Bangor may save $150,000 in electricity deal

BANGOR – The lower electric bills promised during last year’s deregulation of the state’s notoriously expensive power industry might not have come yet.

But Bangor officials hope a group’s recent offer to drop the cost of much of the city’s electricity supply by 23 percent – saving the city nearly $150,000 – could be a step in the right direction.

While the new supply rates are not as low as they were before deregulation’s arrival in March 2000, the offer was still music to the ears of many in City Hall.

“They seem to have crested and are starting to come down the other side a bit,” Assistant City Manager Bob Farrar said of the electricity supply prices since deregulation.

The City Council’s government operations committee recently approved a deal with Maine Power Options, a group representing more than 600 power users including many Maine municipalities.

Under the agreement, the city would switch from this year’s average standard offer rate of 7.3 cents per kilowatt-hour – the default rate set by the Maine Public Utilities Commission – to Maine Power Options’ rate of 5.6 cents per kilowatt-hour.

Adoption of the one-year agreement marks the first time city officials have received a competitive offer less than the default supply rate set by the PUC.

Supply costs make up about one-third of a typical electric bill. Transmission and delivery charges make up the remainder.

The PUC is expected to set a new default supply rate in March of next year for the next 12 months. While that rate might be lower than that offered by Maine Power Options, city officials – unable to wait until March – thought it wise to take the guaranteed savings rather than bank on lower rates come March.

The city’s savings also could be partially offset if the PUC sets higher transmission and delivery rates. The commission is expected to set those rates next month.

The Maine Power Options rate will apply to medium general service accounts, which make up about 45 percent of the city’s electricity usage, Farrar said.

Bangor International Airport – the city’s largest user in the category, accounting for 4.3 million kilowatt-hours each year – would save about $74,000 with the switch, Farrar said. Those savings come at a particularly troubling time for BIA, which, like its counterparts around the nation, has seen a significant drop in revenues since the Sept. 11 terrorist attacks.

Switching now, instead of hoping for even lower rates in March, gives the airport seven months of guaranteed savings this fiscal year, rather than four if the standard offer should come in below the MPO rate as expected, Farrar said.

Other city divisions poised to save money include the police and fire departments, Bass Park and the school department.