Industrial power rates jump 16% in Bangor area Maine PUC ruling to increase standard offer supply rates for the region’s largest electricity customers

BANGOR – The region’s largest electricity users will see their bills jump an average of 16 percent as the result of a Friday ruling of the Maine Public Utilities Commission.

The three-member panel, during its afternoon deliberations, voted to increase the default supply rate – known as the standard offer – for industrial customers in Bangor Hydro-Electric Co. territory from an average of 6 cents to 7.74 cents per kilowatt-hour.

Combined with current transmission and delivery rates, Friday’s action translates into an average 16 percent increase for about 30 of the utility’s industrial customers still receiving the standard offer.

“Ouch,” said Bruce Soper, general manager of Bangor Mall, one of the utility’s larger customers still using the standard offer. “This will definitely make us step up our efforts and look down the road for some competition … in terms of supply.”

The utility’s six other industrial class customers – representing 25 percent of the electricity load in Bangor Hydro territory – had already contracted with other suppliers since the state’s electricity market was deregulated in March 2000.

Standard offer generation service is the default supply for customers who do not choose to use a competitive electricity supplier. Under Maine’s deregulation law, electric service is divided into two parts – supply and delivery.

Bangor Hydro does not produce electricity under deregulation, instead earning its money through delivering electricity created by other companies.

The delivery rates, set at 4.85 cents for Bangor Hydro industrial customers, were not affected by Friday’s ruling.

Although prices will go up for industrial customers – such as Bangor Mall and Eastern Maine Medical Center – PUC officials hoped it would prompt the large companies to look for better prices among the dozen or so suppliers in Maine’s fledgling competitive market.

“I am, again, dismayed that the best supply contracts we have been able to accept result in further increases for Maine’s largest employers,” said PUC Chairman Tom Welch “However, the large customers are the most attractive to competitive suppliers and may be able to obtain less expensive supply.”

Jeff Mylen, facilities manager at EMMC, said Thursday that the hospital, with average electricity costs of $150,000 per month, already has approached other suppliers in search of better rates.

“We are looking at all options,” said Mylen, adding that the hospital had hired Vanderweil, a Boston-based consulting firm, in an effort to reduce its energy costs. “We’re trying to be proactive to take a hard look at all of our energy uses.”

By definition, an industrial-class customer has a demand for more than 500 kilowatts of electricity at any given time. A typical household demands 2 to 3 kilowatts at any given time.

Under deregulation, the PUC is supposed to solicit bids from energy suppliers to provide the standard offer in Bangor Hydro’s transmission territory. As was the case last year, the PUC rejected the bids as too high and instructed Bangor Hydro to secure electricity supply on the open market.

The new rates will take effect March 1 and expire Feb. 28, 2002.

The prices announced Friday bested those secured in Central Maine Power Co. territory, where the utility’s 360 industrial customers will pay a yearly average of 7.95 cents per kwh for supply.

Bangor Hydro president Bob Briggs said that, considering the market and the relatively few industrial customers in the region, he was satisfied with the new supply prices.

“Under the circumstances, it was a pretty good result,” he said Friday.

The new standard offer rate for Bangor Hydro’s large customers varies by the time of day and the season of the year the power is needed.

The utility’s other industrial customers include St. Joseph Hospital, Eastern Fine Paper, The Jackson Laboratory, Cherryfield Foods, the University of Maine and the Bangor Daily News.

Earlier this month, the PUC set standard offer supply rate for Bangor Hydro’s residential and small-business customers at 7.3 cents per kwh, an 8 percent increase when considering the cost of transmission and delivery.