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Maine Public Utilities Commission

NEWS RELEASE 

Maine Public Utilities Commission
242 State Street
Augusta, Maine 04333-0018

Website: http://www.maine.gov/mpuc/, Email: maine.puc@maine.gov
CONTACT: Phillip Lindley, 207.287.1598, phil.lindley@maine.gov

 


FOR IMMEDIATE RELEASE
December 22, 2005

Electric Standard Offer Prices for Residential and Small Commercial Customers to Increase in March
Reflects Fossil Fuel Markets and Potential New Federally-Authorized Generator Capacity Payments  

 

AUGUSTA, MAINE “High natural gas prices, aggravated by the impact of last season’s hurricanes have driven up market prices for electricity, accounting for an increase in standard offer prices,” said Kurt Adams, Chairman of the Maine Public Utilities Commission.  “The markets also appear to be impacted by uncertainty about a planned rate hike by ISO New England, the regional grid operator,” Chairman Adams said. 

The Maine PUC accepted bids for standard offer electricity supply for one-third of the load of residential and small commercial customers of Central Maine Power Company (CMP) and Bangor Hydro-Electric Company (BHE) for the period beginning March 1, 2006.  When blended with supply that had previously been locked in for these classes, the resulting prices for the period March 2006 through February 2007 will be about 8.4 cents/kWh for CMP customers and 8.7cents/kWh for BHE customers.  When combined with CMP and BHE delivery charges, the all-in price increases on March 1 will be about 9% for CMP customers and about 10% for BHE customers.

These increases reflect current energy markets at the wholesale level, which have risen substantially since standard offer prices were last set for these customers one year ago.  Global market conditions for natural gas and oil, as well as disruptions in domestic supply caused by Hurricanes Katrina and Rita, have pushed fossil fuel costs up across the board.  Because electricity supply in New England is dominated by natural gas and oil, regional market prices have followed the same upward path. In addition, the potential for federally-authorized capacity charges paid to companies that own generating plants, known as LICAP, may be a significant contributing cause of the standard offer price increases.  “The New England Power Pool and the markets operated by ISO New England continue to generate high prices for Maine consumers, even though Maine exports electricity to the rest of the region,” Chairman Adams said.  Maine consumers cannot withstand the steady spiral upward in the cost of electricity that the NEPOOL markets appear to generate.”

Because the PUC had previously locked in two-thirds of the supply for these classes last year when energy prices were much lower, price increases are mitigated.  In addition, the stranded cost component of CMP’s delivery rates will decrease on March 1, providing a modest offset to the standard offer price increase.

 The PUC indicated that the names of the supplier(s) chosen to provide the standard offer service will be released after a two-week period to allow supply arrangements to be completed.

 CMP and BHE are the largest transmission and distribution utilities in Maine.  Both operate within the ISO-NE (Independent System Operator for New England) region.  Last year, 2004, electricity sales to CMP and BHE residential and small general service customers were 4.8 million megawatt-hours; with more than 99% of this load currently supplied by standard offer service. 

Under Maine’s retail electric access rules, the Commission must ensure that standard offer service is available to all customers in the State.  Maine’s rules require that the Commission solicit suppliers to provide standard offer service through a competitive bid process.  Standard offer service is the default supply for electricity customers.  Today, electric service is made up of two parts – supply and delivery.  The price for supply is not regulated but rather is based on the wholesale competitive markets for electricity.  The ISO-NE administers the market in New England, pursuant to rules and regulations overseen by the Federal Energy Regulatory Commission.  The Maine Commission regulates the delivery rate. 

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For more information: 

All PUC News Releases may be found on our website at: http://www.maine.gov/mpuc/staying_informed/news/press_release.shtml   

To arrange an interview with Chairman Adams or Commissioners Diamond or Reishus, please contact Phillip Lindley at 207.287.1598 or by e-mail at phil.lindley@maine.gov.  The Commission’s website may be accessed through the Maine School and Library Network at all public libraries in Maine.