CALAIS – Scott Hallowell has been on the job only about a month as Eastern Maine Electric Co-op’s new president and chief executive officer, but on Saturday he had to tell ratepayers that there will be an increase in their electric bills.

Hallowell made the announcement at EMEC’s annual meeting. Hallowell replaced former president and CEO Jimmy Dean who retired June 22 after more than 37 years with the electric company.

Hallowell explained that electric bills are divided into two parts: delivery and electricity supply. “The delivery charges are from the co-op. These charges provide the co-op with revenue, which is used to cover our expenses,” he said. “The electricity supply charges represent the charges that are for the actual energy and are from the standard offer energy provider, which is not Eastern Maine Electric. The co-op only acts as a billing agent for the energy provider.”

Hallowell went on to point out that in recent years EMEC bills have been lower than other utilities’, including Bangor Hydro-Electric Co., Central Maine Power Co. and Maine Public Service.

Last year, co-op officials warned that delivery rates would have to be adjusted upward. “The last time the base delivery rates were changed was in October 2000, almost seven years ago,” he said.

Raising the rates is not something the co-op is looking forward to, he told the nearly 600 ratepayers who attended Saturday’s meeting. The co-op expects to file for the increase with the Maine Public Utilities Commission sometime next month.

How much is it going to cost?

“Well the answer will vary depending upon how many kilowatt hours are used,” Hallowell said. “[A] household that uses 500 kilowatt hours a month would see an increase of around $4.69 a month. A household using 750 kilowatt hours a months would see an increase of $6.98 a month or about 23 cents a day.”

“While no one wants an increase in rates, it is now necessary in order to continue to adequately operate and maintain the system and to keep the co-operative financially sound,” he added.

But the increase is not going to stop there. Ratepayers can expect an increase on the energy side of their bills, too.

The co-op, Hallowell said, has been able to enjoy a below market price for energy because in fall 2002, it was able to lock in a 5.8-cent rate for the period of March 2004 through February 2008.

“Part way through 2004, energy prices started to increase [nationwide],” Hallowell explained.

He showed how increases have affected the other utilities. Households in the Bangor Hydro area were paying 7.1 cents per kilowatt hour for energy in 2005. That amount increased to 8.3 cents in 2006 and the price currently is 9.01 cents per kilowatt hour. Customers in the state’s other utilities have experienced similar increases, he said.

“As you can see from these other prices, the 5.8 cents that you have been paying since March 2004 has been a very good price and well below market prices,” the new CEO said. But the low rate is set to expire next March.

“While we do not know what the price will be yet, we do know that it will be going higher and it will represent market conditions that now exist,” he said.