Posted on 12/15/2004 4:49:22 AM PST by SheLion
BANGOR - Mainers could be paying as much for electricity starting March 1 as they did five years ago when policy-makers promised lower prices once the state's electricity industry was restructured. Today, the Maine Public Utilities Commission likely will increase the standard-offer electricity rate by as much as 50 percent, from roughly 5 cents per kilowatt-hour to 7.5 cents.
It could mean paying about $16 more per month for the average homeowner.
Stephen Ward, the state's public advocate, expects this magnitude of price increase.
It's a vote that wasn't supposed to take place. Standard offer, or the default rate consumers pay for electricity in the absence of buying it from a power supplier, wasn't supposed to be an option anymore.
Five years ago, the originators of electric restructuring believed that by now power suppliers would be clambering over one another on price to sell electricity to residences and businesses. The competition to sign up residential users didn't come, however, because many power suppliers believed they couldn't sell enough electricity in Maine to justify the cost of setting up shop here.
Today's vote not only represents a milestone in the history of a restructured electricity market but also starts a discussion on whether Maine residents would have been better off if the market hadn't been dismantled at all.
On March 1, 2000, the state's two major power companies officially changed forever. Bangor Hydro-Electric Co. and Central Maine Power Co. were ordered to sell their power-generation systems but remain standing as regulated transmission companies.
Mainers saw the difference on their power bills with separate rates for electricity, transmission and distribution, and stranded costs or the price for legislatively mandated projects.
Some of the nearly $1.3 billion gained by Bangor Hydro and CMP from the sale of the generators has been - and continues to be - passed on to consumers through lower transmission rates.
But the anticipation of power suppliers wooing customers just like telephone companies fizzled quickly. Less than 1 percent of Bangor Hydro and CMP's combined 577,000 residential consumers rely on any source other than the standard offer provider for their electricity supply.
Ward said Monday that the comparison between a restructured and nonrestructured marketplace is hard to make. Most of the electricity sold in Maine is produced on power generators that use natural gas to fuel some of their operations, and natural gas prices have doubled in recent years, and other costs have gone up, too.
If Bangor Hydro and CMP still were power generators, they could have gone to the PUC at any time and asked for price increases to cover the cost of skyrocketing natural gas rates, Ward said.
"It's hard to know what rates would have been without restructuring," said PUC spokesman Phillip Lindley.
Mainers have been protected from rising electricity rates over the past three years because in December 2001 the PUC locked in a three-year standard-offer rate. Residential users in Bangor Hydro's service territory have been paying 5 cents per kilowatt-hour for standard offer, while homeowners in CMP's territory have been paying 4.95 cents.
"We got a great deal three years ago," Lindley said. "It was locked in. It was stable."
That comfy rate will end with today's PUC vote, which goes into effect March 1.
Even though the utilities have lowered transmission rates, and stranded costs have been reduced a minimal amount, the standard-offer rate that is chosen today could wash away those financial gains.
Before restructuring, Bangor Hydro's customers were paying 13.76 cents per kilowatt-hour for electricity, transmission and stranded costs combined. Today, it's 14.76 cents for standard offer, transmission and stranded costs combined, up 7.3 percent.
The price, however, still is below the February 2000 rate when it is adjusted for inflation. That rate would be 15 cents today.
If the standard offer, or the price for just the electricity, is increased to 7.5 cents, the combined rate will be 17.424 cents on March 1, or nearly 2.5 cents higher than the February 2000 rate when adjusted for inflation.
For the average homeowner who uses 500 kilowatt-hours per month, the increase will total $13.32.
On July 1, Bangor Hydro will reduce transmission rates by 2.5 percent, slightly more than a penny per kilowatt-hour.
Central Maine Power customers have fared better during the past five years. Before restructuring, CMP residential users were paying 13.14 cents per kilowatt-hour for electricity, transmission and stranded costs.
Today, homeowners in CMP's service territory are paying 11.51 cents for standard-offer, transmission and stranded costs combined, or 12.4 percent below February 2000.
Adjusted for inflation, the February 2000 rate would be 14 cents today.
If standard offer is increased to 7.5 cents, the combined rate will be 14.745 cents per kilowatt-hour, almost a penny higher than the February 2000 rate when adjusted for inflation.
For the average homeowner who uses 500 kilowatt-hours per month, the increase will total $16.18 monthly.
The PUC still will be receiving bids this morning from power generators looking to supply standard-offer power. The commissioners then will meet at 1:30 p.m. to deliberate the bids and select the best ones for both Bangor Hydro and CMP service territories.
I live in Maine, and I can tell you that the concept of having companies compete as providers of elecricity was foolish to begin with. What companies want to come to this over-regulated economy and do business? The answer is ...none. So the cost rises because we have one provider and thats it.
No competition. So they can do with us as they will. I get sick of it, don't you?
Maybe in New York City, but not in Buffalo. Wages are probably similar, plus New York taxes are outragious.
Jake
The one thing that SHOULD be falling is electricity rates.
The reason retail electric power got so expensive in the first place in Maine (and other NE states) is that the power distribution companies, CMP and Bangor Hydro, were forced by the state regulators to buy very high priced Co-Gen/Small Power Producer electricity under long-term contracts, using "avoided cost" estimates based on $100 barrow oil or Seabrook. Mainers had to pay again to buy out contracts, with huge windfall profits going to paper companies, investment banking firms, and other out-of-state and foreign owned firms.
Then the Federal NRC and local activists and politicians had to wage war against the Maine Yankee Atomic Power Plant, and the cowardly owners (the plant was half owned by the Maine power companies, and half owned by other New England power companies) shut down the plant as "uneconomic" on the assumption that natural gas would remain plentiful and cheap forever.
Super, Jake! Get the word out that Baldy is sticking it to us again!
Well, do we 'little people' really challenge the Big Wigs in the Maine State House? Parish the thought! (gag!)
I knew our nuclear plant was closed.
But anyway, there is only one thing wrong with this: there is no natural gas pipeline running up this way. It might be plentiful and cheap, but in northern Maine, we have no pipeline. Hell, can't even get the Interstate to run this far north. :(
Exactly. Not good for nothing now. Pity.
Maine's nuke plant is closed and done...
I knew it was closed, but didn't know they had torn it all down, as MrNeutron1962 told me. It's a good, cheap fuel. Pity.
Actually it was the cracked cooling pipes in the reactor that caused Maine Yankee to shut down. It wasn't cost effective to repair all the problems. Too bad, because it was a very good plant.
It was a good plant...but the reason that it "wasn't cost effective to repair..." is that a low value was assigned to its electrical output because of the assumption that cheap natural gas would continue to be available to produce cheap electricity.
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