May 1, 2013

Central Maine Power seeks to raise electric rates

The company says reliability and billing would improve. But are services already adequate?

By Tux Turkel
Staff Writer

Central Maine Power Co. is asking state regulators to approve a new rate plan that would add roughly $2 a month to the average home bill each year for the next five years.

click image to enlarge

In this September 2010 file photo, Central Maine Power technician Gary Sturgis installs one of the company's first "smart meters" at an apartment building in Portland, Maine. Central Maine Power Co. is asking state regulators to approve a new rate plan that would add roughly $2 a month to the average home bill each year for the next five years. (AP Photo/Joel Page)

Average Maine electricity bill

The average homeowner pays $73.23 a month for electricity from CMP. Here’s where the money goes:

• Energy from power sources: $35.84

•Transmission (major lines from power sources to substations): $11.23

•Distribution (from substations through smaller lines to homes): $23.06

•Other (surcharges for energy efficiency and low-income assistance, past power investments, etc.): $3.10

Source Central Maine Power

The additional revenue would help upgrade distribution and billing systems with the aim of improving reliability, and let customers take better advantage of new pricing options.

The pending rate case will highlight two key issues: Whether home and business customers want to pay higher rates to make service even more reliable than it is today, and whether they are they willing to pay more for a product -- electricity -- when overall use is declining

At the root of the case is this question: Is Central Maine Power Co.'s service good enough, as it is?

This question will be debated over the next 14 months or so, as state regulators open a case into how much money CMP should receive to distribute electricity between 2014 and 2019. Documents to start the process are being filed today at the Maine Public Utilities Commission. A summary of CMP's plan was reviewed by the Portland Press Herald.

CMP says it needs to keep investing in its network of substations and distribution wires. It also says it needs to upgrade technology to replace its aging billing system and allow customers to take advantage of new pricing options for using power at different times, such as at night, when demand and costs are lower.

If CMP's arguments prevail, these improvements would add a couple of dollars a month to an average home customer's bill for the 5-year period, according to the utility's estimates. A home bill today, which includes energy and transmission charges, averages $73.23 a month.

"This is a chance for people to decide what they want, based on what they can afford," said John Carroll, CMP's spokesman.

Eric Byrant, senior counsel at the Maine Office of the Public Advocate, says CMP's estimate may be too low. But he agrees that the upcoming rate case will involve trade-offs and choices.

"You can spend endlessly and never have total reliability," he said. "You have to draw the line somewhere."

In a separate proceeding, CMP is seeking to recover some of the money it spent to install 615,000 "smart" electric meters and restore power after major storms. If fully approved by the PUC, distribution rates could rise as high as 8 percent this July, or roughly $1.90 a month on a typical home bill. Better estimates will emerge in the next month or two as the case proceeds.

Another case, set for August, will consider a redesign of how rates are set for each class of customers, such as residential and commercial.

These cases at the PUC won't have any influence on what customers pay for energy supply, or for improvements to New England's transmission grid.

Energy costs, which make up the largest share of a monthly bill, rise and fall with the wholesale price of natural gas, which fuels the region's power plants. New England utility customers also share the cost of transmission upgrades, such as CMP's $1.4 billion reliability project that's half done.

Both energy and transmission costs are projected to rise in the years ahead. That's because several transmission projects are under way or planned, and natural gas prices are likely to increase over time from historic lows. Energy and transmission costs make up roughly two-thirds of a typical home bill.

(Continued on page 2)

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