BANGOR – Bangor Hydro Electric Co. has proposed changing its rate structure for its largest customers, a move that it hopes will secure the accounts of the major electricity users in the area.
The rate structure changes were filed with the Public Utilities Commission on Tuesday and are intended to better show what company officials said is the real cost of power.
The change would affect only medium and larger commercial customers – representing about 1.5 percent of Bangor Hydro’s total customer base – and would not affect residential customers, although they could benefit from it in the long run, company officials said Wednesday at a meeting with Bangor Daily News editorial page editors. Larger customers use 40 percent of the power distributed by Bangor Hydro.
“This rate structure will show what the real price is of providing services to them,” Bangor Hydro President and CEO Rob Bennett said. Understanding the real cost may make companies become more efficient at using power or at least decide not to unplug from the power grid.
Under the proposed changes, the medium and larger customers would be assessed based on peak-level usage, not overall usage as is the case now.
The rate restructuring plan comes in the wake of Eastern Maine Medical Center’s building its own cogeneration plant to power its State Street hospital operations. Bangor Hydro initially had opposed the construction and on Wednesday officials said further erosion of such business could force remaining customers, including residential customers that account for 86 percent of the customer base, to pick up the burden of covering the costs.
The rate structure changes are intended to be revenue-neutral for the company, meaning Bangor Hydro won’t be making additional income from the changes.
Hydro officials said the current structure is a holdover from pre-deregulation times and doesn’t accurately reflect costs.
As an example, Hydro officials said that two companies could use 75,000 kilowatt-hours per month of power and would be charged the same price, even though their usage is different. One of the companies uses a consistent amount of power each day while the other has higher peak usage, requiring increased infrastructure such as lines, cables, transformers and other equipment.
With the proposed changes in place, the company with the higher peak usage could retool how it operates or absorb the additional cost, although Hydro officials said they will work with their customers and make additional arrangements on a case-by-case basis.
“We certainly don’t want to see this rate design put people out of business,” Kathleen Billings, director of corporate and community relations, said. “That’s not the intent.”
Showing a willingness to work with its customers, the company intends to file with the state a three-year contract with the University of Maine that provides for discount rates.
To lessen any hit a customer takes, the changes would be phased in over a period of six years.
The proposed restructuring is the “next natural evolution” of the electric power deregulation process that went into effect in March 2000 and broke up power companies, splitting them into separate businesses of power generation, transmission and distribution. Bangor Hydro no longer produces power but is now a transmission and distribution operation.
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