HomeMy WebLinkAbout1994-02-28 94-123 RESOLVE........2 HI -194
Data Item'No. 94-123
�: Supporting g L.R. 3049 'Art ACC to Rrwlde FLM1iy
to Support Maine F]v Policy"
Item/subject: uty
Responsible Department:
commentary:
'Hits REfsolve eould pla-e tlaa City Coacfl m record as eI>npoiting L.R. 3049. As
prepareal, tle bi11 wild ptwide once calief Lor elactric mtepayac astl
aiiftimal fwtllr5 for low lnc®ne etexglr assistance p aes a energy
mncervatiat pexgms, by easeai a oxc m tles aczse revealed of rcm-utLlity
electric purer generators. Waste to eneogy gmeratoa edstch accept solid essences
frac mvScipaliTies would be except frac this tan.
Mpartmmntxad
Manager's Comments:
Tine muucipal Operaiias Caaittze. reviesed Uia proposed bill at their
mien g on February 22, 1994 and recce tliat Ute City Council support
Utia legislation through a Resolve. -
�j City Mom
Associated Information:
(devolve, Fetter
Budget Approval:
Pimvoe Aired
Legal Approval:
cysou.
Introduced For
p Passage
❑ First Reading Page _ of
❑ Referral
AMENDED COPY 94-123
Assigned to Councilor Blanchette February 28, 1994
CITY OF BANGOR
(TITLE.) ApgR1jlESup2art4n9.L.5. 3049 An_Act-to Provide Pundinq__
to Support Maine Energy Policy"
By the City Council of the City of Nasser.
RESOLVED,
WHEREAS, -
L.R. 3049, An Act to Provide Funding to Support Maine
Energy Policy, is under consideration by the Joint
Standing Committees on Taxation and Utilities; and
WHEREAS,
L.R. 3049 will provide for rate relief for electric
ratepayers and additional funding for low-income
energy assistance programs and energy conservation
programs by assessing a new tax on the excess
revenues of non-utility electric power generators
(MUGS); and
WHEREAS,
Non-utility generators take up 30 cents of every
dollar paid for electricity; and
WHEREAS,
Non-utility generators are unregulated and the price
of their electricity is not subject to competitive
forces of the market place; and
WHEREAS,
Rates paid to non-utility generators for electricity
rise very year while many of their coats have held
steady or dropped; and
WHEREAS,
Maine utilities pay up to 15 cents per kilowatt-hour
for non-utility generated electricity even when
electricity is available at 2 cents per kilowatt
hour; and
WHEREAS,
Unless non-utility generated electrical contracts are
addressed, electric rates could rise 15 percent over
the next five years to pay for their scheduled price
increases; and
AMENDED COPY 94-123
WHEREAS,
Approximately 30 percent of Bangor Hydro -Electric
Company's electricity is supplied through non-utility
generators; and
WHEREAS,
The City of Bangor is a major ratepayer and user of
electricity and any rate reduction would ultimately
benefit the City and its businesses and residents;
and
WHEREAS,
Municipal solid waste energy recovery facilities,
such as the PERE facility in Orrington, Maine,
perform animportant public function, and therefore
should be exempt from the new tax proposed in L.R.
3049; and
WHEREAS,
The new tax proposed in L.R. 3049, if applicable to
municipal solid waste energy recovery facilities,
such as the PERC facility in Orrington, Maine, would
increase municipal solid waste tipping fees paid by
the City of Bangor by an amount in excess of $290,000
per year, and would increase tipping fees paid by
other Maine municipalities by comparable amounts; and
WHEREAS,
L.R. 3049, as currently pending before the Maine
Legislature, contains a provision that will protect
municipal interests by exempting municipal solid
este energy recovery facilities, such as the PERE
facility in Orrington, Maine, from the new tax
proposed in L.R. 3049;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
BANGOR:
THAT the City Council supporta and urges favorable
consideration of L.R. 3049, in its present form, for
the benefit of the City and its ratepayers, including
citizens and businesses.
AND BE IT FURTHER RESOLVED BY THE CITY COUNCIL OF THE CITY OF
BANGOR:
THAT the City Council opposes and urges defeat of any
amendment to L.A. 3049 that would make municipal
solid waste energy recovery facilities subject to a
additional tax, including the new tax proposed in
L.R. 3049.
94-123
Assigned to Councilor Blanchette
February 28, 1994
CITY OF BANGOR
(TITLE.) esOlbef-...„, �...«:«..L.a..3049_•%n s. tn.em�.im.sadity.m.s tax
Bp the City CommoR of a'y of Bauder:
"WLVBD.
tAOR 0 L.A. 3049, An Act to seaside RUMLy m Support Maine &teary Policy,
is tsder mgaideraticn by t Join Starlvg Cmmfttem on smmtiml
arcl Uulftfss; a
FAPP@:•, L.A. 3049 w l pravide for rate relief for electric ratepayers and
atkiftfmal furd;ng for la>freme en ry assistance progress and
energy Cal6ervetion progr®ie by assessing a tan an the massa
revmu;es of ra:-utility electric pacer g ratma (=); and
vnmWnS, R utility generators take V 3 cenus of every dollar paid for
electricity; and
kAmffAR, H utility geneutors are ,„,.e; :xw ani the price of.tb:^
electricity is rot §object m mpetitive forces of the msr
Place; and
WH�AAS, Pates paid to ncnwtflity gamesters for electricity rise every yeetc
while many of their Costs Taus held atasdy or dropped; a el
yIIOiEAS, afav�e utilities pay up to 15 mnffi per ]dlmatt-Tuu: for m: -utility
9 atad electricity eves whm elatrl Sty is available at 2 cents
per Uloatt hour; and
4frffiAAAS• Ihdava nm -utility g ted electrical converts are arkir:meed•
electric rates Could rise 15 pmcsnt war tla ret fine yeas to pry
for their echerkded price increases; aN
tam, Apinnxivetaly 30 percamt of Baa}a HyN Elatric Caigany's
elsetcicity is supplied through mn-utflity gendernmrs; aM
wo:�IS, no City of Bangor is a wjm rateyy .r arcl user of electrlcity aM
amy rate refire•;^^ would ultimtaly baa£it tTe City and its
buaireaem aM reeidmm;
NJV]• 9ffiffiRRB• AB TT Im = w 9HB CTTY WlRtih m TR8 CITY w HAt89JR, TIIXr:
tie City Cmutmil supporta aM urges favorable mnaideratim of L.R.
3049 for the b fit of tla City and its ratepayers, including
ciusens and businesses.
IN CITY COUNCIL
February 28, 1994
Vote to refer to Municipal operatIcpa -
Failed Passage. Vote: 1 Yea, 6 No,
2 Abstained. I
Councilors Voting Yes: Blanchette
Councilors Voting No: Baldaccl, Popper,
Shubert, Soucy, Stone 6 Sullivan.
Councilors Abstaining: Cohen S Tyler.
(RESOLVE) Passed as Amended.by
Attorney's Additions.
See amended Copy on File in the
City Clark's Office.
AL—
xxY cLek
c
94-123
RESOLVE
Supporting L.R. 3049 "Act to Provide
Funding to Support Maine Energy Policy"
P .f/
March 1, 1994
TO: Russ McKenna, City Clerk
FROM: Erik Stumpfel, City Solicitor
RE: Council Resolve 494-123
Per the Council's amendment of the above item last night,
the following language should be added:
-- 9th "Whereas" clause: Add the Word 'and" at
the end.
-- Add 10th "Whereas' clause as follows:
"WHEREAS, municipal solid waste energy
recovery facilities, such as the PERE facility
in Orrington, Maine, perform an important
public function, and therefore should be
exempt from the new tax proposed in L.A. 3049;
and"
-- Add 11th "Whereas' clause as follows:
"WHEREAS, the new tax proposed in L.R. 3049,
if applicable to municipal solid waste energy
recovery facilities, such as the PERC facility
in Orrington, Maine, would increase municipal
solid waste tipping fees paid by the City of
Bangor by an amount in excess of $290,000 per
year, and would increase tipping fees paid by
other Maine municipalities by comparable
amounts; and"
-- Add 12th "Whereas' clause as follows:
"WHEREAS, L.R. 3049, as currently pending
before the Maine Legislature, contains a
provision that will protect municipal
interests by exempting municipal solid waste
energy recovery facilities, such as the PERE
facility in Orrington, Maine, from the new tax
proposed in L.R. 3049;"
-- In the "RESOLVED" clause, add the following
after urges favorable consideration of
L.R. 3049...."
its Present form.'
-- Also add a "FURTHER RESOLVED" Clause as
follows:
-THAT the City Council opposes and urges
defeat of any amendment to L.R. 3049 that
would make municipal solid waste energy
recovery facilities subject to an additional
tax, including the new tax proposed in L.R.
3049."
A copy of the amended Resolve is attached. `J
G � W' ,I
S.S.
tc
Attachment
X94-123
see
• 33 sore Steer, po. Boxgs2, Rsmor, Maine a4o %I -Z8 07' -5841
13X644 "3nuary 18, 994 ,.
Dennis Don Soucy, Chairman, city Council
City of Bangor
73 Harlow Street
Bangor, ME 04401
In the early 1980's the Federal Government and the State of
Maine established the requirement that utilities, including
Bangor Hydro, buy energy from non-utility generators ("HUGS").
In 1993, these HUGS supplied approximately (30$) of Bangor
Hydro's supply of electricity. The HUGS on our system are
generally well run and reliable, and they contribute to the
diversity of our energy mix.
The problem with sense of these purchases is their cost. The
remaining NUGs on our system costs us between 8 and 12 cents a
kilowatt-hour when operating. This is between 4 and 8 cents a
kilowatt-hour higher then we can purchase electricity on the open
market.
High costs were locked into these contracts by public policy
of the early 1980's when lawmakers and regulators required
utilities to enter into fixed priced contracts, based upon the
then projections of future power costs. Since then the cost of
alternative power has declined dramatically due to lower interest
rates, low inflation, reduced fuel prices and improved
technology. However, these cost reductions, which the HUG
supplies have taken advantage of have not been passed on to us
because of the fixed prices in the contracts. Thus the NUGs have
enjoyed 'windfall" profits at the expense of our customers. To
make matters worse, because of our high rates as a result of the
MiGs some of our customers have taken advantage of lower cost
energy alternatives and reduced their purchases from us, causing
rates to increase more to the remaining customers and that trend
continues.
94-1234
-2-
we have attempted to negotiate with the MUGS to reduce their
contract prices with only limited success. we bought out one
significant contract at a price that kept the owners whole yet
allowed us to reduce our rates by replacing that contract with
current low cost suppliers. Other suppliers have not been
forthcoming and do not seem willing to bargain in good faith. As
distasteful as it is to us, we have no alternative but to support
ways to get these suppliers to the bargaining table.
The Maine legislature is the most appropriate agent to
address this problem. The Legislature will take up a bill that
would impose percentage levies on NUG receipts above the level of
utilities' large -industrial -customer rate of roughly 6 cents a
kilowatt-hour. The intent in not to punish or destroy MUG
projects; they have their own legitimate expenses, including a
return on their invested Capital. The bill's effect would, at
the maximum, reduce a 15-cent/kilowatt-hour revenue stream to 10
cents --still well above current energy -market prices; a 9 -cent
revenue stream would drop to 8 cents. Utilities would be
required to apply the proceeds to reducing fuel -clause costs,
funding low-income subsidies, and promoting energy efficiency.
Maine households and businesses, not to mention Maine's economic
climate, need that relief.
This legislation is the only legislation which offers hope
of significant electric rate relief for our customers. i urge
you to support our efforts in two important ways.
<-First,. you can add your name to the growing list of
individuals, businesses and organizations who support LR 3049, An
Act to Provide Funding to Support Maine Energy Policy.
Second, you can write your -legislators and to the Chairs of
the Taxation and Utilities Committees in support of LR 3049.
These legislators would be most interested in the impact of
high electric rates on your business, as well as your views on
the impact of high electric rates on Maine's economy. Some
additional points you may wish to include in your letter are:
1. Non-utility generators (NUGs) take up 3 cents of every
dollar you pay for electricity.
2. NUGs are unregulated, and the price of their
electricity is not subject to competitive forces of the
market place.
3. Rates paid to NGLs for electricity rise every year
while many of their costs have held steady or dropped.
4. Maine utilities pay up to 15 cents per kilowatt-hour
for MUG electricity even when electricity is available
at 2 cents per kilowatt-hour.
5. Unless these contracts are addressed, electric rates
94-129
-3-
could rise 154 over the next five years just to pay for
their scheduled price increases.
Enclosed is a support form for M 3049. We need your help
to lover electric rates. Again, thank you for your time and
attention. Please call me if you have any questions at (207)
945-5621.
r,
N' iam M. Cohen
rector of Communications
6 Public Affairs
NMC/hk
Enc.
P.S. one last note, letters of support may also be mailed to:
Me Honorable John Baldacci, Chair
The Honorable Susan Dore, Chair
Joint Standing committee on Taxation
State House
Augusta, ME 04333
The Honorable Harry Vose, Chair
The Honorable Herb Clark, Chair
Joint Standing Committee on Utilities
State House
Augusta, ME 04333