MAINE STATE LEGISLATURE The following document is provided by the LAW AND LEGISLATIVE DIGITAL LIBRARY at the Maine State Law and Legislative Reference Library http://legislature.maine.gov/lawlib Reproduced from scanned originals (text not searchable) ACTIVITY SHEET COMMITTEE: Utilities and Energy L.D. 1375 Act To Improve Cooperative Energy Purchasing for Schools, Towns and Nonprofits HEARJNG DATE: 4-13-05 WORK SESSION DATES: _4?28-05 REPORTED OUT DATE: 5-6?05 COMMITTEE REPORT: WOught to Pass 122nd MAINE LEGISLATURE FIRST REGULAR SESSION-2005 Legislative Document No. 1375 SP. 473 In Senate, March 17, 2005 An Act To Improve Cooperative Energy Purchasing for Schools, Towns and Nonpro?ts Reference to the Committee on Utilities and Energy suggested and ordered printed. 961% JOY J. Secretary of the Senate Presented by Senator STRIMLIN of Cumberland. Cosponsored by Senator: BARTLETT of Cumberland. Printed on paper enacted by the People of the State of Maine as follows: SEC. 1. 30-A MRSA sub-?l, as enacted by PL 1999, c. 231, is amended to read: 1. Authority. In addition to its other enumerated powers, but subject to the limitations imposed under subsection 2, the bank, on behalf of or in partnership with one or more governmental units or nonprofit corporations organized under the Internal Revenue Code, Section 501, may aggregate governmental units and nonprofit corporations to purchase in bulk electricitv, petroleum products, fuel oil and natural Gas. SUMMARY This bill allows schools, towns and nonprofits to cooperate to purchase in bulk electricity, petroleum products, fuel oil and natural gas. Page l?LR159l(l) STATE OF MAINE I22ND LEGISLATURE NOTICES JOINT STANDING COMMITTEE ON UTILITIES AND ENERGY Sen. Philip L. Bartlett it, Senate Chair Rep. Lawrence Bliss. House Chair PUBLIC HEARING: ILD. 32?) (LD. 913) (LB. 1098) ILD. 1375) up. I435) PERSON: Wednesday, April 13, 2005, 1:00 pm, Room 211 Cross Building Bill "An Act To Implement Energy Conservation Standards for Affordable Housing" (H.P.0250) (Presented by Representative EDER of Portland) "An Act To Promote Green Power Use at State Buildings" (H.P.0632) (Presented by Representative PIOTTI of Unity) (Cosponsored by Senator COWGER of Kennebec, Representative BLISS of South Portland, Representative KOFFMAN of Bar Harbor, Representative PERCY of Bill "Resolve, To Establish Energy Standards for Residential Rental Properties? (H.P.0751) (Presented by Representative EDER of Portland) (Cosponsored by Senator STRIMLING of Cumberland, Representative DAVIS of Falmouth, Representative DUDLEY of Portland) "An Act To Improve Cooperative Energy Purchasing for Schools, Towns and Nonprofits" (S.P.D473) (Presented by Senator STRIMLING of Cumberland) (Cosponsored by Senator BARTLETT ll of Cumberland) Bill "An Act Establishing Minimum Energy for Certain Products Sold or Installed in the State" (H.P.0999) (Presented by Representative EBERLE of South Portland) (Cosponsored by Senator TURNER of Cumberland, Representative BLISS of South Portland, Representative BRAUTIGAM of Falmouth, Representative FLETCHER of Winslow, Representative KOFFMAN of Bar Harbor, Representative MUSE of Fryeburg, Representative PINGREE of North Haven, Representative RECTOR of Thomaston, Representative THOMPSON of China) Kristen Gottlieb 100 State House Station Augusta, ME 04383?0100 287?4143 TESTIMONY SIGN IN SHEET Joint Standing Committee on Utilities and Energy 3-05 Name Town/Affiliation Proponent Opponent Neither Rep. Sockalexis Penobscot Nation ME PowerOptions Mary Lou Gallup (L.D. 324) (L.D. 312) (L.D. 327) (L.D. 913) (LB. 1098) (LB. 1375) (LB. 1435) (L.D. 711) CONTACT PE RS ON: WORK SESSION AGENDA UTILITIES AND ENERGY 04/28/05 1:00 pm Room 211 Cross Building Bili "An Act To Aliow the Public Utilities Commission To Consider the Health of Maine's Manufacturing Economy in the Design of Electric Rates and Energy Policy" (H.P.0583) (Presented by Representative FLETCHER of Winslow) Bill "An Act To Create a Manufacturin Energy Policy for Maine" (H.P.0236) (Presented by Representative FLETC ER 0 Winslow) Bill "An Act To implement Energy Conservation Standards for Affordable Housing" (H.P.0250) (Presented by Representative EDER of Portland) Bill "An Act To Promote Green Power Use at State Buildings" (H.P.0632) (Presented by Representative of Unity) (Cosponsored by Senator COWGER of Kennebec, Representative BLISS of South Portland, Representative KOFFMAN of Bar Harbor, Representative PERCY of Phippsburg) Bill "Resolve, To Establish Energy Standards for Residential Rental Properties" H.P.0751) Presented by Representative EDER of Portland) (Cosponsored by enator ST of Cumberland, Representative of Falmouth, Representative DUDLEY of Portland) Bill "An Act To improve Cooperative Energy Purchasing for Schools, Towns and Nonprofits" (S.P.0473) (Presented by Senator of Cumberland) (Cosponsored by Senator BARTLETT ll of Cumberland) Bill "An Act Establishing Minimum Energy Efficiency Standards for Certain Products Sold'or installed in the State" (H.P.0999) (Presented by Representative EBERLE of South Portiand) (Cosponsored by Senator TURNER of Cumberland, Representative BLISS of South Portland, Representative of Faimouth, Representative FLETCHER of Winslow, Representative KOFFMAN of Bar Harbor, Representative MUSE of Fryeburg, Representative of North Haven, Representative RECTOR of Thomaston, Representative THOMPSON of China) Bill "An Act To improve the Energy Efficiency of Buildings To Be Owned or Occupied by the State" (H.P.0506) (Presented by Representative EDER of Portland) Kristen Gottlieb 100 State House Station Augusta, ME 04333~0100 287-4143 '32 RCHASERS CONSORTIUM A Program of the Maine Municipal Bond Bank and the Maine Health and Higher Educational Facilities 1R EDUCAIEDNAI AUTHORITY TESTIMONY OF MARY LOU GALLUP, PROGRAM OFFICER, MAINE POWEROPTIONS in support of LD 1375, ACT TO IMPROVE COOPERATIVE ENERGY PURCHASING FOR SCHOOLS, TOWNS AND NONPROFITS Before the JOINT STANDING COMMITTEE ON UTILITIES AND ENGERY April 13, 2005 Senator Bartlett, Representative Bliss, and distinguished members of the I oint Standing Committee on Utilities and Energy, my name is Mary Lou Gallup. I serve as Program Of?cer of the Maine PowerOptions Program, a joint program of the Maine Municipal Bond Bank and the Maine Health and Higher Educational Facilities Authority. Robert Lenna the Director of the Bond Bank sends his apologies, as he is unable to be here today to testify due to a long standing commitment. I appear before you today in my roles as Program Of?cer of the Maine PowerOptions Program in support of LD 1375, ?An Act to ?Improve Cooperative Energy Purchasing for Schools, Town and Nonprofits?. My goal today is to inform you of our successful efforts with cooperative energy purchasing, and our belief in the bene?ts of the aggregated purchasing model. Maine PowerOptions supports the intent of the bill and looks to the legislature to determine who should best carry out the process. Earlier this year, each of you received a packet of information introducing you to the Maine PowerOptions Program and giving you some background on our activities and achievements with our aggregated purchasing programs. Maine PowerOptions serves as a Member based purchasing consortium for municipalities, school systems, water and sewer district, nonpro?t organizations, the University of Maine System, and tax-exempt healthcare and higher educational facilities throughout the State of Maine. 3 University Drive, PO. Box 2268 Augusta, Maine 04338-2268 1-877?852?3332 or (207) 621-0744 FAX: (207) 623-5359 Our efforts have helped Members reduce their energy costs through voluntary purchasing opportunities for electricity and fuel oil. Savings achieved through the MPO program have a trickle down effect to all Mainers through reductions in property taxes, water and sewer fees, healthcare costs, education costs and in so many other areas. Controlling energy costs has never been more critical than it is today, yet it competes for scarce administrative resources in every business and organization across the State. Maine PowerOptions (MPO) has a successful track record in aggregating purchasing for our Members, while shouldering the majority of the administrative and legal review components of managing competitive energy purchases, following energy markets and market regulations. Our Electricity Program is open to all Maine PowerOptions members. Participation in our Fuel Program is limited by current state statute to non?pro?t healthcare and higher education organizations. Since 1998, the MPO program has provided an average annual savings of 40% on purchases of #2 fuel oil. Our electricity purchasing program, which serves a much larger percentage of our membership has provided approximately ten million dollars in savings since restructuring of Maine?s electricity market in 2000. The benefits of the economies of scale are evident in the larger volume of our electricity program. As we have demonstrated, a key ingredient to a successful purchasing consortium is to bring understanding and analysis of the market to bear and to help determine the best market timing. Energy markets are becoming increasingly complex and volatile, and ongoing preparation and the ability to react is becoming a larger component in the equation for success. Well run, proactive, voluntary purchasing consortiums can act as an independent education resource and administrative support arm for those they serve. Maine PowerOptions role as the independent source, making options available and educating about the market and the options available, frees up our Members to work on their critical missions. Savings 3 University Drive, PO. Box 2268 Augusta, Maine 04338?2268 1-877-852-3332 or (207) 621?0744 FAX: (207) 623?53 59 achieved, both on the cost of energy and on related administrative processes, allows our Members to better serve their constituents, taxpayers, patients and Maine?s citizens. Past efforts of Maine?s Legislature to expand group purchasing for fuel oil have met resistance. We believe that a well structured group purchasing program, cooperative in nature, will bene?t both the fuel purchaser and the fuel supplier. Under our current program, for both purchasers and suppliers participation is voluntary; the process is public and available equally to all interested and eligible parties. The Maine PowerOptions ?le] purchasing program is designed to be equally inclusive of local independent and larger regional suppliers. Our experience has shown that true to Maine?s tradition of local roots many of our Members want to support their local fuel suppliers. We support this effort and have provisions in our current fuel process for participants to specify who they would like to have included in the bid process. Many take advantage of this and speci?cally request bids from their local fuel suppliers. Further, MPO believes that by expanding the possibilities for a fuel purchasing consortium and helping educate a greater number of organizations about the market, Maine?s fuel oil dealers will be gaining a partner. Greater knowledge and better timing of purchases should not take away from Maine?s suppliers, but rather allow customers to better time their purchases. This is a win-win for everyone in Maine! For the last 7 years the Bond Bank, MHHEFA, and Maine PowerOptions have worked together to lower energy costs to bene?t the people of Maine. We lend our support to this effort to expand the opp01tunities to a broader range of energy purchasers. I would be glad to try and answer and questions the Committee may have, either now or later in work session. Thank you. 3 University Drive, PO. Box 2268 Augusta, Maine 0433 8-2268 1?877-852?3332 or (207) 621-0744 FAX: (207) 623-5359 MAINE OIL LERS Representing Maine's Petroieum industry and Associated Businesses Since 1954 TESTIMONY OF JAMIE PY OF THE MAINE OIL DEALERS BEFORE THE JOINT STANDING COMMITTEE ON UTILTIES AND ENERGY IN OPPOSITION TO LD 1375, "An Act To Improve Cooperative Energy Purchasing for Schools, Towns and Nonprofits Sponsored by Senator Ethan Strimling April 13, 2005 Senator Bartlett, Representative Bliss and other members of the Joint Standing Committee on Utilities and Energy, my name is Jamie Py, I am President of the Maine Oil Dealers Association (MODA) and I thank you for this opportunity to address you today. MODA represents Maine businesses and their 12,000 Maine?based employees that market petroleum products at retail. Our members include 220 of the approximately 240 companies engaged in the retail sale of home heating oil to 410,000 consumers, as well as the sale of the majority of propane gas sold in the State of Maine. Our members own or operate 1,000 of the roughly 1,200 retail gasoline outlets in Maine. Our members sell over 90% of the heating oil and gasoline in Maine, as well as 80% of the propane. We are opposed to LB 1375. As we were in 1999 and again in 2001, we continue to be opposed to this bill for the following reasons: It is inherently unfair and unnecessary for the state to be competing with private industry. This is precisely what this bill would provide and was the primary reason for this language to be defeated in 1999 as part of LD 704 and again in 2001 as LD 533. It is a stretch of the imagination to believe that the purpose of the Maine Bond Bank should be to purchase commodities for any nonprofit entity in the state. In fact, if one were to read section 5902 of Title 30-A, the Declaration of Necessity and Purpose of the Maine Bond Bank, one would not see any purpose or need remotely associated with what this bill proposes. Most telling, the statute in section 5958 of Title enumerates speci?c prohibited acts and limitation of powers. These prohibited acts EnergyPAC Health insurance Trust I Workers Compensation Trust I Education Foundation 25 Greenwood Road, PO. Box 249, Brunswick. Maine 04011-0249 Toll Free: 1-888?863-3753 I Tel: (207) 729-5298 I Fax: (207) 721-9227 I email: oilman@meoil.oom 5 website: and limitations of powers clearly articulate that the Maine Bond Bank is not to compete with commercial banks. Now if the Maine Bond Bank was strictly prescribed to not engage in business that would compete within its sphere of commerce and de?ned as its declaration of purpose and necessity, namely - banking, how is it possible that the Maine Bond Bank has any reason to be seeking to enter the commercial markets for the commodity brokering of oil, gas and propane? Government intrusion into competition with small business is not the step this State wants to take. Former Senator Pendleton worked on the subcommittee that reported to the State and Local Committee in 2001 on LD 533, An Act to Prohibit the State from Competing with Private Industry. In the federal initiatives section of that report, the nature of the argument was stated: Nationally, government competition with small enterprise has been a major concern of small business for several years as evidenced by the issue?s repeated consideration at White House Conferences on Small Business. A former Carter Administration of?cial, Milton Stewart, re?ected small business owners? frustrations when he wrote nearly two decades ago that any job that small business could handle ?shouldn?t be done by government.? Government competition with private industry, wrote Stewart, ?is a permanent issue in a self?governing republic. It is where the citizenry draws the line between the proper realm of government and forbidden government intrusion.? Page 2, Nov. 3, 1999, Report on LD 533 It is my humble suggestion that should the members of the committee care to learn more about this issue of government competition against small business that they work with the Advisory Committee on Fair Competition with Private Enterprise. This is the entity created to speci?cally review complaints about unfair of unnecessary government competition. The bill before you today would place government, in the form of the Maine Bond Bank, squarely in direct competition with private industry. There is no need for this service by the government. This issue was defeated in the 119th and again in the 120th for these same reasons. Circumstances have not changed to warrant the heavy hand of government intrusion in this arena. The Maine Bond Bank would be performing a service that is currently available in the market, it would also be offering a service for which it was not created, nor intended. Maine State Legislature OFFICE OF POLICY AND LEGAL ANALYSIS 13 State House Station, Augusta, Maine 04333?0013 Telephone: (207) Fax: (207) 287?1275 MEMORANDUM TO: Members, Joint Standing Committee on Utilities and Energy FROM: on Clark, Senior Analyst DATE: April 21, 2005 RE: LB 1375 An Act To Improve Cooperative Energy Purchasing for Schools, Towns and Nonprofits This bill allows the Maine Municipal Bond Bank (MMBB) to aggregate government units (counties, municipalities, SADs and community school districts, and quasi-municipal entities such as water and sewer districts) and nonpro?ts to purchase in bulk electricity, petroleum products, fuel oil and natural gas. Notes At the hearing Representative Sockalexis offered an amendment to provide that all federally recognized tribes in the state would be allowed to participate in the bulk purchasing arrangements of the bank. Under 30 MRSA 6206, the Passamaquoddy Tribe and the Penobscot Nation, within their respective Indian territories,1 have all the rights, privileges, and powers of municipalities and so should be entitled to participate in the bank?s aggregation arrangements under current law. The Houlton Band of Maliseets and the Aroostook Band of Micmacs do not have municipal powers or privileges. Thus the amendment would clarify applicability of the law to the Passamaquoddy Tribe and the Penobscot Nation and extend applicability to the Houlton Band of Maliseets and the Aroostook Band of Micmacs. Current law MRSA permits aggregation by the bank for obtaining electricity for the daily operations of participating entities. Current laW includes standards for the bank?s exercise of its aggregation authority; these are not changed by the bill: The bank is subject to all applicable laws, including laws relating to aggregators of customers of electricity; the bank must provide notice that no entity is under any obligation to accept any of the services and that no 1 The indian territories include the reservations plus certain lands (up to 150,000 acres) described in the few. other service provided by the bank is conditional upon or affected by the entity's acceptance or rejection of the offer; the bank may not extend credit or vary?the terms of credit based on an entity's acceptance or rejection of an offer by the bank to provide the services; and the bank may not encourage or otherwise seek to persuade any entity to accept any services offered by the bank, if the entity has an application with the bank for a loan, until after the bank has taken ?nal action on approving or rejecting the application. Under 22 MRSA 2055 (16), the Maine Health and Higher Educational Facilities Authority (MHHEFA) also has authority to make bulk purchases on behalf of certain eligible entities (non? pro?t healthcare and high education facilities and the University of Maine System). It?s authority is broader than the current authority and very similar to that pr0posed in the bill for the MMBB. The MHHEFA may purchase, lease or otherwise acquire, ?nance, sell and transfer for, to or on behalf of itself and any eligible entities commodities necessary for the daily operation of the facilities of the eligible entities, including, but not limited to, electricity, petroleum products, fuel oil and natural gas. Maine Power Options is the program established by the MMBB and the MHHEFA to carryout the bulk?purchasing functions pursuant to the 2 laws. Brief summaryof testimony - High energy costs for tribes; this will help 0 Government intrusion into competition a Maine Power Options supports inclusion of with small business the tribes If small business can do, government 0 Extending the current bulk purchasing shouldn?t authority for non?pro?t healthcare and higher education facilities to other nonpro?ts and governmental units will save money 0 Current bid process allows participants to request bids from local suppliers good for local businesses Committee: UTE LA: I File Name: 10:52:00 AM) LR (item)#: New Title?: Add Emergency?: Date: April 1, 2005 LB 1375 PROPOSED COMNIITTEE AMENDMENT OFFERED BY REPRESENTATIVE OF PENOBSCOT NATION MICHAEL SOCKALEXIS Amend the title to read: An Act to Improve Cooperative Energy Purchasing for State and Local Governmental Entities, Nonpro?ts and Indian Tribes Amend the bill as follows (changes shown in bold italics): Aggregation service 1. Authority. In addition to its other enumerated powers, but subject to the limitations imposed under subsection 2, the bank, on behalf of or in partnership with one or more governmental units1 federally recognized Indian tribes,_or nonpro?t corporations organized under the Internal Revenue Code, Section 501, may aggregate governmental units, federallv recognized Indian tribes, and nonpro?t corporations to purchase in SUMNIARY The amendment provides that the Maine Municipal Bond Bank is authorized to provide aggregation services to purchase in bulk electricity, petroleum products, fuel oil and natural gas on behalf of federally recognized Indian tribes in this State as well as 011 behalf of state and local governmental units and nonprofit corporations. Office ofPolicy and Legal Analysis Draft ..Page 1 LB 1375 LR 1591(01) An Act To Improve Cooperative Energy Purchasing for Schools, Towns and Nonpro?ts Fiscal Note for Original Bill Sponsor: Sen. Strimling of Cumberland Committee: Utilities and Energy Fiscal Note Required: No Fiscal Note Minor cost increase - Maine Municipal Bond Bank - Fiscal Note Page 1 of 1 LD or Con?rmation: COMMITTEE VOTENG TALLY SHEET )75?15 <3 Wx Km Committee: 22:; 5 0 Date: Ll I 0- Motion: own/(M Motion by: m. Mm . a Seconded by: {?49 l) V. Recommendation of those opposed to the Motion Those as a; 4.. a Voting in ?11 5 Favor of the 8 a) .3 Motion 4 Senators Sen. Philip Bartlett Sen. Scott Cowger I ll . ,Sen. Carol Weston 1.7 Representatives Rep. Lawrence Bliss Rep. Stacey Allen Fitts Rep. Christopher Babbidge Rep. Philip Curtis Rep. John Brautigam Rep. Kenneth Fletcher Rep. Herbert Adams Rep. Maitland Richardson Rep. Peter Rines Rep. Everett McLeod TOTALS SENATE REPORT THE CONEVIITTEE ON Utilities and-Energy to which was referred the following: An Act To Improve Cooperative Energy Purchasing for Schools, Towns and Nonpro?ts S.P. 473 LB. 1375 has had the same under consideration, and asks leave to report that the same Ought to Pass 76/ of Cumberland BARTLETT II For the Committee (Type) (Signatures) Rep. of (Town) and/or Sen. of (County) SENATE REPORT