Electric rates officially go up again this week – by 8 to 10 percent depending on where you live – on top of a 14 to 17 percent increase that went into effect just one year ago.
Maine has the second highest residential rates in New England – a region which has some of the highest rates in the country due to its reliance on generators fueled by natural gas.
Natural gas prices took what regulators hope will be an unprecedented spike in the last six months because of the hurricanes in the Gulf Coast. The cost of electricity distributed by the state’s leading service providers – Central Maine Power and Bangor Hydro Electric – went up more than 70 percent over the previous year’s rate.
That price hike was softened, however, because the state’s Public Utilities Commission now authorizes blended rates, where just one-third of electricity needed is purchased on an annual basis under three-year contracts. That blended rate, for the cost of electricity alone, is going from 6.9 cents per kilowatt hour in 2005 to 8.4 cents for Central Maine Power in 2006 and 7 cents to 8.7 cents for Bangor Hydro Electric.
When combined with delivery charges, the price increase that went into effect on Wednesday, March 1, will be about 8 percent higher for CMP customers and 10 percent for BHE customers. The all-inclusive rate will be around 14.6 cents for CMP and 17.2 cents for BHE.
The price would have been higher for CMP customers, but the company just announced it will be reducing delivery charges by 3 percent to help soften the overall rate hike. The company estimates it will save customers $13 per year.
To put those rates into comparison, CMP customers were paying around 13 cents per kilowatt hour for electricity and transmission and BHE customers 14.5 cents prior to deregulation of the electricity industry six years ago – a move that was supposed to bring electric rates down.
Deregulation essentially split electric utilities in two, leaving Central Maine Power and Bangor Hydro Electric in charge of transmission and customer service and others in the electric-generating business.
New England relies heavily on natural gas and oil to produce electricity, and generally leads the country in electric rates.
The most expensive state in 2005 was Hawaii, followed by New York, Connecticut, Maine, New Hampshire, Massachusetts, Alaska, Vermont, and Rhode Island. The least expensive state was West Virginia. Another factor driving rates in Maine, compared to its New England neighbors, is the high transmission cost of providing service to a small number of customers spread out over a large area.
Maine fares slightly better on rates for all electric consumers, including big industry. There it comes in at number 10 in the country.
Rates will be adjusted again on March 1, 2007.
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