Scott Hallowell realized the members of his electricity co-op might worry when they heard about supply price spikes in January.
So, he sent a letter to remind them they would not be affected.
“They might panic, so we just really wanted to let them know that their price was not going up,” said Hallowell, CEO of the Calais-area Eastern Maine Electric Cooperative, the largest consumer-owned utility in the state serving about 13,000 customers.
It was luck more than skill for the co-op, formed in 1940 and owned by its ratepayers rather than corporate shareholders. It signed a five-year contract for power coming out of Canada before Russia’s invasion of Ukraine.
Ringing in at 5.9 cents per kilowatt hour for the average residential user, it is one of the best bargains in the state at a time of rapidly rising prices. The average residential co-op member pays a total of about $88.65 per month for delivery and supply. That compares with $138.55 for similar Versant Bangor Hydro District customers and $154.59 for Central Maine Power customers.
The co-op serves as a model of how regulators and lawmakers in the state might broadly decrease and stabilize energy supply prices, which spiked in January because of disruptions in the natural gas market. A ratepayer advocate has recommended extending standard offer contracts, which the major utilities rely on, from one year to 10 years to help stabilize prices.
That could benefit consumers if prices from other suppliers rise. But if regulators ink a long contract and prices fall, consumers will complain.
“It’s difficult to time the market and win,” Philip Bartlett, chairman of the Maine Public Utilities Commission, said.
That is what the co-op did. It assessed the risk of energy rates going much lower or higher than 5.9 cents per kilowatt hour by looking at historic energy rates, Hallowell said. It felt the risk of the rate falling significantly below 5.9 cents was somewhat smaller than the risk of it going above that mark.
“It’s always a risk, no matter what you do,” he said. “But I wasn’t anticipating seeing the rates that are out there now.”
He also cautioned co-op members in his letter that future prices are not guaranteed and may rise. The co-op’s low rate is saving members with average electricity use about $592 annually.
Standard offer electric rates approved by the public utilities commission rose about 40 percent for the average Versant Power residential customer at the start of the year and about 49 percent for the average CMP residential customer. That comes to 16.4 cents per kilowatt hour for the average residential Versant Power Bangor Hydro District customer and 17.6 cents per kilowatt hour for the average CMP customer, almost triple the co-op rate.
The Maine Public Utilities Commission approves the default standard offer supply price each year through a competitive bidding process. Customers also can buy from competitive-energy providers, some of whose rates rose even more starkly, up to 300 percent.
The fortuitous timing for Eastern Maine reflects the upside of longer contracts, but commission chair Bartlett cautioned that all factors need to be considered, including what happens when rates decrease during the contract period.
The commission, public advocate and Legislature all are looking now into ways to stabilize and decrease prices. The commission plans to hold a special deliberation Thursday as it discusses starting an investigation into Electricity Maine, the largest competitive-energy provider in the state and against which consumers have complained of the highest price hikes.
The Legislature’s energy committee also will meet Thursday to talk about a measure on electrical supply cost transparency.
