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Maine Public Utilities Commission

NEWS RELEASE 

Maine Public Utilities Commission
242 State Street
Augusta, Maine 04333-0018
Website: http://www.maine.gov/mpuc/, Email: maine.puc@maine.gov
CONTACT: Phillip Lindley, 207.287.1598, phil.lindley@maine.gov

 


FOR IMMEDIATE RELEASE
January 26, 2005

Electric Standard Offer Prices Increase Slightly For
Commercial and Industrial Customers

Reflects Recent Energy Market Price Conditions

 

AUGUSTA, MAINE – Yesterday, January 25, 2005, the Maine PUC accepted bids for new standard offer energy prices for medium and large commercial and industrial customers in the service territories of Central Maine Power Company (CMP) and Bangor Hydro-Electric Company (BHE), for the period March 1, 2005, through August 2005.  The new standard offer prices for CMP commercial and industrial customers are, on average over the 6-month period, about 6.8 cents/kWh for the medium class and about 6.56 cents/kWh for large class.  For BHE customers the prices are, on average, 6.88 cents/kWh for the medium class and 6.30 cents/kWh for the large class.  This reflects a modest increase over existing standard offer prices:  for CMP medium class – u p 3.2%; CMP large class – up 1.3%; BHE medium class – up 3.5% and BHE large class – up 0.2%.  The names of the suppliers chosen to provide the standard offer service will be released after a two-week period to allow supply arrangements to be completed. 

Stranded cost rates will also change on March 1, 2005.  For BHE medium and large customers, the combined effect (including the standard offer increase) of the rate change will be a decrease of about 3/4 cent per KWH on average in their overall rates.  The new combined rates for CMP’s customers will remain roughly the same as the rates today once the stranded cost decreases are taken into account.

As a general matter, energy prices are higher in the period that includes the summer months.  The modest increases here suggest that energy prices have fallen since the standard offer prices now in effect were secured.  It is, of course, impossible to predict whether the next winter standard offer solicitation will obtain prices lower than the summer period prices accepted today, because the underlying cost of energy is certain to change.

Under Maine’s retail electric access rules, the Commission must ensure that standard offer service is available to all customers in the State.  Maine’s rules require that the Commission solicit suppliers to provide standard offer service through a competitive bid process.  

The RFPs that resulted in the bids accepted yesterday were issued in November 2004.  The RFPs sought prices for a six-month term.  The Commission prefers a relatively short term such as six-months for these customer classes to allow standard offer prices to track market changes and, thereby, better enable other retail suppliers to compete.  The shorter term will also allow other retail suppliers to compete by offering customers longer terms with price stability.   

Standard offer service is the default supply for electricity customers, which means that customers receive it only if they have not purchased supply from another retail supplier on their own or through an aggregator.  Currently, approximately 10 to 15% of the members of the CMP and BHE large customer classes and 65 to 70% of the members of the CMP and BHE medium customer classes take standard offer service; the remaining customers receive their energy supply from other retail suppliers.

Residential and small commercial customers in CMP and BHE territory are unaffected by today's decision:  starting on March 1, 2005, those customers will receive standard offer generation service at the recently determine rate of 6.95 cents/kWh for CMP customers and 7.1 cents/kWh for BHE customers through February of 2006. 

“Although high by historical standards, energy costs have not risen significantly over the past six months, which has enabled us to afford at least some measure of price stability to standard offer customers,” said Tom Welch, chair of the Commission.  “Customers who are deciding whether to shop for power or to continue to take standard offer service should, however, bear in mind that we have no way of predicting where prices will be when we seek supply for the next winter period.  I am especially pleased that, for customers in Bangor Hydro territory, the decreases in stranded costs will more than offset the standard offer price increases we announce today, so that virtually all Bangor Hydro large and medium customers will see a noticeable decrease in their rates beginning next March.”

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For more information:

Standard Offer Rates:

http://www.maine.gov/mpuc/new%20standard%20offer/standard_offer_home.htm

Delivery Rates:
http://www.maine.gov/mpuc/ElectricSupplier/ElectricRates.htm

All PUC News Releases may be found on our website at: http://www.maine.gov/mpuc/newsreleases2004.htm 

To arrange an interview with Chairman Welch or Commissioners Diamond or Reishus, please contact Phillip Lindley at 207.287.1598 or by e-mail at phil.lindley@maine.gov.  The Commission’s website may be accessed through the Maine School and Library Network at all public libraries in Maine.