AUGUSTA – Rates charged to residential customers in Central Maine Power Co.’s service area could rise early next year, a state official said.

Monthly bills could increase on March 1 to reflect increases in costs to produce electricity, said Stephen Ward, who represents utility consumers before the Legislature as the Maine public advocate.

Most electricity purchased in Maine comes from generators that use natural gas, oil, nuclear power and hydroelectric sources. The higher rate in a new contract is based on the rising prices of natural gas and oil, Ward predicts.

At the same time, distribution and supply costs will remain the same or even decrease slightly in 2005.

A possible 40 percent increase in the generation side of the bill would increase an average bill by about 16 percent, raising the typical bill from $61 to about $70 a month.

Ward said the price of natural gas has climbed significantly during the past year or two, although it’s dropped since the election. He still believes that the high cost of natural gas could increase the standard offer rate from the current 5 cents per kilowatt-hour to as much as 7.5 cents.

Constellation Power Co. of Baltimore has supplied the electricity used by nearly all of CMP’s residential customers for nearly three years at 5 cents per kwh. A contract that took effect March 1, 2002, expires Feb. 28.

Beth Nagusky, director of the state’s Office of Energy Independence and Security, said natural gas has become the fuel of choice to generate electricity in New England during the past decade.

“I would not at all be surprised to see a fairly significant increase” in the electricity generation rate, said Nagusky.