Maine residents conditioned to endure rising energy prices in the winter are experiencing a welcome trifecta in early 2020: stable or falling prices at the oil tank, gas pump and electric meter.

And while energy costs can be volatile, a couple of underlying factors may provide longer-term relief and counter a perception of inevitably higher prices.

With six of 10 Maine households still primarily burning oil to stay warm, midwinter typically marks a peak in heating fuel prices. Not this year. Average temperatures this winter are above normal. Heating degree days for the Portland area, a measure of how much energy is needed each day to heat a building, are well below average.

Maine has been experiencing unseasonably warm temperatures this winter, with Portland hitting a record high of 63 degrees on Jan. 11.

Another factor is a global energy supply glut, being exacerbated now by low demand in China during the coronavirus epidemic. Lack of consumption is collapsing worldwide petroleum demand and wholesale prices.

“It’s amazing that something in China can affect our heating oil prices in Maine,” said Lisa Smith, a senior planner at the Maine Governor’s Energy Office.

Heating oil, Smith said, hasn’t done its “historical creep, creep up,” as prices often do at this time of the winter, when temperatures typically are at their lowest and people are ordering more oil.

“And February is the last real high-demand month,” she said.

Except for Friday, temperature forecasts over the next week don’t show any extreme cold in southern Maine, an indication that there’s nothing coming to spike demand and support a late price rise.

The most recent figures from the federal Energy Information Administration illustrate this winter’s uncommon trend. They show that home heating oil prices peaked in Maine the week of Jan. 6, at $2.77. This week, they stood at $2.64, which was the lowest average price in New England.

A glut in the global energy supply, combined with low demand in China during its coronavirus epidemic, is driving down wholesale petroleum prices. 2014 photo by Michael G. Seamans/Morning Sentinel

So for a homeowner ordering 100 gallons of oil this week, the average price would be roughly $13 cheaper. That statewide average doesn’t reflect lower prices in competitive markets, such as Portland. MaineOil.com on Tuesday showed an average cash price of $2.47 a gallon for heating oil companies that advertise on the site.

Propane, increasingly used for heating Maine homes that can’t get natural gas, was on the verge of supply problems last fall during a strike by Canadian National Railway workers. Luckily, the strike ended at Thanksgiving. That brought a major supply source for Maine propane back on track, Smith said, and ushered in an unusual period of stable prices all winter. Last week, Maine’s propane heating price averaged $2.48 a gallon, also the lowest in New England.

Those factors also are reflected in gasoline markets.

Maine gasoline prices fell by 4 cents a gallon over the past week, averaging $2.43 on Monday, according to GasBuddy’s daily survey. Maine prices are roughly 15 cents per gallon lower than a month ago, although 21 cents higher than a year ago.

According to GasBuddy, prices currently vary from $2.15 to $3 across Maine cities and towns.

“The nation’s gas prices continue to fall to fresh lows as coronavirus fears continue to put a chokehold on oil prices, leading to the fourth straight weekly decline in the national average,” said Patrick DeHaan, GasBuddy’s head of petroleum analysis.

In Portland on Tuesday, the average price for regular gasoline was about 29 cents less than it was in January. 2018 photo by Michele McDonald/Staff Photographer

Concerns that the spread of the virus will trigger a wider economic slowdown suggest gasoline prices will continue to fall next week, DeHaan said.

In Portland on Tuesday, the average price for regular gasoline had fallen to just under $2.30 a gallon, according to GasBuddy’s tracking. That’s roughly 29 cents lower than last month’s average of $2.59. For a motorist pumping 15 gallons into a car Tuesday, it adds up to a savings of $4.35.

Electricity supply prices also have been going down. But because households receive electricity bills that also include transmission and distribution rates, and because rates are regulated and don’t fluctuate daily like oil and gasoline values, the trends are harder to notice and understand. As of January, however, most Maine households and small businesses were paying a lower rate for their electricity.

Last November, the Maine Public Utilities Commission set the 2020 rates for its standard-offer supply program, the default rate consumers pay if they don’t sign contracts with competitive suppliers. The PUC bidding process produced a rate for Central Maine Power’s small customers that was nearly 20 percent lower than in 2019. Electric supply makes up roughly half of a typical bill. The PUC calculated that an average home customer would save $9.35 a month starting in January and cut the typical bill to $86.18, or nearly 10 percent lower than last year.

However, that forecast needed an adjustment in recent weeks. It was no longer accurate, following cases at the PUC in January linked to CMP’s service quality problems, billing system and distribution rates. In those cases, the PUC instituted both an earnings penalty and a small rate increase to improve service and reliability. So now, the net reduction in an average electric bill is estimated at roughly 8 percent from last year.

That calculates to an average reduction of $7.64 a month.

As of January, most Maine households and small businesses were paying reduced rates for electricity, and supply rates could drop next year. 2016 photo by Andy Molloy/Kennebec Journal

A key factor driving electric prices lower is an oversupply of natural gas, a result of America’s shale gas fracking boom. Gas fuels half of the power plant generation in New England, so cheaper fuel means cheaper power.

And there are new indications that electricity supply rates could drop next year, as well.

Earlier this month, ISO-New England, the region’s electric grid operator, announced the results of an annual auction it conducts to make sure there’s enough generating capacity and efficiency measures to meet peak demand three years from now. That auction drew the lowest prices in the market’s 14-year history.

“New England’s competitive wholesale electricity markets are producing record low prices, delivering unmistakable economic benefits for consumers in the six-state region,” said Robert Ethier, ISO-New England’s vice president for system planning.

The auction also drew a number of renewable-energy participants. They included land-based and offshore wind farms, and solar-electric projects, some of which included battery storage. Those projects reflect state-mandated climate change and clean energy goals.

Taken together, those trends hold the promise of adequate, lower-priced capacity that’s also getting cleaner, noted Tony Buxton, an energy and utilities lawyer in Portland who represents large industrial customers in Maine.

“It keeps the market prices of electricity lower while we’re rushing to decarbonize the grid,” Buxton said.


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