For a second year in a row, most customers of Central Maine Power will see their electricity supply rates rise in 2023, reflecting a trend driven largely by the high cost of natural gas that fuels many power plants in New England.
Beginning on Jan. 1, new “standard offer” supply rates for home and small-business customers in CMP’s service area will rise from 11.8 cents per kilowatt hour to 17.6 cents, a 49% hike.
Electricity supply makes up roughly 60 percent of a total monthly bill. When delivery charges are added, the total bill for a typical customer using 550 kWh will go up $31.98 a month, from $122.59 to $154.58, a 26% increase.
The PUC also selected bids Wednesday for standard offer power supply in Versant Power’s Maine Public District, which is mostly in Aroostook County. The supply rate there for home and small-business customers will change from 11.8 cents per kWh to 14.9 cents, a 26% jump. That will increase a total bill $18.96 a month, from $103.03 to $121.99, an 18% rise.
The rates approved by the Maine Public Utilities Commission were selected from an annual competitive bidding process that seeks the best deals from large power generators.
The state’s standard offer is the default supply for homes and small businesses that don’t sign contracts with a licensed competitive energy provider.
“We recognize that this is a significant increase that comes at a time when consumers are already faced with rising prices due to inflation,” said Philip Bartlett, the PUC’s chair.
Bartlett noted, however, that wholesale natural gas prices have eased a bit in the past few months, leading to lower supply rates than initially anticipated. For context, the PUC created a table showing supply rates in the six-state region.
“In fact,” Bartlett added, “these electricity supply prices are lower than most other New England states.”
One of the other three commissioners, Patrick Scully, also noted that recent power contracts approved by the PUC for wind and solar generation have featured prices below next year’s standard offer. These contracts are helping to ease the impact on ratepayers, Scully said, and are a hopeful sign as New England transitions to renewable energy.
But these distinctions were small comfort for Bill Harwood, the state’s Public Advocate.
“I’m deeply concerned about today’s announced standard offer price increase,” Harwood said in a statement. “The timing is unfortunate as it comes when Maine energy consumers are bracing for a tough winter of high energy prices. This increase will create more misery for consumers, especially low-income consumers, who are already struggling to pay for food and medicine.”
He advised residents to do what they can to reduce energy use, and urged those needing help paying bills to contact CMP or Versant about payment plans.
Harwood’s concerns were echoed by Gov. Janet Mills. She blamed the rate hikes on Maine’s over-reliance on fossil fuels, notably natural gas, and the market volatility tied to Russia’s invasion of Ukraine.
“I have directed my administration to examine every solution possible to this crisis,” Mills said in a statement, “and we will be preparing a proposal for the Legislature’s consideration next month to help Maine people with the significant hardship caused by high energy prices this winter.”
House Republicans, however, released a statement that sought to connect the standard offer hike with Democrat-led policies to encourage solar and wind development. They said they’d be offering bills when the Legislature reconvenes to lower energy costs, notably around the state’s net-energy billing law.
“State policies favoring solar and wind at the expense of family budgets need to be changed,” said Rep. Steven Foster, R-Dexter.
Wednesday’s outcome was not unexpected. A day earlier, the PUC approved standard offer bids for customers in eastern Maine served by Versant Power. For homes and small businesses, those rates will go from 11.68 cents per kilowatt hour to 16.44 cents in January, a 41% increase. That will add nearly $24 to a monthly bill, raising it nearly 21% from $114.78 to $138.55 a month.
Roughly nine out of 10 home customers of both utilities are on the standard offer, PUC figures show. Larger customers are more likely to have contracts with competitive providers.
Neither Versant nor CMP generates electricity; they only move it over transmission and distribution lines. CMP has roughly 636,000 customers and serves 80% of the state’s residential electric load, or amount of power on the grid. Versant has more than 159,000 customers and serves 13% of the residential load.
These standard offer rate increases are separate from the delivery rate hikes being sought by both CMP and Versant. CMP’s current delivery rate is 8.8 cents per kWh. Versant’s delivery rate is 11.6 cents in the Bangor Hydro District and 9.3 cents in the Maine Public District of northern Maine.
With the supply increase, the total CMP rate will rise to 26.4 cents per kWh as of Jan. 1. Versant’s total rate will reach 28 cents per kWh in the Bangor area and nearly 26 cents in Aroostook County. Both rates could increase if CMP and Versant succeed in receiving hikes in their delivery rates.
BIGGER BURDEN
Energy experts had been predicting for months that rates would rise to record levels. It’s part of a trend that began last year with soaring wholesale prices for natural gas, made worse by Russia’s invasion of Ukraine and New England’s dependence on imported, liquefied natural gas to help fuel power plants in the winter.
These jumps aren’t isolated to Maine, a point stressed by the PUC. The agency noted that the average delivery-only rate in New England this winter will be 17.4 cents per kWh, with rates in Massachusetts hitting a stunning 24.6 cents. New Hampshire and Vermont average roughly 18 cents, the PUC said.
These increases are shocking for customers because only two years ago – after the pandemic had shrunk overall energy demand and fossil fuel prices plummeted – electricity supply rates were especially low. Then things changed dramatically.
In CMP’s service area, standard offer supply rates rose 83%, from 6.4 cents per kWh in 2021 to 11.8 cents in 2022. Combined with a 9.4 cent delivery rate, it brought the total rate to 21.2 cents per kWh, and a typical home bill from $96.50 to $126 a month in 2022.
Last autumn, Versant’s Bangor-area customers saw the standard offer rate jump by 88%, from 6.2 cents per kilowatt hour in 2021, to 11.6 cents in 2022. That added roughly $30 a month to the bill in a household using 550 kWh. When combined with a delivery rate of more than 11 cents per kWh, it brought the total rate to 23.3 cents per kWh, and raised a typical home bill from $101 to $131 a month.
CMP acknowledged the hardship the rate increase could cause for many customers.
“We understand that these increased prices present real challenges for many Mainers, especially as the cost of gasoline, fuel oil, food and other basics are increasing as well,” Joseph Purington, CMP’s president and CEO, said in a email Wednesday. “We are here to help and encourage any CMP customers that are challenged to pay their bills – now or in 2023 when these prices go into effect – to call us.”
Versant Power also released a statement saying it wanted to help customers handle the increases.
“We’re launching an educational information campaign about benefits that may help with electricity cost via our social media channels and in a bill insert that will appear in January,” the company said in a statement Tuesday.
The pending increases in electricity supply are an unwelcome addition to the overall increase in the cost of keeping buildings lit and warm, and getting around. Experts call it the household energy burden.
Heating oil prices have continued their steady rise in November, with the statewide average reaching $5.71 a gallon last week, according to the Maine Governor’s Energy Office survey. K-1 kerosene, which has been in short supply, was averaging $7.07 a gallon. Although at record levels, Maine’s average prices are the lowest in New England, the agency notes.
The energy office is promoting an online resource guide with tips and contacts to help Mainers get through an expensive winter. It can be downloaded from the agency’s website.
Average gasoline prices were $3.95 a gallon earlier this week in Maine, according to GasBuddy, 52 cents higher than a year ago and on track to be the highest ever during the busy Thanksgiving holding travel weekend. Average diesel prices were at $5.34 a gallon, a key cost of trucking goods and a factor contributing to inflation.
This story has been updated to include CMP’s current electricity delivery rate.
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