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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