Maine needs to better diversify its energy sources to mitigate future price spikes

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Electricity prices for most Maine residents will increase by about $30 per month under rate increases set this week by the Maine Public Utilities Commission. The rate increases come on top of rising prices for heat, gasoline, food, cars and many other consumer goods, many of which are also in short supply due to transportation and other issues. supply chain issues.

After the PUC announced the steep price increases for the coming year, state officials encouraged Maine residents to conserve electricity – through efficiency upgrades and weathering, for example – and ask for help if they need help paying their energy bills.

While the Mainers should be doing those things, and additional help is available this year through federal pandemic financial assistance, that’s cold comfort for those still struggling to pay their bills.

Unfortunately, there are no quick and easy answers to rising energy prices. But these big rate increases should spur conversations — and hopefully action — to change the state’s energy mix. Reviewing the way electricity prices are set should also be on the table.

Rising electricity costs, like rising fuel oil and gasoline prices, are the result of supply and demand. At the start of the pandemic last year, when governments around the world imposed restrictions to slow the spread of the coronavirus, demand for transportation and manufacturing fuels plummeted, as did prices. In April 2020, demand for oil was so weak that oil futures were briefly traded at negative prices.

As pandemic-related restrictions have largely been lifted and economic activity resumes, demand for fuels, especially natural gas, is high around the world. Worldwide, to supply has not kept pace with this increased demand, so prices have risen rapidly. Natural gas prices in New England have more than tripled since last September, according to data from ISO New England, which operates the region’s power grid.

Maine and the rest of New England rely heavily on natural gas to generate electricity. So when natural gas prices are high, they can drive up electricity rates, which happened this week when the PUC selected bids to supply electricity to most Maine customers. for the coming year.

Residential customers who purchase electricity from the standard supply of Versant, which serves most of Penobscot County as well as Hancock, Piscataquis and Washington counties, will see an 89% increase in their power supply rate to from January.

Standard supply rates for customers of Central Maine Power, which serves much of southern and central Maine, will increase by 83%.

Commercial and industrial customers of both utilities will also see significant rate increases next year.

Almost all residential utility customers pay the standard bid tariff, which is set by the PUC when it selects electricity supply bids for the coming year. Customers can choose to buy electricity from so-called competing electricity suppliers, who may offer lower prices. The Maine Office of the Public Advocate has a list of these suppliers, as well as their current prices and contractual conditions, on its website.

An electricity bill consists of two elements, the supply and the delivery of electricity. The electricity supply rate is set through the bidding process required by Maine law.

Staggered bids – setting prices for only a portion of the electricity supply needed at a time, which the PUC has done in the past – could help spread out price increases. But the bottom line is that higher input prices translate into higher electricity prices.

Increasing supply from renewable sources is a big part of the solution. Rather than buying fossil fuels from other states and countries, Maine and New England should generate more electricity from wind, solar and hydroelectric facilities, which also pollute less than fossil fuel generators. The amount of electricity produced by renewable sources grows in New England, but too slowly to keep up with demand.

The New England Clean Energy Connect, the 150-mile transmission line through Maine that was rejected by voters earlier this month, pledges to bring 1,200 megawatts of hydroelectricity from Quebec into the power grid of New England. The corridor, which is now the subject of competition legal claimswouldn’t have helped reduce electricity prices this winter, but projects like this will be needed to meet both energy demand and climate change goals in the future.

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