Better known for its gasoline stations, Gulf Oil is getting into the electricity business in Maine.
Nearly 12 years after Maine deregulated its electric industry, a competitive market finally is emerging for home and small-business customers to choose power providers based on overall rates, time-of-use pricing or their commitment to renewable energy.
Over the next several months, Mainers will have new options that can marginally lower their electric bills, as well as signal their support for wind, hydro and other green-power generators.
Competition is heating up with news that Gulf, the Framingham, Mass.-based motor fuels supplier and operator of Cumberland Farms convenience stores, is launching Gulf Electricity in Maine. Gulf Electricity began operating earlier this year in Connecticut, part of Gulf Oil’s transition to a diversified energy provider.
“Not a lot of people know we’re in the electricity business,” Rick Dery, Gulf’s senior vice president and chief marketing officer, told the Portland Press Herald.
Gulf will compete head-on with at least two notable providers: FairPoint Energy, a subsidiary of northern New England’s dominant telephone company, and Electricity Maine, the Auburn power supplier that has attracted more than 150,000 customers since starting up more than a year ago.
FairPoint Energy is offering an introductory deal that guarantees a 10 percent savings in the first year. It’s primary plan then features a variable rate that can change month to month. FairPoint also is offering a green energy option, a variable rate that supports Maine wind power generators.
Electricity Maine has grown by offering rates that have ranged from 5 percent to 17 percent below the state’s standard-offer supply charges for Central Maine Power Co.’s home customers. Roughly one-quarter of all CMP home customers have left the standard offer for Electricity Maine, state figures show.
These companies are competing in a market in which wholesale electricity costs have been falling faster than standard-offer charges, which change each March. That gives them room to sell power at a small discount and still make a profit.
Based on current fixed rates and charges, it also gives residents a chance to save a little money on their bills. But for now, it will be hard to compare Gulf and Electricity Maine on price: They are within pennies of each other.
Calculations by the Press Herald show that — compared to the standard offer — Gulf and Electricity Maine are virtually on par. An average home today that uses 521 kilowatt hours a month will cut 6 percent from its energy supply bill with Gulf Electricity and 5 percent with Electricity Maine.
Those savings add up to roughly $2.14 a month with Gulf and $1.56 a month with Electricity Maine. For reference, a home in CMP’s territory that uses 521 kilowatt hours a month pays $38.55 now for its standard-offer electric supply.
This figure doesn’t include CMP’s delivery charge. When that’s included, the average, total home bill is roughly $75 a month.
It’s not clear how long this period of declining or stable wholesale costs will last, according to Tom Welch, chairman of the Maine Public Utilities Commission, or where the new standard-offer charge will stand next March. But the entry of a second competitive supplier in Maine for home customers will create pressure to keep retail rates as low as possible, he said.
“I’m always happy to see companies interested in the Maine market,” Welch said.
In addition, the PUC recently approved a new green power supply option for Mainers, and is requesting proposals for a program that will give home customers a discount when they use power at night and other times when demand is low.
The Maine Green Power program, which is just ramping up, is charging 1.5 cents per kilowatt hour more than the standard-offer rate, or a 16 percent premium. That means the average home customer would pay an extra $7.50 a month to match their electricity use with green power.
“It’s an interesting experiment,” Welch said. “We’ll see whether people will vote with their dollars for a particular principle.”
The time-of-use program will start next March. Supplier bids are just going out, so there’s no way to know how much of a discount will be available. The program may appeal to people who can run their washing machines and dishwashers when demand is low on the power grid. It also will cut the operational costs of thermal storage heaters, which can charge overnight.
The advent of smart meters for both CMP and Bangor Hydro-Electric customers eventually will allow homes to monitor rates and consumption online.
Both green power and time-of-use options have been available in the past in Maine, and were discontinued for various reasons.
Sustained public interest in the current array of options may hinge on marketing.
Energy suppliers have switched many big businesses to the competitive market in Maine, but have balked at the high cost of gaining and servicing home customers.
Reaching people through the Internet and social media sites such as Facebook has lowered those costs, Welch noted. Electricity Maine has had great success promoting its product online, and using proprietary billing software to service customers. It holds drawings that offer customers free electricity for a year, and partners with businesses for employee benefits. More recently, it has been buying advertising featuring a former Portland television news anchor.
Gulf Electricity has similar plans. It also may use its gas stations for cross promotion, perhaps by offering electricity customers discounts when they fill up.
“We may be able to do things in Maine differently than they can,” said Dery, the Gulf vice president.
As with any product or service, though, it’s up to customers to shop around and compare prices and claims.
For instance, Gulf Electricity’s website says: “Depending on your state, you could save 15 percent on energy versus the regulated utility supply. This could be $200 a year.”
But in Maine, the average home’s savings now are actually closer to $25 a year, based on the current standard offer price and Gulf’s one-year fixed rate.
Electricity Maine also has been imprecise with its numbers. In an interview this month with the Mainebiz newspaper, the company’s co-founder, Kevin Dean, said the average homeowner can now save $5 a month. But based on today’s 5 percent savings over the standard offer, the actual monthly savings is closer to $1.60.
Dean didn’t return messages seeking comment for this story Monday.
Welch, the PUC chair, said his agency was in contact earlier in the year with Electricity Maine, over what appeared to be an offer that exaggerated savings compared to the standard offer for medium-sized business customers. He declined to discuss details but said the company modified its promotion.
“If you’re going to make percentage claims, you should be able to back it up,” Welch said.
Staff Writer Tux Turkel can be contacted at 791-6462 or at: