“This legislation is important to our jobs future, for our energy future, and it’s important therefore for our children’s future,” O’Malley told the Maryland Senate Finance Committee yesterday.
For the third year in a row, O’Malley and allies are arguing for a bill that would create state incentives for developers to build 40 turbines in the Atlantic Ocean 10 to 30 miles east of Ocean City. The goal of the governor’s offshore wind power legislation, also known as Senate Bill 275, is to generate enough clean, renewable electricity to power about a third of the homes on Maryland’s Eastern Shore.
Similar legislation did not pass in 2012 or 2011, in part because of concerns about the cost to electricity consumers, because wind power is more expensive to generate than power from coal or natural gas.
To help address those objections, the legislation this year would cap the maximum monthly rate increases to $1.50 per month for an average family, compared to the $2.00 per month in last year’s bill. In addition, many farmers and industries would be exempt from any rate increases, according to the O’Malley administration.
The wind power legislation is backed by many environmental and public health organizations, but is being opposed by (among others) retail chains and supermarkets, which are concerned about higher electricity prices cutting into their profitability.
State Senator E. J. Pipkin, who represents Maryland’s Eastern Shore, questioned the economic viability of offshore wind energy, in light of the rise of hydraulic fracturing for natural gas in shale formations, which has made electricity generated by natural gas much cheaper.
“Why I think this is the dumbest idea is that natural gas prices continue to go down,” Pipkin said. “While this (wind farm) is kinda out there, natural gas is with us, it’s abundant, and …it’s environmentally friendly.”
O’Malley replied that the relatively new technologies to extract natural gas from shale rock has been good for making energy prices cheaper, in the short term. "Fracking" for natural gas took off in the Marcellus shale rock formations of Pennsylvania and West Virginia about seven years ago, but has not yet been allowed in Western Maryland's shale, because the O'Malley administration has imposed a de-facto administrative moratorium until the potential environmental impact can be studie.
Yesterday, O'Malley noted that natural gas is an inherently limited resource –- unlike the wind –- and the supply will run out at some point.
Moreover, O'Malley said that proposals to export liquid natural gas to foreign countries will inevitably drive the price of natural gas up, making wind more competitive. A utility company is proposing to create the first liquid natural gas (LNG) expert terminal in the U.S. on the Chesapeake Bay, at the Cove Point LNG pier in southern Maryland.
“Now that (hydraulic fracturing for natural gas) makes financing a project like this (wind farm) even more challenging, given the cost benefit analysis,” O’Malley said. But he added: “There will come a time very quickly when that fuel is exported, and the prices will start to resume their long-term upward move.”
The O’Malley administration has included measures to help protect customers from the multi-billion dollar construction project, including a requirement that no costs be passed along in rates until after the wind farm is operating.
To learn more about the bill, read this analysis of the bill by the Maryland Department of Legislative Services.
O'Malley described the wind power bill as not only good for reducing pollutants that cause global warming and sea-level rise, but also as a stimulator of jobs.
“Offshore wind would support 850 jobs during the construction phase, it would allow us to create 160 permanent local jobs once those turbines start spinning,” O’Malley said. “And if we succeed if making Maryland the regional manufacturing hub for wind turbines, it will create and sustain more good jobs into the future.”
By Tom Pelton
Chesapeake Bay Foundation