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 tturkel@pressherald.com
Staff Writer

(Continued from page 1)

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 three distribution cases before the PUC aren't unexpected requests for additional money.

Since 1995, CMP has operated under five-year alternative rate plans. They are agreements between CMP and state regulators that set annual targets for service quality, responsiveness and outage duration, to name a few. CMP is rewarded with a certain level of revenue when it performs well, and can be penalized for falling short. In the past four years, CMP has met or exceeded the targets.

CMP also has managed to keep distribution charges relatively flat over the past decade, in the $25-a-month range. But setting new targets is tricky, because it involves predicting the future.

For instance: When the current rate plan was being developed in 2007, officials assumed electricity sales and customer demand would grow over the following five years. But the deep recession, warmer winters and other factors ruined those projections. Instead, sales were well below expectations and the number of customers grew only slightly.

Looking ahead to 2019, CMP expects these trends to continue. Weak business growth, little new-home construction and increased spending on efficiency and conservation will lead to flat electricity sales over the period, the company says. And if the state ramps up spending on energy efficiency programs, it says, power sales actually will fall. These declines reflect national projections, according to the U.S. Energy Information Administration.

Consequently, CMP will ask in the pending rate case to "decouple" the revenue it's allowed to earn from electricity sales.

"Our business model is predicated on people using electricity, but that's in conflict with conservation and efficiency goals," Carroll said.

CMP could become an active participant in encouraging efficiency, Carroll said, if its revenues weren't tied directly to sales.

This argument has been made in other states, according to Bryant, but Maine is different. It's one of only a few states where a separate agency -- Efficiency Maine Trust -- oversees conservation efforts. Utilities handle the task elsewhere.

But it's still possible that electricity demand will rise in the near future, according to Beth Nagusky, Maine director of Environment Northeast. If the state chooses to ease its dependence on oil with efficient electric heat and plug-in cars, for examples, a greater share of overall energy use could shift to electricity, she said.

"This case is going to involve major changes that will have an impact on how rates are set and recovered, and the incentives CMP has to promote or oppose cost-effective energy efficiency," she said.

At the Public Advocate's office, Bryant said his agency plans to hire expert consultants to study the impact of decoupling revenue from sales, as well as other complex issues that will be raised in the case.

One indicator for his office to consider, Bryant said, will be customer feedback. A decade ago, customers frequently complained about power outages after storms knocked down poles and lines. The PUC then ordered CMP to increase spending on tree trimming. That program has cost ratepayers more money, but today, most of the tree-related outage complaints have eased.

Tree trimming is one example of how a lack of complaints suggests that regulators struck the right balance between what customers are willing to pay and reliable service, Bryant said. Because the upcoming rate case will set direction for five years, striking the correct balances will be important.

"You get one shot every five years to get it right," he said. "What's at stake are customer bills and the reliability of the distribution system."

Tux Turkel can be contacted at 791-6462 or at:

tturkel@pressherald.com

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