What is Behind Maine’s Rising Energy Costs?

On October 6, 2014 the Maine Public Utilities Commission, Maine’s Public Advocate, and Gov. Lepage’s energy office released a warning.  Consumers should plan on rising electricity costs.

The increase is coming as the state heads into the coldest time of the year.  This gets compounded when household budgets take a hit from other seasonal increases around home heating and other expenses related to weather. Medium businesses on the Standard Offer will feel the pinch first, residential consumers next.


Many news organizations across the state have recently covered the story:

Bangor Daily News


Portland Press Herald & Kennebec Journal

The reason given for these increases — the high cost of natural gas delivered to New England.

The rise in natural gas dependency has been dramatic in the region. ISO New England, the manager of the regional electricity grid, indicated that nearly 15 years ago, natural gas represented only 15% of the total mix of fuels.  In 2014, natural gas is now the leading source of electricity in the region, accounting for 55% of production — that’s an increase of 266%! Currently, the second leading source of electricity is now nuclear, with coal representing 1% and oil even less than that, a dramatic restructuring of the region’s traditional fossil fuel mix used to generate electricity.

Maine households on the standard offer have been protected from price swings because the PUC (not the utilities as many believe) has been bidding only one-third of the total standard-offer price each year.  The PUC bidding process will change this year, with standard-offer bids reflecting more-immediate, real-time prices. That process will begin later this fall and rates will change on March 1, 2015.

How much will Maine residential consumers pay for power?  Maine’s Public Advocate, Tim Schneider, is quoted in a recent news story as saying consumers should pay attention to the rates offered by competitive electricity supply companies such as Electricity Maine. “I think they are indicative of what the next annual solicitation will be for the standard offer,” he said.

This issue is a problem for all of New England.

In Massachusetts, one of the largest utilities, National Grid, recently announced their rates would be 37% higher than last winter.  For the average home this is a $30 per month increase.  NSTAR and WMECO, the other utilities in Massachusetts, are expected to follow suit.

In New Hampshire, customers of two utilities – Liberty and Unitil – will see an increase in their electricity supply rates greater than 40%. PSNH, the state’s largest utility, has not announced their new rate. State energy officials are going to unprecedented lengths to put information into the hands of consumers.  The New Hampshire Office of Public Advocate put out a news release offering advice to consumers on how to manage their utility bills this winter.

Are there any short-term solutions for customers—both residential and business owners?

Emile Clavet, co-owner of Provider Power (the parent company of Electricity Maine, ENH Power and Provider Power Mass), suggests consumers “lock in” a longer term contract for electricity.

“It all depends on personal risk,” said Clavet. “In this environment, with so much fluctuation in the cost of power, it is our belief that the best option for consumers is to lock-in a longer term contract—especially one that covers as many ‘peak seasons’ as possible. Fixed, longer term contracts protect consumers,” he said.

Similar to oil-price contracts that allow customers to pay a set price for each gallon purchased during the heating season, even if the price of heating oil spikes, competitive electricity providers also offer similar type contracts for the power they provide.

“There isn’t a model that suggests rates will go down any time soon,” added Clavet.

To read more about what is driving the cost of electricity and the impact on residential and business consumers, see these stories in New England media:

Seacoast Online

Boston Globe

Cape Code Today

Posted on October 23, 2014 in Electricity Maine

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