HALLOWELL — Home and small-business customers served by Central Maine Power who buy electricity through the state’s standard offer will see slightly lower rates in 2016.
The Maine Public Utilities Commission on Tuesday accepted a bid for energy supply that is 3.7 percent lower than last year’s average, which will translate to roughly a savings of $1.35 a month on a typical homeowner’s bill.
Energy supply rates that currently are 6.71 cents per kilowatt hour will dip to 6.46 cents next year. For a typical CMP customer using 540 kilowatt hours a month, that will cut the energy portion of the bill from $36.25 to $34.90, according to PUC calculations.
The standard offer is the default rate for the 40 percent or so of customers who don’t sign contracts with a competitive energy supplier, but it’s also an indicator of overall retail market rates and trends.
“The standard offer prices set this week reflect the best bids received in a strongly competitive auction process,” according to commission Chairman Mark Vannoy. “We are pleased that prices remain stable or slightly decreasing, allowing retail customers and businesses to benefit from recent downward trends in energy markets that have been reflected in New England wholesale prices.”
The new rate is only for the energy-supply portion of electricity bills, not the distribution services provided by CMP. For homeowners, CMP’s distribution portion of the bill adds up to 6.3 cents per kilowatt hour, or $42.40 on an average monthly bill. So taken together, a typical residential customer will see an average monthly bill of $77.30, when the changes go into effect.
Rates for medium-size business customers who use the standard offer will see an annual average drop of 11 percent compared to last year. Those businesses have rates that vary monthly.
The new rates are tied to the continued low cost of domestic natural gas used to generate much of New England electricity, and the anticipation of new pipeline capacity meant to ease cold-weather shortages.
“This is a reflection of the benefits of additional natural gas projects coming on line, and most dramatically, low imported oil and LNG prices,” said Patrick Woodcock, director of the governor’s energy office.
Mainers are confused about natural gas prices, Woodcock noted. Tight winter gas supplies caused by a too-small pipeline network and growing demand for heat and power raise wholesale prices and lead to headline-making shortages and price spikes. But the situation changes when the weather warms. Last summer, wholesale electric prices in the region were at all-time lows.
New pipeline projects are under way and others are planned, he noted, a signal to the market that has led to an overall decline in wholesale electricity prices now being set for 2017.
“We are making incremental progress to address what has been an energy crisis over the past few years,” Woodcock said.
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