Many Mainers this past month discovered it’s best to open their electric bills while seated – lest they faint. “My electric bill is DOUBLE,” posted one user of the social media app Reddit. Another bemoaned “bill shock.” There was advance warning. The Maine Public Utilities Commission in November hiked standard offer supply rates for the state’s two major electric companies, Versant Power and Central Maine Power Co. For residential customers in Versant’s Bangor Hydro District who receive standard offer service, supply rates went up 88.6 percent. The change went into effect Jan. 1.
Supply represents roughly half of a customer’s bill and it’s the part power companies don’t control. Maine deregulated its electricity supply in 2000, forcing companies to sell their generation assets.
Now, the standard offer supply rates are set through a PUC-run competitive bid process. Dramatic increases in natural gas prices are driving up costs. Algonquin Citygate, a benchmark for New England natural gas prices, in January reported the highest monthly average for natural gas since February 2014.
Skyrocketing electricity costs may ramp up support for a referendum campaign to force Maine’s power companies to sell their assets in the state to a consumer-owned utility. But as an incentive, that’s misguided. Supply costs are beyond the control of any entity that does not produce its own power. However, companies must answer to complaints about customer service, billing issues, reliability and inadequate infrastructure investment.
The Governor last week unveiled new legislation that seeks to give the state more oversight of electric utilities and the power to levy large fines if those utilities do not meet new performance standards. The bill requires the PUC to issue quarterly reports on whether a utility is meeting the mark. If the utility does not, the legislation requires the PUC to impose penalties of up to $1 million, or 10 percent of the utility’s annual revenue. If the commission finds that an electric company is unfit to continue to provide service and that sale of the utility is necessary to protect ratepayers, it will invite bids. Bids from a consumer-owned corporation would be considered.
Giving regulators more teeth and increasing public confidence in the regulatory process are prudent steps forward. The prospect of a consumer-owned utility raises more red flags.
Maine’s history with deregulation shows the unintended consequences of the state trying to steer the electric market. Then there’s the question of scale. The largest consumer-owned utility currently, Eastern Maine Electric Cooperative, serves just over 10,000 residential customers, compared to 133,671 in the Versant Bangor Hydro District and more than 559,000 CMP customers. Consumer-owned utilities do report lower total costs per kilowatt hour, but their size and unique service areas make them a challenging basis of comparison.
And while a consumer-owned utility would not be beholden to investors, it would have to shoulder debt and infrastructure costs. As we have seen with state and local roads, elected officials often underfund capital projects in order to curb costs for taxpayers, or what would be in this case, ratepayers.
With CMP again ranking dead last in the nation in a J.D. Power survey of electric residential customer satisfaction, it is hard to imagine anyone doing worse. Our Power proponents still must prove they can do better.
In the meantime, lawmakers should demand more accountability from the companies that have monopoly control over electric delivery. Mainers’ wallets and the state’s economic future depend on it.