Use less, pay more.
That’s the upshot of a proposal by Central Maine Power Co. now before the Maine Public Utilities Commission. The idea, part of CMP’s five-year rate plan, would force customers who generate some of their own electricity to pay higher monthly service charges. CMP says the increase is necessary to cover the company’s forthcoming capital projects in the face of lagging demand for electricity.
The cost increase, however, would unfairly punish Maine residents, colleges and businesses that have made a commitment to renewable energy, and dim the prospect for future investment in that field, at a time when the state should be supporting it.
CMP’s proposal is not unique, and neither is its situation. The growing popularity of renewable-energy and energy-efficiency initiatives has reduced the demand for electricity provided by the grid. Utilities say they have to recoup that revenue – to fund infrastructure improvements and reward investors – so they are pursuing changes in the way customers are charged.
Increasingly, those changes include basing rates for all customers more on a utility’s fixed costs and less on power usage. In fact, two of CMP’s New York-based sister companies recently were awarded improved bond ratings because of new fixed-cost mechanisms.
On their own, there is nothing wrong with these new formulas; in fact, they better align the incentives of the transmission utility with that of public policies designed to reduce energy use. If most of a company’s revenue comes when people use electricity, as CMP’s does now, the company has little reason to persuade people to use less.
Where CMP’s plan runs into trouble is with the creation of a new charge for customers who have gone partly off the grid, mostly by utilizing on-site solar power. Known as standby rates, these charges – from the utility’s viewpoint – help keep the electricity running so it is there when the customer does need it.
But it makes little sense to target customers who use less electricity for all the right reasons. In fact, those customers actually help out the grid when the grid is most stressed, during the peak summer usage time when air conditioners are humming. In those times, solar panels feed the grid, raising capacity without the need for costly new transmission and distribution lines.
In addition, the standby rates likely would increase costs at mills that generate some of their own power, such as Verso Paper, which employs more than 1,500 people at its mills in Jay and Bucksport. They could jeopardize development deals that depend on clean energy, such as one in the works at Brunswick Landing.
Standby rates also would deter investment in solar power by residential customers, who would see higher monthly bills and a much slower return on their investment.
Finally, they would severely limit the impact of investments made by some Maine colleges.
Thomas College in Waterville, for instance, in 2012 installed a 170-kilowatt solar panel array that is designed to supply 11 percent of the college’s power. The college had planned to pay for the array in 15 years, and save $500,000 over the course of 35-plus years. CMP’s plan would cost the college $38,000 over five years.
It would be a similar situation at Bowdoin College in Brunswick, which is planning a 1,300-kilowatt array. According to the Maine Independent Colleges Association, CMP’s plan would cost Bowdoin almost $300,000.
These are kinds of investments Maine should be encouraging with incentives, rather than discouraging with hefty new charges.
The PUC should reject the standby rate proposal, then help CMP adjust to the new realities without harming Maine’s renewable-energy efforts.