The cost of electricity will hit a 10-year high next month for most customers in southern and central Maine, adding about $6 per month to the average bill.
On Monday, the Maine Public Utilities Commission approved new standard offer rates for 2019. These supply rates will rise 14 percent, from 7.9 cents per kilowatt hour to 9 cents, for most home and small-business electricity customers in the area served by Central Maine Power.
Total home electricity bills, a combination of supply and distribution charges, for CMP customers currently average about $88 per month. Under the new rates, the average total monthly bill will rise to roughly $94, a 6.8 percent increase.
The hike approved Monday will bring power supply rates to their highest level since 2009, when they last hit the 9-cent threshold.
Standard offer rates for medium-class businesses change monthly, but over the year will rise an average of 7.8 percent.
The new rates affect the majority of customers served by CMP who don’t choose to buy their electricity from a competitive supplier. Instead, the PUC selects a provider following a bidding process.
The new rates are only for the energy-supply portion of electricity bills, not the distribution services provided by CMP. Under Maine’s 19-year-old electricity restructuring law, utilities only distribute power. They don’t generate and sell it.
The increases reflect a regional trend. Wholesale electricity prices in New England have been moving up, driven in part by the cost of natural gas. Roughly half the region’s power comes from gas-fired plants, which typically set the price for wholesale electricity in New England’s competitive marketplace. So if natural gas prices go up, wholesale power prices tend to follow.
In October, for instance, average wholesale gas prices rose 20 percent and average electricity prices went up 24 percent, according to the region’s grid operator, ISO New England. These real-time, monthly averages help form the basis for the retail rates home and business customers ultimately pay in long-term contracts, such as the one approved Monday at the PUC.
Last week, the PUC chose a standard-offer supply contract for eastern and northern Maine that will lead to a roughly 16 percent increase next year for home and small business customers served by Emera Maine. For the typical customer who lives in the Emera service area, bills will jump nearly $6 a month.
In June, the New Hampshire PUC approved a 19 percent hike in the energy charge for Eversource, the state’s largest utility. The per-kwh rate went from 7.9 cents to 9.4 cents.
In October, customers served by National Grid in Rhode Island saw their standard offer rates go up from roughly 8.5 cents to 10.9 cents per kwh. That’s the highest rate there since 2015.
Maine has the lowest residential prices for electricity in New England, but it is still 3 cents per kwh higher than the national average.
FACTORS AFFECTING PRICE
A handful of factors appear to be behind these rate hikes across the region.
“New England is heading into its second consecutive winter season of unusually high electricity prices,” National Grid said in a statement in October. “Much of this increase is due to the announcement of several older generation plants going offline. While new resources are stepping up to meet future demand, most utilities and their customers across the region are still feeling the impact.”
Another contributor is the growing role of renewable generators on the grid, said Marc Brown, a spokesman for the New England Ratepayers Association. Brown said state policies that favor intermittent resources such as wind and solar have created more risk for the companies that bid into supply contracts, especially for home and small-business customers. It’s important for New England to continue building power plants that can be dispatched when needed, he said, especially in the winter.
“I think we need to revisit how we look at capacity in the region,” Brown said.
A shortage of natural gas on the coldest days of the year is a factor because demand for the fuel is growing, but opposition to building new pipeline capacity in the region has triggered tight supplies and high prices.
“The standard offer prices set this week reflect the best bids received from a competitive auction process,” PUC Chairman Mark Vannoy said. “As the commission stated last week, these price increases are driven by increases in wholesale electricity market prices in New England due primarily to constraints on the availability of natural gas in the region.”
Vannoy added that New England has yet to address its gas infrastructure needs.
The rate hikes will be felt broadly because the majority of CMP customers default to the standard offer.
In recent years, competitive suppliers have had a hard time beating the PUC-selected rates for home and small business customers. Also, media reports around deceptive marketing practices involving the state’s largest private supplier, Electricity Maine, have dampened interest. Electricity Maine currently is offering a two-year fixed rate of 10.29 cents/kwh. Another supplier, CN Brown, is bundling a nickel-per-gallon savings on heating oil with a rate of 8.96/kwh for 11 months.
The PUC maintains a list of suppliers and their contact information on its website.
Tux Turkel can be contacted at 791-6462 or
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