How are electricity prices set in Maine?
Your residential electric bill has two components:
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Supply, which is the cost to generate the electricity you use;
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Delivery, which is the cost of delivering the electricity to you (e.g. wires, poles, equipment, and operations).
Typically, supply and delivery are each about half of your bill each month. The below chart provides an example of the cost components in a typical residential energy bill, provided by Central Maine Power from late summer of 2023. The average Maine residence uses about 550 kilowatt-hours annually. The supply, or “standard offer,” is shown below in orange. Delivery includes both transmission and distribution in the chart below.
Complete residential electric utility rates are available from the Maine Public Utilities Commission (PUC) website here.
Electricity Supply
In Maine, the default supply price for electricity is set annually through a “standard offer” process administered by the PUC. Through this process the PUC solicits competitive bids to supply electricity to customers receiving standard offer service, and the selected bids establish the price of electricity for the following year.
About 90 percent of residential and small business customers in Maine receive the default standard offer price for power. All customers have the option to choose an alternative competitive supplier. Electricity supply prices offered by competitive electricity suppliers vary. Customers shopping for competitive electricity supply are encouraged to review consumer protection resources available from the Office of the Public Advocate. Energy suppliers bidding to provide standard offer service largely base their proposals to the PUC on their expectations for wholesale electricity prices in the coming year, as well as other market factors. The PUC routinely considers how to most cost-effectively provide energy supply, including reviewing the contract lengths and other mechanisms to bring the lowest cost to ratepayers.
The 2024 standard offer prices for residential and small commercial customers, which apply as of January 1, 2024, are:
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For Central Maine Power customers, the standard offer supply rate decrease by 35% to 10.8 cents per kilowatt-hour (kWh) from 16.6 cents per kWh in 2023. This represents a decrease of about $32/month for a typical household using 550 kWh per month in 2024.
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For Versant Power Bangor Hydro District customers, the standard offer supply rate decrease 30% to 10.8 cents per kWh from 15.4 cents per kWh in 2023, representing a typical bill decrease $23 per month in 2024.
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For Versant’s Maine Public District customers, the standard offer supply rate decrease 24% to 11.3 cents per kWh from 14.8 cents per kWh in 2023. This represents a monthly savings of $18 for a typical household in 2024.
| Residential Standard Offer Supply Rates per kWh |
2022 (Jan 1 – Dec 31) |
2023 (Jan 1 – July 14) |
2023 (July 15 - Dec 31) |
2024 (Jan 1 – Dec 31) |
|---|---|---|---|---|
| Central Maine Power | $0.11816 | $0.17631 | $0.166 | $0.1084 |
| Versant Power - Bangor Hydro District |
$0.11684 | $0.16438 | $0.154 | $0.1076 |
| Versant Power - Maine Public District |
$0.11088 | $0.14879 | $0.148 | $0.1129 |
Electricity Delivery
Delivery costs include the costs of delivering the electricity to the end user, including the wires, poles, equipment, and utility operations. These reflect the outcomes of recent distribution rate cases initiated by Central Maine Power and Versant Power, and approved by the PUC. Delivery costs also include components for various programs, including the Efficiency Maine Trust, renewable energy contracts, Electric Lifeline Program, and Low-income Assistance Program.
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Delivery charges will change on January 1, 2024 as a result of changes in transmission rates approved by the Federal Energy Regulatory Commission, as well as distribution rates – opposed by the GEO - and other delivery cost components approved by the PUC.
Why have electricity prices been high recently?
More than half of all electricity in New England is generated using natural gas, making the price of natural gas the primary driver of the market price for electricity in our region. Volatile natural gas prices create uncertainty and risk for electricity suppliers, who incorporate that risk as higher supply bids to provide standard offer service. New England does not produce any natural gas, so the entire supply must be imported either through pipelines from elsewhere in the U.S. or Canada, or from liquid natural gas terminals primarily in the Boston area and New Brunswick. These import channels can become constrained in times of high demand, such as in winter months. Global events, including supply chain shocks from the COVID-19 pandemic as well as geopolitical disruptions such as conflicts in Ukraine and the Middle East have increased pressure on global fossil fuel prices, including natural gas.
According to the PUC, standard offer price increases in recent years have been driven by these increased natural gas prices. Higher wholesale prices in turn result in higher retail prices, including the standard offer. The closely linked relationship between natural gas prices and wholesale electricity prices is demonstrated by the following chart published by ISO-New England, the independent entity responsible for operating the region’s bulk power generation and transmission system.
(source: ISO New England)
How does Maine compare to other states for electricity costs?
While all of the New England states have historically experienced higher electricity costs than the national average, Maine continues to have one of the lowest rates in the region, according to the Energy Information Administration through 2022.
(Source: Energy Information Agency)
How do renewables like wind and solar affect electricity prices?
Maine’s recent investments in renewable energy are counteracting the cost increases driven by our region’s over-reliance on fossil fuels, by providing stable, low-cost, homegrown energy at affordable prices not dictated by global energy markets.
2019 legislation which directed the PUC to solicit long-term contracts for clean energy generation have delivered substantial cost savings to Maine people. For example, in 2022, renewable projects selected through these procurements resulted in more than $68 million in direct savings for Maine ratepayers while providing a hedge against volatile fossil fuel markets.
Fossil fuels often experience price volatility influenced by a global market, and we have seen examples of that over the last two years. Renewable energy generation provides an opportunity for price stability and in-state generation resources can also keep economic benefits within the state.
To date, renewables make up a small, but growing percentage of the overall electricity mix in the region. Over the long-term, Maine must continue to diversity its energy supply with renewable energy—and in 2019 with bipartisan support, the legislature committed Maine to a path to achieve 80% renewable energy by 2030.
Maine Energy Plan: Pathway to 2040
The Governor’s Energy Office is undertaking a planning effort for achieving the use of 100 percent clean energy in Maine by 2040. The “Maine Energy Plan: Pathway to 2040” will engage the public and key energy stakeholders on actionable and affordable strategies to meet this target, such as through diversifying energy sources in Maine, stabilizing electricity rates, reducing emissions, and supporting jobs and economic investment. Visit this page for more information on the planning process.