PUC readies announcement on standard offer electric rates

BANGOR – The Maine Public Utilities Commission tentatively agreed to the prices many statewide electricity users will be paying for their power supply starting March 1, 2001.

But the commission isn’t releasing any of the rates until “other issues” are worked out between the PUC and the bidding companies that apparently won the rights to sell electricity under standard offer.

“It goes beyond dotting the i’s and crossing the t’s,” PUC Chairman Tom Welch said Tuesday.

With the high costs of gasoline and heating fuels making it more expensive to generate electricity, it is likely that the standard offer price now paid by all customers in the Bangor Hydro-Electric Co. and Maine Public Service Co.’s service territories will be going up.

Welch said he couldn’t comment on the bids and expected an announcement would be made “within a few days,” but by Dec. 21 at the latest.Public Advocate Stephen Ward said Wednesday it was inevitable that the standard offer rates would be higher because of the topsy-turvy nature of the fuels and electricity markets.

When the electric industry in Maine was restructured, the state’s three major utilities – Central Maine Power Co., Bangor Hydro and MPS – were forced to sell their power generators and allowed only to transmit and distribute electricity from other sources.

Mainers are now free to buy their electricity from whomever they want. If they don’t shop around and choose a new supplier of electricity, however, customers are charged a default rate – the standard offer rate negotiated by the PUC.

There are three standard offer rates for residential consumers throughout the state, and the rate users are charged depends on the transmission service territory they live in.

Customers in Bangor Hydro’s territory currently pay 6.106 cents per kilowatt-hour for standard offer electricity, and those in MPS territory pay 4.29 cents.

The standard offer rate for residential customers in Central Maine Power Co.’s service territory was set last year at 4.089 cents per kilowatt-hour and will not change until March 1, 2002.

“The only people who are in a happy circumstance are the CMP standard offer ratepayers who are paying 4.1 cents for another year,” Ward said.

Most consumers in Maine are paying a standard offer rate for their electricity because they have not chosen another company to sell them power.

The standard offer rate constitutes about one-third of a consumer’s bill; the cost to transmit the electricity is the other two-thirds.

Under state law, the PUC is required to solicit, review and accept bids from power suppliers wanting to sell electricity at a standard offer rate. Suppliers bid to sell to residential, commercial or industrial users in three transmission territories – those that cover Bangor Hydro, CMP or MPS customers.

Unlike last year, some of the successful bidders have not wrapped up negotiations with their wholesalers because they did not want to lock in to a price or agree to buy a set amount of electricity in the likelihood their bids were not accepted by the PUC.

Now, if the names of the companies or their standard offer rates are made public, the wholesalers could raise their prices before contracts are signed, Welch said. The successful bidders, faced with paying more for electricity, could lose money because their standard offer rate was accepted and cannot be changed.

“If they [wholesalers] know they [bidders] have to get power quickly the price may go up for them,” Welch said.

If the price of wholesale power goes up, the successful bidders for standard offer cannot change their prices, Welch said. That price will remain through the length of the agreement with the PUC.

“Life is never perfect,” Welch said. “We have some rules and we want to make sure they comply with them.”