Natural Gas
Frequently Asked Questions about Natural Gas in Maine
1. Where is natural gas service offered in Maine?
- Northern Utilities currently serves customers in the greater Portland area, Lewiston, Auburn, and Kittery.
- Bangor Gas serves customers in Bangor, Brewer, Old Town, Orono and Veazie.
- Maine Natural Gas currently serves customers in Windham, Gorham, Bowdoin Topsham and Brunswick.
Each of these companies may expand to serve additional municipalities as new customers request service. Companies typically choose to expand when the revenues from new customers cover the costs to provide service. Often a utility will expand its mains to a large, "anchor" customer and then seek to add small customers located along the main.
2. Does the MPUC regulate propane?
The MPUC does not regulate propane rates but is responsible for conducting safety inspections on all “jurisdictional” propane facilities. Jurisdictional propane systems are those serving ten or more residential customers, or two or more customers served in a public place, from a single or a manifolded-tank system
3. How are my rates for Natural Gas determined?
Initially, the utility files its proposal for a rate change. Commission staff, the Office of Public Advocate and other intervening parties then review that proposal and make a recommendation for adoption by the Commission.
Rates for natural gas utilities are composed of two components – base rates and cost of gas rates. Base rates represent the cost of installing, operating and maintaining the utility’s pipeline system to deliver the gas to your home. Base rates usually are changed periodically through rate cases. Cost of gas rates can change as frequently as monthly depending on the utility.
Northern's rates are determined on a traditional cost of service basis and involve three basic steps. In the first step the revenue requirement is determined. This is what the total cost is to serve the customer and includes operating and maintenance costs and a return on investment. In the second step, the sales by customer class are estimated for the same period. Lastly, the revenue requirements are then allocated to each customer class based upon the cost to serve each class – this is referred to as rate design. Northern's last rate case was filed in 1983 but its rate design was reevaluated in 1999.
Both Bangor Gas and Maine Natural Gas have operated under alternative rate plans since they began their operations in 1999. Essentially, both utilities base rates are set using price cap methodologies. Initially both utilities set their rates based upon estimates on the cost to serve and estimates for sales. Bangor Gas’s plan allows for an annual rate cap adjustment based upon price indexes. Maine Natural Gas’s plan does not include any price adjustments.
4. What is the CGA?
A CGA is a Cost of Gas Adjustment, also known as a Cost of Gas Factor (CGF) in Northern Utilities' rates. Both the CGA and the CGF include the cost of the gas commodity purchased to serve the utility's customers and the cost to deliver the gas from the point of purchase to the local company’s “city gate.” The CGA is the difference between the actual cost of gas and that amount included in base rates. All three gas utilities are allowed to collect 100% of their cost of gas so any difference between actual gas costs and gas revenues are subject to future reconciliation.
Northern Utilities has a Cost of Gas Factor which changes every six months for the winter and summer periods. In addition, if it appears that Northern will either under or over collect substantially within the rate period, it may file a mid-course rate adjustment.
Both Bangor Gas and Maine Natural Gas have monthly cost of gas rates. These rates change on a monthly basis based upon the indexed projected price of gas for the upcoming month. Both offer a fixed price option so customers may choose to pay a known price for a set term, such as the upcoming winter period or 12-months.
5. How can I compare the price for natural gas with the price for oil or electricity?
Heating fuels are measured in different units, making cost comparisons difficult. For example, electricity is sold by the kilowatt hour, fuel oil is sold by the gallon and gas is measured by the cubic foot or therm. In addition the efficiency that these fuels are burned at varies greatly with the equipment design and condition. To make a meaningful comparison of energy commodities, you must convert physical units of measure and the energy content of each fuel to comparable units. You can read more about this on the department of energy’s web page at http://www.eia.doe.gov/neic/infosheets/apples.htm