Governor Initiates Regional Energy Conservation Campaign

Governor Initiates Regional Energy Conservation Campaign

Governor John Baldacci has initiated a New England wide regional conservation campaign to proactively address a potentially serious energy problem this winter. The Governor's initiative is in response to the ISO-New England's assessment that natural gas supplies in New England will be tight, causing prices to remain at extremely high levels. About 40% of New England electricity supply is derived from natural gas. The ISO-New England is stressing that energy conservation and efficiency will be important to ensure the reliability of New England's electric grid this winter.

Governor Baldacci, who currently serves as Chair of the Coalition of Northeastern Governors, submitted to each New England Governor a draft proposal "Memorandum of Understanding for A New England Electricity and Natural Gas Conservation Initiative."

Governor Baldacci has been active in helping Maine's struggling families deal with high energy prices this season. He has urged the President to release more fuel assistance dollars and has tasked Beth Nagusky, his Director of Energy Independence and Security, with coordinating state agencies and private parties to help Maine citizens get through a long winter. Prior to the latest energy price increases, the Governor made State Government a leader by example in energy conservation and energy efficiency, and the use of renewable energy sources. Additionally, tomorrow morning Governor Baldacci will be leading the first team of volunteers of Operation Keep ME Warm, who will be winterizing the homes of 3,000 of Maine's seniors.

To find out more about Operation Keep ME Warm, please visit www.volunteermaine.org, and to find out more about energy issues in Maine, please visit www.maineenergyinfo.com.

The following is the text of the letter the Governor sent to the New England Governors dated October 13, 2005:

Dear Governor,

As you and the other Governors in New England know, we are facing a potentially serious energy problem this winter. The recent meetings ISO New England has been holding with our respective offices includes a natural gas outlook that suggests that we may face some very tight natural gas supply margins this winter and, because of our heavy reliance on natural gas to fuel our electricity production, a remote risk that we may face electricity shortages during a portion of this winter. Though it is important to recognize that actual shortages of natural gas are remote, the situation warrants immediate contingency planning.

The most effective way to address this essentially national and regional problem is together as Governors. I believe short- and long-term action can serve our citizens by easing the impact of shortages this winter, and reducing our dependence on fossil fuel in the future.

In the short-term, ISO New England believes that we can reduce the region's electrical load, and therefore our natural gas consumption, by 250MW to 500MW with a coordinated and sustained public conservation campaign. I have directed the Chairman of our Public Utilities Commission, Kurt Adams, to work with the ISO and the appropriate officials from your state on a regional conservation campaign. Kurt stands ready to work with your representative on developing a region-wide conservation campaign.

One benefit of the current attention on natural gas and fuel oil prices is that it sharpens our focus on our dependence on fossil fuel. A long-term solution is warranted. Attached is a draft proposed "Memorandum of Understanding for A New England Electricity and Natural Gas Conservation Initiative" that my staff has developed for your consideration, and for our collective discussion. It draws on similar efforts recently agreed to by our colleagues, the Midwest Governors Association. I believe this MOU can form the basis of effective regional efforts that can reduce our region's demand of natural gas while helping to reduce the cost of natural gas by an estimated 13% over the next five years. It will give us the most effective tool to offset a portion of the dramatic increase in the price of natural gas we've experienced in the past year.

I urge that this MOU be quickly, but carefully considered by each of the six states, that we move forward expeditiously to finalize an MOU that is acceptable to all of us, and that we implement it in time to take productive actions this winter.

Thank you for your prompt consideration, and your productive comments and suggestions for improving the draft MOU.

With warm regards,

John Elias Baldacci

Governor

DRAFT DOCUMENT FOR REVIEW

MEMORANDUM OF UNDERSTANDING

for

A NEW ENGLAND HEATING FUEL AND NATURAL GAS CONSERVATION INITIATIVE

WHEREAS, the price of natural gas has reached and sustained $7 per Mcf during most of this year; and in the aftermath of Hurricanes Katrina and Rita natural gas prices exceeded $15 per Mcf in September 2005 and may rise further this winter; and,

WHEREAS, the market for natural gas is extremely tight, causing high and volatile prices which disproportionately impact the New England region because of its significant reliance on natural gas for generation of electricity and the high concentration of natural gas fueled home heating in several New England states; and,

WHEREAS, recent reports indicate that natural gas supply disruptions, though a remote possibility, are more likely in the wake of Hurricanes Katrina and Rita; and, WHEREAS, heating oil prices are currently 45% higher than they were last year at this time, and last year they were roughly 25% higher than the previous year; and demand for heating oil could rise significantly if #2 oil is used more widely on-road and in dual-fuel combined cycle power plants;

WHEREAS, high natural gas and heating oil prices and the resulting impact on electricity prices and supply affect all aspects of the New England economy including individuals and families who cannot afford the associated high home heating costs, the manufacturers and companies that must pass increased production and operating costs on to their customers, and state and local governments and schools that are already financially challenged and must spend more on operating costs; and,

WHEREAS, high heating oil, natural gas and electricity prices are even more burdensome for low-income families and senior citizens who must often choose between paying their energy bills and buying food, medicine or clothes for their families; and,

WHEREAS, supply-side options including drilling in the Arctic National Wildlife Reserve and in the Outer Continental Shelf off the New England coast, and the Alaska pipeline are controversial, not widely supported in New England, and will take 5 to 15 years to have an impact on natural gas markets; and,

WHEREAS, conservation and energy efficiency are the only short-term options to ease the strain on heating fuel and electricity markets and are easily implemented at the state and regional levels; and,

WHEREAS, the New England region has a multi-billion dollar "dollar drain" due to its reliance on imported oil and natural gas; and,

WHEREAS, the American Council for an Energy-Efficient Economy found that a small reduction (1% per year for at least 5 years) in natural gas consumption can produce a 13% reduction in wholesale natural gas prices; and, a Northeast Energy Efficiency Partnerships analysis concludes that New England could reduce forecasted natural gas demand growth by 11% to 68% by 2013 depending on how much energy efficiency potential is captured, and

WHEREAS, conservation and energy efficiency also save money, increase energy reliability and economic prosperity in New England; and,

WHEREAS, a coordinated regional effort to promote and increase energy efficiency could easily achieve savings of 1% or more per year for New England people and businesses. NOW, THEREFORE, be it resolved:

1. The states of Connecticut, Maine, Massachusetts, New Hampshire, Rode Island and Vermont will work together to address the region's overdependence on fossil-fuels through conservation and energy efficiency.

2. We commit to pursue a 1% reduction (per year) in natural gas consumption in each of our states, helping to secure the larger regional goal of 5% reduction by 2011, beginning on the date of their signing this memorandum of understanding and continuing for 5 years from that date.

3. We commit to consider and enact policies, such as codes and standards for energy consumption, regulatory and legislative mandates and programs, that are appropriate for our state to accomplish the 1 % reduction per year and to serve as an educational contact for all other state agencies, parties and participants in our state to further the goal of a 1% per year reduction.

4. We commit to working collaboratively between and among states to develop a regional approach to increase energy efficiency as well as to working within our own state to achieve actual energy savings.

5. We commit to report the annual energy savings in our state to the Initiative for the purposes of demonstrating achievements and sharing lessons learned between the states.

http://www.maine.gov/tools/whatsnew/index.php?topic=Gov+News&id=9447&v=Article