Who pays the bill?

This is the first of a two-part series on subsidizing the utility bills of low-income consumers. Tomorrow, an examination of some of the limited options.

While suppliers of electrical energy and their opponents debate the merits of adding new capacity, two realities are hitting home, hard. They are related:

The cost of alternative power projects is raising the floor on consumer costs of electrical energy.

Maine in 1990 is feeling the influence of a whole generation of biomass and cogeneration projects, most of them built in the mid to late 1980s under the stimulus of federal tax incentives. They provide a valuable addition to the mix and variety of indigenous sources of electricity — broadening the state’s energy base — but they have inflated power rates with double-digit costs per kilowatt hour. Fuel costs for these plants are being phased in over the next two years, with a projected 10-percent increase due to be reflected in utility bills this January and an additional 10-percent increase the following January.

The machinery of state at this moment is attempting to grind out a solution to a major policy question that will hit the pocketbook of every consumer of electricity in the state: As electric rates increase — as much as 40 percent in the next few years — and as the number of people unable to afford this necessity becomes unacceptably high, who should bear the cost of subsidizing the power bills of Maine’s poor?

Approximately five months ago, the office of the Public Advocate filed testimony with the Public Utilities Commission, suggesting that power customers qualifying for fuel-assistance programs also be afforded a 20-percent break on their electical energy costs. Given Maine’s cold weather and the long hours of winter darkness it is not unusual for the poorest citizens to spend 30 percent of their income on energy costs.

Maine’s electrical utilities are responding with their own subsidy proposals and revised programs to assist the poor. The public has a stake in this debate. Regardless of the type of mechanism that is devised, consumers and taxpayers will wind up footing the bill.

The scenario for the poor is urgent. It is complicated by the fact that as base rates have crept steadily upward, heating oil costs have fluctuated erratically (last winter nearly doubling in a month), while federal fuel assistance has actually declined.

That is the situation today. Tomorrow, it will worsen. Three important utility-related stories that broke this summer, the start-up of the Seabrook nuclear plant in New Hampshire, Central Maine Power Co.’s request for an 8-percent increase in revenue, and a 7.33-percent increase requested by Bangor Hydro-Electric Co. are just glimpses of a significantly more expensive energy future.

The old era of 4-cent per kilowatt-hour power from sources like Maine Yankee is over. So is the opportunity for 9-cent power that now will not be arriving from Hydro-Quebec. The 12-cent power from biomass and cogeneration facilities is on line. Seabrook’s 22 cents per kwh is bad economic news for everyone, and it will look worse on power bills.

The poor and indigent must have electricity, and assigning the cost of subsidizing this service is an old problem wearing a new face.

The state already considered the utility subsidy issue during the debate over local measured telephone service and the related issue of universal phone service: If society believes there should be a phone in every home, how should it pay for those who really can’t afford to call? At that time, there was a disturbing tendency on the part of regulators to want those who could pay their phone bills to subsidize those who couldn’t.

LMS disappeared when it was defeated in referendum, but the state never made the important prospective policy decision on utility subsidies, which will not end with electricty and telephones.

Water, another commodity once taken for granted, no longer is cheap. The investment in finding or cleansing new sources of potable water and the cost of repairing infrastructure and expanding sewer systems could someday make this utility prohibitively expensive for the poor.

Per-unit taxes or fees to dispose of solid waste already are on the municipal agenda. Will the poor eventually need financial assistance to get rid of their trash?

The state narrowly averted a major confrontation on the subsidy issue when it discussed universal telephone service, but it will not be able to avoid making policy on subsidies for electrical energy.

If the Legislature fails to measure up to this job, it is a decision that could ripple through all bills for utility and public services, landing hardest on people who can least afford to pay.

But the state has choices.

This is the first of a two-part series on subsidizing the utility bills of low-income consumers. Tomorrow, an examination of some of the limited options.