It’s not a question of if they go up, but how much.
That’s the outlook for electricity supply rates most Mainers will pay next year. The prices for power generation are destined to rise again. Exactly how high will become clear in November.
The prime culprit, experts say, is the ripple effect from Russia’s invasion of Ukraine on natural gas prices in New England, notably liquefied natural gas imports.
“The region remains highly reliant on natural gas for electricity generation, resulting in volatile electricity prices,” said Philip Bartlett, chair of the Maine Public Utilities Commission. “Because of limited pipeline capacity into the region, liquefied natural gas imports play an important role, particularly in winter months.”
How much higher might rates increase? Bartlett wouldn’t speculate.
But one energy expert says a typical household rate could jump 4 cents to 5 cents per kilowatt-hour, based on futures prices in wholesale energy markets and experiences in other New England states. The cost of electricity supply in southern and central Maine already has shot up this year from around 6.5 cents a kilowatt-hour in 2021 to nearly 12 cents.
“I would be surprised if the standard offer came in anywhere below 16 cents,” said Rich Silkman, chief executive at Competitive Energy Services in Portland, which helps businesses negotiate power contracts.
At 12 cents per kWh today, a typical household using 550 kilowatt-hours a month is spending $66 just for the electricity supply. An increase to 16 cents would bring that average to $88 a month starting in January.
Sometime next month, the PUC will select the winning bids to provide 2023 standard-offer electric service, which is how more than half of all Central Maine Power and Versant Power customers get their power supply. The standard offer is the default for people and businesses that don’t sign contracts with competitive energy suppliers.
Electricity supply rates are bid in a competitive market. They’re the other half of an electric bill, the flip side of the transmission and distribution charges set by regulators for CMP and Versant.
CMP’s distribution rate today is 9.4 cents a kWh; Versant’s is 11.5 cents. If supply rates hit 16 cents, that would add up to a total rate for a CMP residential customer of an unprecedented 25.4 cents per kWh, up from 21.2 cents. Versant’s total rate could go from 23.3 cents to 27.5 cents.
Customers who aren’t on the standard offer but buy their electricity supply from licensed competitive energy providers won’t do any better. Data collected by the Maine Office of the Public Advocate show rates for 12-month terms range from roughly 16 cents per kWh to as high as 26 cents.
These rates reflect what’s happening elsewhere in New England.
“Other states in the region have seen significant increases in standard offer prices in recent months,” Bartlett noted.
Neighboring New Hampshire is an example. Utility regulators there last month approved a supply rate hike of 77% for power provider Unitil, hitting nearly 26 cents per kWh.
Unitil’s rate period runs eight months from Dec. 1, which is different than the 12-month standard-offer period in Maine. Unitil has a separate summer rate period, when prices are much lower. But the impact this winter is striking, adding nearly $95 to bills in households that use 600 kilowatt-hours a month.
The reason, though, is familiar. Not enough gas pipeline capacity in the winter, according to Alec O’Meara, a Unitil spokesman.
“This means we are competing abroad with Europe for liquefied natural gas shipments that supplement our own supply,” O’Meara told InDepthNH.org last month, “and those prices have increased dramatically following the Russian invasion of Ukraine.”
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