published “A New Energy Policy Direction for Maine: A Pathway to a Zero-Carbon Economy by 2050.”

The pathway I set out in my report was reaffirmed by work done by the Governor’s Energy Office in its report issued earlier this year, “Maine Pathways to 2040: Analysis and Insights.” That pathway is based on two fundamental actions: (1) Decarbonization of the electric grid through the replacement of fossil-fuel generation with renewable, zero-carbon emission generation technologies and (2) Beneficial electrification through the conversion of heating and transportation to electricity.

It’s been five years now. How is Maine doing?

The track record is mixed with respect to decarbonization.

While we are tracking the 30-year requirements for solar development, the sizes of the solar projects being built have been too small with the disturbing consequence that the cost of this power has been far too high. This could have negative consequences.

The track record on wind, however, has been poor. Inexcusably, we are lagging with respect to the development of onshore wind generation. The solution is and has been clear for over a decade — Northern Maine wind. Development of this source of generation is technically feasible and can be done at a reasonable cost. What stands in the way is our inability to build the necessary transmission.

Most disturbing, however, are the prospects for offshore wind in the Gulf of Maine. This source of energy is critical to any pathway, yet every attempt to move this forward runs head-on into a brick wall — whether that brick wall is new federal policies, Maine’s inability to move forward with a construction and assembly port at Sears Island or increasing project development costs. Without offshore wind, Maine will need to develop the equivalent of three Maine Yankee nuclear facilities to meet electricity requirements without increasing CO2 emissions.

The track record on beneficial electrification is similarly mixed. The good news is that because of the efforts of Efficiency Maine Trust in promoting heat pumps, Maine is ahead of the curve on residential heating conversions. The not-so-good news is that we are behind the curve on electric vehicle (EV) adoption. The bad news is that a critical factor is trending in the wrong direction.
That critical factor is the price of using electricity.

Over the past five years, the prices of heating oil, natural gas and propane, while volatile during the COVID epidemic and especially after the Russian invasion of Ukraine, have not changed much, if at all. Meanwhile, the price of electricity has risen sharply, and specifically the prices for utility transmission and distribution services and the cost of environmental policies reflected in electric rates.

As I noted in my report, “… exacerbating the price divergence between the price of electricity and the price of fossil fuels … will slow the pace of beneficial electrification by increasing the costs of switching to electricity from fossil fuels in transportation, heating and process applications.”

To illustrate this problem, consider an increase of 2 cents per kilowatt-hour (kWh) in electric rates. For an average heat pump in Maine using 500 kWhs a year, this increases the costs of using the heat pump by $100 a year or $1,000 over a 10-year period. This is equal to the rebate being offered by EMT beginning this spring. The price increase negates the rebate — and the inevitable price increases the next year and the year after only make the situation worse. People won’t convert to electricity if the price of using electricity keeps going up while the prices of using heating oil, propane and natural gas stay the same.

One solution to this problem is the imposition of a carbon tax to ensure that as the price of electricity rises, so too do the prices of fossil fuels. This solution seems to be politically impossible, as to be effective, it would have to be enacted at the national level.

An alternative solution is to design electricity rates to ensure that continuing increases in utility and environmental costs do not increase the price of using more electricity and therefore make it more expensive, not less expensive, to install heat pumps or buy EVs. Unlike a carbon tax, this is well within the control of Maine’s government and our Public Utilities Commission. The key is to increase fixed monthly charges while keeping the price per kWh used as low as possible — that is, for us to pay for electric service more like the way we all pay for cell phones and broadband internet service.

The PUC has just such a choice in front of it today as it considers how to charge ratepayers for the costs of Maine’s net energy billing program.

If it makes the wrong decision by increasing the price per kWh of electricity used rather than the fixed monthly charge, it will send the wrong signal to every Mainer thinking about installing a heat pump or buying an EV. That will be a major setback to Maine’s efforts to achieve a zero-carbon economy.