Frequently Asked Questions
- Q: Did Maine deregulate its electric industry?
- Q: What are stranded costs?
- Q: What is the Standard Offer?
- Q: What is green power?
Q: Did Maine deregulate its electric industry?
A: Not really; rather it restructured it. The Restructuring Act (35-A MRSA, ch. 32) took Maine's electric utilities out of the generation business and required them to sell their various generation assets. You may recall that a subsidiary of Florida Power & Light bought CMP's assets. CMP and the other transmission and distribution utilities remain fully regulated by the Maine PUC. The generation or supply portion is subject to competition and one could say it has been "deregulated". However, since electricity remains a necessary commodity, there has been a major effort in the last 8 years to create new rules and regulations that will allow competition for this commodity without exposing consumers to high prices that would result from unfair price manipulation. So far in New England (unlike California in 2000), these efforts have succeeded.
Q: What are stranded costs?
A: Prior to March 1, 2000, Maine's electric utilities were responsible for generating as well as delivering power. In some cases, contracts were signed or facilities built that are now too expensive to compete in the competitive generation market. Because these costs were approved by the PUC at the time and may be recovered by the utility, they are now "stranded" by the move to a competitive industry. The PUC regularly conducts reviews of these costs to insure that they are legitimate and that the utilities are making bona fide attempts to reduce them.
There are two important things to remember about stranded costs. First, they are going down and will eventually be paid off, like a mortgage. For example, CMP's stranded costs will significantly decrease in 2008, though they will not be entirely gone until 2015. Second, they would be in rates even if the industry had never been restructured.
Q: What is the Standard Offer?
A: The standard offer is what you get for supply if you do not or cannot make another retail choice. Beginning on March 1, 2000, Maine's electric customers were supposed to be afforded many retail choices for supply. See section on supply. While this has occurred for larger commercial and industrial customers, there are few, if any, choices available to residential customers. Nevertheless, these customers still pay a competitive price for service. The standard offer is service available to anyone and the price for this service is set in periodic "auctions" held by the PUC. Licensed suppliers compete and bid for the right to provide generation, or supply, service to Maine customers. Our rate chart includes all residential standard offer rates.
Q: What is green power?
A: Green power is a term with no formal definition. (Do not confuse the term with the supply product of the same name. See http://www.mainegreenpower.org/index.shtml) It refers generally to power that is generated using renewable resources. Wind, solar and hydropower clearly fit into this definition. Power created by burning "biomass" - wood chips and other forest industry by-products - is also commonly described as green. Many feel that more and more green power should be used not only so that the air is cleaner, but also because it would tend to reduce the region's reliance on fossil fuels and stabilize wholesale prices.