Jun. 6—State utility regulators on Tuesday approved a rate hike for Central Maine Power — a compromise that will increase a typical home's total electric bill by just over 1%, or $1.67, next month and by roughly $5 a month by the middle of 2025.
The two-year, $67 million plan reflects a settlement worked out in May by CMP and the Office of the Public Advocate.
The new rates include money to upgrade the distribution grid to increase reliability, resist storm damage linked to a changing climate and accommodate clean energy investments. The deal also includes more stringent financial penalties to hold CMP accountable if it misses new service quality standards. Those standards are for metrics such as frequency and duration of outages, call response, billing accuracy and fulfillment of field service requests.
The new rates will phased in over a two-year period to lessen the impact on customers. The figures are estimates, which vary a bit depending on certain assumptions calculated by the PUC and CMP.
For a home using 550 kilowatt-hours a month of electricity, the PUC estimates total bills will go up roughly 1%, or $1.25 per month, beginning July 1. Then they will rise 2% in 2024, or $3.10 a month for an average home customer.
CMP estimates total bills for the same home will rise just over 1%, or $1.67 a month in July. They will go up nearly 1% in January 2024, or $1.40; then another 1% in July 2024, or $1.70; then less than 1% in January 2025, or $1.31. Rates will then fall by less than 1% in July 2025, or $1.34 a month, which reflects a one-time deferral built into the rate recovery schedule.
Viewed another way, the settlement will boost bills by about $5 by mid-2025. With current total rates at 27 cents per kilowatt-hour, an average home customer using 550 kWh a month pays $148 on the total bill.
Notably, the new rates apply only to what CMP charges for distributing electricity to homes and businesses. They don't include yet-unknown changes in the supply cost of power, which is influenced by the competitive wholesale energy markets.
The supply costs are not controlled by CMP, which does not produce electricity. In 2023, supply costs linked to the state's standard-offer supply service accounted for a 26% increase in total electric bills for CMP customers.
A spokesperson for CMP, Jon Breed, described the plan in a statement: "We know Mainers are feeling the impact of high costs. This plan is designed to minimize the impact to our customers and create rate stability while allowing us to continue making critical reliability investments to our electric grid."
Philip Bartlett, the PUC's chair, said, "This settlement is significantly lower than the initial $98 million that CMP requested and really balances the impact on CMP customers with the need to invest in the electric grid to meet reliability needs and Maine's clean-energy goals."
Bartlett noted that it also incorporated the strictest service quality standards the PUC has ever approved in a rate case, with potential penalties as high as $8.8 million a year.
"Both the commission and CMP customers have been demanding better reliability," Bartlett said, "and we believe this is the best way to achieve that."
The settlement was signed by parties including the Office of the Public Advocate, AARP Maine, Competitive Energy Services, Efficiency Maine Trust, Walmart Inc. and a union, IBEW Local 1837.
Under the agreement, CMP will receive an increase of $16.75 million on July 1, and additional step increases of the same amount on Jan. 1 and July 1, 2024, and Jan. 1, 2025.
Negotiators who helped reach the deal on behalf of Maine consumers said the increase is much less than the $90 million to $105 million CMP was originally seeking — which would have added as much as $10 a month to an average customer's bill by 2026, beginning with a monthly hike of about $5 by September.
"The settlement is not perfect," said Andrew Landry, deputy public advocate, "but it represents a significant reduction from CMP's initial request."
CMP, which serves roughly 640,000 customers in central and southern parts of the state, had an incentive to reach an agreement. A referendum campaign to take over the assets of CMP and Versant Power and form a public distribution utility called Pine Tree Power is heating up ahead of a vote in November. Moving past the rate case might spare CMP some negative publicity just as Mainers are weighing the merits of the takeover plan.
Pine Tree Power supporters criticized the agreement last month, calling it a "bad deal for Mainers" and saying customers can't afford any additional rate increases. On Tuesday, Pine Tree Power's campaign manager, Al Cleveland, said in a statement, "Our bills are already too high; we need rate savings and that's what Pine Tree Power can bring."
Electricity supply rates have soared over the past two years in Maine, largely because of spikes in prices for wholesale natural gas used to fuel many New England power plants. Market prices have fallen this year, and the expectation among many energy analysts is that the cost of electricity supply for Maine customers will be much lower in 2024 than it was this year.
Compounding the problem this year, electric rates also are set to rise in July as part of an annual adjustment of utility expenses. That increase, estimated at $9 per month by the public advocate, is largely to pay for long-term power purchase agreements approved by the PUC and the net energy billing costs associated with renewable energy contracts such as community solar farms. CMP is required by law to enter into those contracts.
Also last month, the PUC approved another settlement the public advocate reached with Versant Power, in which Versant customers will see their total electricity bills rise by roughly 4% — an average of $5.25 a month — starting July 1.
A second increase of the same amount would go into effect next year. The two-part phase in for the Versant rate hike is designed to help ease the impact on customers, the PUC said.
The settlement also includes penalties for not meeting service quality standards.
Versant Power serves 164,000 customers, mostly in eastern and northern Maine.
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