A month before November’s election, four Republican legislators held a news conference in Bangor to charge that Gov. Janet Mills and the Public Utilities Commission were giving discounts to electric vehicle owners – but that other customers would have to subsidize them.
The comments came soon after the PUC approved a new set of electricity delivery rates for Central Maine Power and Versant Power, based on recent laws meant to encourage a transition to heat pumps and other efficient electric technologies.
“We know from the net energy billing rate scheme,” said Rep. Steven Foster, R-Dexter, referring to a state solar energy policy, “that when electric rates are developed that favor a few, other ratepayers are left to make up the difference.”
The election’s over now, but skepticism remains. There’s a lingering sense that, say, Mainers who live in mobile homes and drive old trucks will help well-off residents run their heat pumps and charge their Teslas.
In a recent interview, Foster took a more nuanced stance on the new, optional delivery rates for households with heat pumps, electric vehicles, heat pump water heaters and battery storage. He said he was trying to get more details to help his understanding.
“I’m not totally clear on how this is going to work, how it’s revenue-neutral,” Foster said.
The new rates approved recently by the PUC are designed to be revenue-neutral. That means there’s not supposed to be a shift in the share that each customer – or class of customers such as residential and mid-size business – pays to have power delivered.
“All rates are based on the cost of serving a customer,” said Philip Bartlett, the PUC’s chair.
Bartlett, a former Democratic legislator nominated by Mills to head the commission, said one way the new rates fairly recover costs is by charging participating customers a higher monthly basic delivery fee. For instance: Households on the Seasonal Heat Pump or Electric Technology rates will pay $31.67 a month, versus $13.44 for the typical Rate A that most people now have.
Increased revenue from selling more electricity at beneficial times is another factor, Bartlett added. Utilities have fixed system costs for poles, wires and substations. Those costs are shared among all customers. But if the system is used more in the winter to run heat pumps, or overnight to charge cars and storage batteries, the added revenue can lower the overall cost of providing power. It also can spread out use to periods when the system has excess capacity.
The new rates reflect a new reality in Maine, according to Tony Buxton, a lawyer who represents factories and mills in the Industrial Energy Consumer Group. As has long been common south of Maine, CMP has become a summer-peaking utility, meaning the highest demand on its system is in hot weather, notably for air conditioning.
In time, CMP could again become a winter-peaking utility. But for the foreseeable future, Buxton said, encouraging winter heat pump use spreads out fixed costs and can save Mainers money. He accused Republican lawmakers of “trying to create a class war over heat pumps and EV chargers” by implying their adoption will shift costs to low-income customers.
“Anyone who thinks heat pumps are class warfare probably doesn’t believe in gravity or other forms of science,” said Buxton, who is a Democrat. “Heat pumps are a gift to regular people. Rich people don’t need them. Everyone else does.”
FAULTY COMPARISON
Another concern raised by detractors is that warming a house with a heat pump will increase electric bills so much that the household would be better off sticking with oil, Maine’s most common heating fuel. The critics note that the state-run standard offer supply rate is due to increase again in 2023, making electricity even more costly.
But experts at Efficiency Maine say it’s a faulty comparison. Heat pumps don’t use electricity to produce heat, only to run a fan and compressor. They produce more energy than they consume.
Basically, heat pumps work in the opposite way an air conditioner does: They absorb heat energy that’s present outdoors – even on a cold winter day – and transfer it using a refrigerant inside the building. The best cold-climate units produce heat even when the temperature outside is 15 degrees below zero, according to Efficiency Maine.
Efficiency Maine has an online calculator to compare costs based on units of heat energy. The calculator shows that the annual heating cost for high-performance, ductless heat pumps would be $2,297, with electricity at its current 23 cents per kilowatt-hour. That compares with an oil boiler at $3,381, assuming oil is $4 per gallon. Even in 2023, when standard offer electric rates bring a total kWh charge to a record 26 cents, the annual cost for a heat pump would be around $2,597. Air-source heat pumps also are a bargain compared with using a propane boiler, according to the calculator, with propane costing $3.30 a gallon.
It’s obvious that electric bills will rise when people use more electricity, according to Michael Stoddard, the agency’s executive director. But because heat pumps produce heat more efficiently than oil or propane units, the total household cost of heat will be less.
“All our analysis confirms it’s cheaper to make heat with a heat pump in Maine than with oil or propane,” he said. “That’s true even at today’s prices.”
Send questions/comments to the editors.
