BANGOR – Bangor Hydro-Electric Co. is seeking approval for a rate plan that initially would reduce the amount of money residential users pay for their electricity by 25 percent.

But the plan is being viewed by critics as a veiled attempt to hide a rate increase assessed on the transmission of electricity to homes and businesses.

It also is being criticized as an attempt by Bangor Hydro to circumvent state law requiring that electricity markets become competitive, and that utilities such as Bangor Hydro no longer sell power, just transmit it.

On Wednesday, Bangor Hydro submitted a rate plan to the Maine Public Utilities Commission that would bundle standard offer electricity rates and transmission fees into one flat rate. Bangor Hydro told the PUC it wants to sell standard offer electricity to residential customers for 5.5 cents per kilowatt-hour, down from the current 7.3 cents.

Transmission rates, however, would go up from 9.4 cents per kilowatt-hour to 9.8 cents. The combined effect would be a decrease of 8.4 percent in what Hydro customers pay for both power and transmission.

Bangor Hydro no longer generates or sells electricity, under the state’s electric restructuring law that went into effect on March 1, 2000. The utility only transmits it, and charges a rate for that delivery.

Most electricity users in Bangor Hydro’s service territory, however, purchase electricity by standard offer, which is the default rate paid by consumers who have not chosen another power supplier.

What is confusing to most consumers, though, is that the standard offer electricity is being sold to them by Bangor Hydro, which purchases the power on the wholesale market and then transmits it. Because of that, many consumers think Bangor Hydro still sells and transmits power as it did before the state law went into effect last year.

But Bangor Hydro is providing standard offer because the PUC did not receive bids at acceptable rates from other power sellers to do so. The PUC then instructed Bangor Hydro to buy the power at a standard offer rate set by the commission, and to not make a profit on the transactions.

Under the plan submitted Wednesday, though, Bangor Hydro is asking to change its status to a for-profit power supplier, and bundle the standard offer electricity and transmission rates for the next four years. The utility told the PUC it has been in discussion with a wholesaler to sign a long-term contract to buy the power it would sell under standard offer service.

The name of that company is not known. Bangor Hydro is being purchased by Emera, the parent company of Nova Scotia Power Co., the province’s largest power generator. Emera, however, is not licensed as a power seller in the United States, and would need to form a subsidiary to do that.

Since being asked to purchase standard offer electricity the last two years, power rates – and not transmission rates – have gone up nearly 20 percent, said Carroll Lee, chief executive officer for Bangor Hydro. The plan, he said, would change that.

“We want to provide stability to our customers and their utility costs,” Lee said.

The PUC already has solicited bids from competitive energy suppliers to sell standard offer electricity, said spokesman Phil Lindley. Those bids are expected by Aug. 7.

But usually the rate by which power suppliers are willing to sell power under standard offer service are sealed for competitive reasons. Bangor Hydro’s public announcement that it wants to sell standard offer power at 5.5 cents per kilowatt-hour, though, could change what bids come in from what competitors.

Stephen Ward, the state’s public advocate, said he’s skeptical of Bangor Hydro’s intent by bundling the two rates.

“What it really boils down to is will the customers of Bangor Hydro really be better off,” Ward said.

Ward said the plan “runs counter to the intent of the state’s electric restructuring law” that requires the formation of a competitive energy supply market in which numerous companies try to outsell each other by offering lower rates and wooing customers with those rates.

By locking standard offer to transmission rates for four years, competitors are discouraged from entering the marketplace to try to outbid the standard offer rate, Ward said. The only way that would change is if the bottom falls out on prices and 5.5 cents per kilowatt-hour is viewed as too high in comparison. Then, he said, the competitors could come in, offer a rate at 5 percent lower than standard offer and “still make a buck.”

One of the competitors, Competitive Energy Services of Portland, said it is against Bangor Hydro’s plan because the utility is hiding a transmission rate increase that is higher than the 0.4 cents it has publicized.

Transmission rates should be coming down as planned because of efficiencies created by the sale of Bangor Hydro to Emera, said CES analyst Rich Silkman.

“Combining energy and delivery … is a veiled attempt to get a rate increase for delivery without public opposition,” Silkman said.

What is formed by the bundling of rates, Silkman said, is a utility that both sells and delivers power, with prices set by the PUC, something that the state Legislature separated more than two years ago.

At the PUC, the legality of whether Bangor Hydro both can sell power even under standard offer service and transmit it will be reviewed right away, Lindley said. A review could take a couple of months.

“It’s certainly one of the things the commission is going to take on early on,” he said.