Most Versant Power residential customers who buy their electricity via the state’s “standard offer,” or default power supply, will see the rate jump by roughly 88 percent next year, based on a competitive bid selected Tuesday by the Maine Public Utilities Commission.

The rate hike will bring the supply rate from roughly 6.2 cents per kilowatt-hour to 11.6 cents, adding roughly $30 per month to the bill of a household with a typical usage of 550 kilowatt-hours, the PUC said. That will raise a typical home bill from roughly $101 to $131 a month.

The sharp increase foreshadows what is likely to be similar jump in the supply rate for Central Maine Power home customers next year, to be determined Wednesday.

The Versant supply rate increase is for home customers in the utility’s Bangor Hydro District, which includes Hancock, Piscataquis and Washington counties and most of Penobscot County. The 88 percent increase doesn’t apply to Versant’s large business customers or customers in some parts of northern Maine.

The new rate will take effect Jan. 1 and be in force for one year.

“I do recognize these prices are significantly higher than last year’s rates,” PUC Chair Philip Bartlett said after announcing the new prices.

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Bartlett blamed soaring wholesale electricity prices, driven by the elevated cost of natural gas, which powers more than half New England’s electricity generation.

In an interview following deliberations, Bartlett said the agency had received proposals from a number of bidders. Each was consistent with today’s high market conditions, Bartlett said.

“We knew it was going to be high, but it’s very hard to gauge,” he said of the overall bid environment. “We hoped it would have been lower.”

On Wednesday, the PUC commissioners will meet to choose a standard offer supplier in CMP’s service area, which will determine the 2022 price increase for most of its residential customers.

Those rates won’t be precisely the same as the ones bid for Versant customers. But historical data show that the ups and downs in standard offer rates reflect the broader wholesale electricity market, so when supply rates increase for customers at one of the state’s two major utilities, they also go up for the other. Since 2018, the difference per kilowatt-hour between Versant’s and CMP’s standard offer rates has been less than a penny.

“The standard offer prices for electricity coming before the PUC this week are the direct result of New England’s over-reliance on natural gas to power its electrical grid,” Dan Burgess, director of the Governor’s Energy Office, said in a statement Tuesday. “While Maine electricity prices are typically lower than other New England states, these price increases are being driven by volatile global energy markets and will cause too many Maine people to reach deeper into their pockets this winter to pay their bills.”

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BUSINESS RATES UP, TOO

Versant has more than 133,000 home customers in northern and eastern Maine and distributes roughly 14 percent of the state’s residential electricity supply. In addition to home customers, businesses that get their electric supply through the standard offer also face steep rate hikes.

Medium-class business customers will see the new prices vary by month, averaging 11 cents per kWh. That will work out to a nearly 77 percent average annual increase in the supply portion of their bills.

Prices for Versant’s large business customers will be indexed to market prices and set in advance of each month.

Lastly, rates for Versant’s Maine Public District residential/small business and medium business classes in northern Maine were awarded multiyear contracts in 2019. Those prices will be calculated and released next week, the PUC said.

The increases announced Tuesday only apply to the supply portion of a customer’s electric bill, not the distribution expenses to bring the power over wires to homes and businesses. Versant and CMP only distribute electricity, they don’t generate it.

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The standard offer increase doesn’t affect customers who get their electric supply from competitive energy providers, although those contracts also are expected to rise. Most home and small business customers rely on the standard offer – roughly 92 percent in Versant’s service area and 87 percent in CMP’s territory, according to 2020 PUC statistics.

During Tuesday’s deliberations, Commissioner Patrick Scully suggested that electric customers dissatisfied with the standard offer rates might explore the offerings of competitive energy providers. Those rates, which aren’t chosen or regulated by the PUC, might dip a few months from now, Scully said, if wholesale market conditions change.

But customers who sign contracts with competitive providers must be aware of the duration and terms, as well as possible early termination fees. The practices of one large provider, Electricity Maine, led to a class-action lawsuit and multimillion-dollar settlement in 2020.

The Maine Office of Public Advocate maintains a web page with some samples of competitive energy provider deals. A full listing of retail energy providers is available on the PUC website.

The PUC sought bids for its standard offer power supply this fall. The companies selected for 2022 for Versant weren’t immediately identified. In recent years, they have been subsidiaries of NextEra Energy and Constellation Energy.

The power mix these generators provided included 30 percent hydroelectric power, 30 percent natural gas, 23 percent biomass and 8 percent wind, according to 2020 PUC disclosure statistics.

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In terms of climate impact, this energy mix emitted an average of 777 pounds of carbon dioxide per megawatt-hour, slightly above the New England average, the PUC reported.

OTHER ENERGY PRICES UP

Tuesday’s action comes just as Versant’s home customers are absorbing a $5.50 a month increase in their distribution rates, part of an overall increase approved by the PUC aimed at improving reliability and storm response. It was the first such increase since the utility was purchased last year by Canadian utility Enmax Corp.

For a typical home customer on the standard offer in Versant’s Bangor Hydro District, that distribution change increased the average monthly bill in November to nearly $92.

The pending hike in electric supply rates is part of a trend in rising energy prices that are hitting consumers as winter approaches.

Average gasoline prices in Maine reached $3.43 a gallon this week, according to GasBuddy, approaching a 10-year high. That’s up 15 cents from last month at this time and up $1.29 from a pandemic-induced driving lull prior to Thanksgiving last year.

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A softening of wholesale petroleum prices, however, may cause prices at the pump to ease in time for holiday travel, GasBuddy says.

Fuel oil, which warms six out of 10 Maine homes, has risen from $2.85 a gallon at the start of the heating season to $3.16 in the latest weekly survey from the Governor’s Energy Office.

Concerns about high prices this winter have led a group of New England lawmakers, including Reps. Jared Golden and Chellie Pingree, to urge President Biden to release inventory from the Northeast Home Heating Oil Reserve. The million-barrel reserve was established in 2000 to provide a supply buffer during severe cold snaps. It wasn’t designed to influence prices.

Separately, Sen. Angus King, I-Maine, on Tuesday questioned U.S. energy policy that has led to a steep increase in liquefied natural gas exports. He has been promoting a bill to require the federal Department of Energy to consider the impact that sending natural gas overseas has on domestic prices.

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