Standard offer electric prices rising slightly

Energy costs are rising slightly this month for some residential and commercial customers of Bangor Hydro-Electric Co. and Central Maine Power Co.

Residential and small-business customers of Bangor Hydro and CMP will see their bills rise somewhere between 2.5 percent and 3 percent. The reason for the increase is a rise in the standard-offer electricity rate. The companies’ transmission and distribution rates have in fact dropped.

Standard-offer electricity is the default energy supply for consumers. The Maine Public Utilities Commission regularly solicits bids from electricity generation companies and the one that offers the best price supplies standard-offer electricity. Residential and commercial customers receive standard-offer service if they have not purchased electricity from another retail supplier or aggregator. CMP and Bangor Hydro do not generate electricity, but they deliver it.

Right now about 99 percent of the electricity for residential customers within CMP and Bangor Hydro territory is standard offer. About 25 percent of the electricity delivered to CMP and Bangor Hydro medium and large commercial and industrial customers is standard offer; the remaining customers receive their energy supply from other retail suppliers.

The rise in standard-offer electricity rates can be attributed to changes in wholesale electricity market prices, which in New England are a direct function of fuel costs for natural gas power plants, according to the PUC.

Maine businesses are classified as small, medium and large class depending on the maximum amount of energy they demand at a given time.

At Bangor Hydro, small-class customers are defined as those whose peak demand is up to 25 kilowatts, according to the PUC. Medium-class customers have peak usage of between 25 and 500 kilowatts, and any businesses that use more are called large-class.

At CMP, small-class customers are defined as those whose peak demand is up to 20 kilowatts, according to the PUC. Medium-class CMP customers have peak usage of between 20 and 400 kilowatts, and any businesses that use more are called large-class.

Some businesses will see changes to their bills depending on whether they are CMP or Bangor Hydro customers.

Bills for medium- and large-class commercial customers receiving standard-offer electricity from CMP will remain stable. Bangor Hydro medium-class business customers will see their bills rise between 7 percent and 8 percent, while Bangor Hydro large-class customers will see a 3 percent increase.

The rise in standard-offer prices for these medium and large commercial customers will be partially offset this year by a reduction in the cost of CMP and Bangor Hydro electricity delivery rates.

The PUC administers a number of programs that help businesses reduce their electricity consumption, which can offset some of the high market prices. Efficiency Maine provides direct technical assistance and cash incentives to Maine businesses that want to install new, energy-efficient equipment. The incentives reduce capital costs, typically making the return on investment highly favorable.

For more information on standard offer and energy delivery rates, go online to http://www.maine.gov/mpuc/industries/electricity/standardoffer/standardofferrates.html.