An Electricity Supply Tutorial And Maine’s New Green Power Option
Posted: 07 Dec 2012 10:49 AM PST at Conservation Law Foundation
Mainers have recently been seeing and hearing advertisements for alternatives to the standard offer electricity supply that most residential customers receive through their transmission and distribution (T&D) utility. I’ve been ask numerous times to explain the meaning of these new alternatives. This post is written as a guide to that very question.
In Maine, the majority of customers are served by three investor-owned transmission and distribution utilities: Central Maine Power, Bangor Hydro-Electric Company, and Maine Public Service Company. These T&D utilities maintain the transmission lines and related equipment to carry electricity throughout the grid. Prior to 2000, these same utilities also generated electricity.
In 1997, in response to federal changes that decoupled or split generation from transmission, the Maine legislature passed a law requiring that electric utilities divest their generation assets. Additionally, as of March 1, 2000, all Maine consumers had the right to purchase generation service directly from competitive electricity suppliers.
Until recently, however, there have been few options for residential customers other than the standard offer available through each of the T&D utilities. That, thankfully, is changing.
Recently a number of companies have entered the residential electricy supply market in Maine. They operate by purchasing power on the wholesale market, generally at rates slightly lower than the standard offer rate. The electricity itself is primarily generated by conventional power plants.
Another, greener option on the horizon is Maine Green Power. Maine Green Power is currently pre-enrolling customers who wish to offset their energy supply with renewable energy credits generated by 100% Maine-based renewable energy projects. This offer – of entirely renewable energy – is a first for the state, one that is certain to apply pressure on competing providers.
Maine Green Power’s definition of green power projects is, on the whole, in line with CLF policy priorities and includes solar photovoltaic systems; hydroelectric projects that meet state and local fish passage requirements; wind turbines; biomass facilities that use wood, wood waste, landfill gas or agricultural biogas; tidal power projects; geothermal projects; and fuels cells that use landfill gas or agricultural biogas.
To be clear, the power isn’t purchased directly. When power is generated through the above no- or low-emission sources, Renewable Energy Credits (RECs) are created. RECs are then sold by the green power generators to support their further development. These RECs are what Maine Green Power is purchasing and, in turn, what Maine Green Power’s customers are paying for. By doing so, customers are investing in local renewable energy projects, reducing greenhouse gas emissions, and reducing our society’s reliance on fossil fuels.
Let’s put the cost into perspective. A typical Maine household uses roughly 500 kwh of electricity per month. A 500 kwh “block” of renewable energy can be purchased from Maine Green Power for $7.50 per month (a half block of 250 kwh is available for $3.75/mo.). This charge is paid in addition to the standard offer price for electricity.
That, from my perspective, is an entirely reasonable price to pay for a brighter energy future. In fact, when you factor in the currently externalized costs of climate change and dirty energy to our public health, to our environment, and to our economies and communities, I’d say it’s more than a fair deal.
And so, to return to the original question, what exactly do these alternatives mean for the state? They mean a brighter future.