Electricity Prices
Your residential electricity bill has two main components:
- Supply, which is the cost to generate the electricity you use; and
- Delivery, which is the cost of wires, poles, equipment, and operations for delivering the electricity to you.
Typically, supply and delivery are each about half of your bill each month. A third, smaller component of your bill is stranded costs, which include the costs associated with storm recovery as well as certain renewable energy and assistance programs.
The below chart provides an example of the cost components in a typical residential energy bill for customers of Central Maine Power and Versant Power, effective of July 1, 2024. The typical Maine residence uses about 550 kilowatt-hours each month.
How are electricity prices set in Maine?
Electricity rate components change at different times of the year. Electricity supply rates for residential customers taking the standard offer service change annually on January 1, and in some years have been adjusted in the middle of the year as well. Customers taking competitive electricity supply may see supply rate changes at different times depending on the terms of their supplier agreement. Residential electricity delivery rates can also change during the year; residential transmission rates are typically adjusted annually around January 1, while distribution and other rate changes may take effect at multiple intervals during the year depending on the electric utility and other conditions. Rate changes effective July 1, 2024 are summarized below. Complete residential electric utility rates for all utility customers are available on the Maine Public Utilities Commission (PUC) website.
Electricity Supply Prices
In Maine, the default residential supply price, or “standard offer” for electricity, is set annually through a competitive bid process administered by the PUC. Through this process, the PUC solicits bids to supply electricity to customers receiving standard offer service, and the selected bids establish the price of electricity for the following year. For residential and small business customers, the standard offer is a fixed price per kilowatt-hour. For larger commercial, institutional, and industrial customers, standard offer prices can vary month-to-month.
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.
In November 2023, the PUC approved standard offer supply rates for calendar year 2024 that are about thirty percent lower than prices in 2023. On June 13, 2024, the PUC issued a modest downward adjustment to the standard offer. Current and recent residential standard offer electricity prices are summarized below.
| 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 – Jun 31) |
2024 (Jul 1 – Dec 31) |
|---|---|---|---|---|---|
| Central Maine Power | $0.11816 | $0.17631 | $0.166 | $0.1084 | $0.1063 |
| Versant Power - Bangor Hydro District |
$0.11684 | $0.16438 | $0.154 | $0.1076 | $0.1026 |
| Versant Power - Maine Public District |
$0.11088 | $0.14879 | $0.148 | $0.1129 |
$0.1129 |
Electricity Delivery Prices
Delivery costs include the costs of delivering the electricity to customers (i.e. wires, poles, equipment, and utility operations). Delivery costs include both transmission (i.e. large electricity lines and substations that transfer bulk power across long distances) and distribution (i.e. smaller electricity lines, substations, transformers, and other equipment that delivers electricity to customers). Transmission rates are regulated by the Federal Energy Regulatory Commission (FERC) and typically change each year around January 1. Distribution rates are regulated by the Maine Public Utilities Commission and may change throughout the year depending on the utility.
Delivery costs also include components for various programs, including energy efficiency programs, renewable energy contracts, and assistance programs including the Electric Lifeline Program and Low-income Assistance Program. Residential delivery rates include both a fixed monthly charge, which does not change based on how much electricity a customer uses, and a variable rate (cents per kilowatt-hour), where a customer pays more the more electricity is consumed.
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The Commission has recently approved rate changes for Central Maine Power and Versant Power customers, effective July 1, 2024. These increases include:
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Ongoing distribution rate increases that were initially approved by the PUC in 2023 to be phased in over the subsequent two years.
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Annual adjustments to stranded costs and other program charges, including costs and revenues from certain renewable energy and assistance programs.
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Significant new costs incurred to respond to major storms particularly during the winter of 2023-2024.
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In addition to increasing and decreasing certain amounts to be collected through electricity bills, following a PUC order Versant Power has implemented a change in how some revenues are collected, moving some charges from per-kilowatt-hour to fixed monthly fees.
As of July 1, 2024:
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Central Maine Power residential customers will see a total bill increase of approximately $15 on average. Customers using less electricity will see a higher percentage increase due to an increase in the monthly fixed charge.
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Versant Power customers will see bill changes as Versant converts most stranded cost charges from per-kilowatt-hour rates to a fixed monthly charge.
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The average residential customer’s overall monthly bill will increase by about $8 in Maine Public District and decrease by about $1 in Bangor Hydro District.
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For Bangor Hydro District residential customers, the fixed monthly charge will be $21.17 per month, an increase from $11.64 per month. However, the distribution service rates will decrease to $0.145 per kilo-watt hour from $0.165 per kilowatt-hour.
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For Maine Public District residential customers, the fixed monthly fee for residential service will be $23.19 per month starting July 1, 2024, an increase from $10.78 per month in 2023. The distribution service rate will decrease to $0.124 per kilo-watt hour from $0.137 per kilowatt-hour.
Why are energy prices volatile?
Much of the volatility in electricity prices in recent years has been due to the fluctuating price of natural gas. About 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 in 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.
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. Standard offer costs have stabilized in recent months following significant volatility in 2022 and 2023.
(source: ISO New England)
In May 2024, Governor Mills established the Infrastructure Rebuilding and Resilience Commission, which is charged with reviewing and evaluating Maine’s response to the recent storms, crucial areas for near-term investment and policy needs, and developing the state’s first long-term infrastructure plan to ensure that Maine is ready for the harsh storms ahead. The Commission will engage with communities, industries, and organizations to understand challenges following storms, identify and bridge gaps in resources like funding, financing, and insurance, ways to improve the resilience of energy systems, and propose new approaches to improve disaster recovery and response and strengthen resilience supports at the state, regional, and local levels.
How does Maine compare to other states for electricity costs?
Maine continues to have among the lowest rates in the region, according to the Energy Information Administration. All of the New England states have historically experienced higher electricity costs than the national average, driven by a range of factors including infrastructure costs and limited energy supplies and production. In addition, other energy costs in New England have historically been significantly higher than the national average for similar reasons. Maine is the most heating oil-dependent state in the country.
(Source: Energy Information Agency)
How do renewables like wind and solar affect electricity prices?
In recent years, Maine’s investments in renewable energy have counteracted 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. 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.
Over the long-term, renewable energy will keep supply costs stable by providing low- to no-cost operating assets. To date, renewable energy makes up a small, but growing percentage of the overall electricity mix in the region. Maine must continue to diversity its energy supply with renewable energy. In 2019 with bipartisan support, the legislature committed Maine to a path to reach 80% renewable energy by 2030. A recent report found that Maine’s renewable portfolio standard, or the portion of electricity sold in Maine generated from renewable sources, has saved Maine ratepayers more than $21 million annually in net electricity costs by suppressing prices in the regional electricity market, while supporting more than $100 million in direct investment and approximately $900 million in operations and maintenance spending.