Electric Competition: be prepared
(from Maine Townsman, December 1999)
by Eric J. Bryant, Senior Counsel, Office of Public Advocate

On March 1, 2000, the electric industry changes in Maine. Simply put, the supply of electricity will become competitive and the delivery will remain regulated. All electric customers, including municipalities, businesses, and individual households will be able to shop for supply, selecting from among those competitive suppliers who choose to do business in Maine. What do these changes mean for Maine’s municipalities?

To Choose or Not to Choose. While many Maine customers may wish to choose a supplier, others may not. Those who do not actively participate in Maine’s electric supply markets will receive "standard offer" service. For each existing utility service territory, there has been a competitive bid process to determine which supplier will serve the customers in that territory who do not make a choice. The standard offer bid process began in August and final awards were made by the PUC on November 29.

A Key to Competition. The standard offer price will serve as a benchmark for other suppliers. Now that standard offer prices are known, other competitive suppliers know the price to beat. There remains, however, some question about how vigorous competition will be at the beginning, and thus, how many choices will likely be available to customers, especially for smaller customers.

Answering the Call. Assume that you receive a call from a competitive supplier who wants to sell power to your municipality. What do you do? I suggest that you consider the following factors.

• Become familiar with the standard offer prices applicable to your municipality. In CMP’s territory the price will be approximately 4.1 cents per kwh. In Bangor Hydro’s territory, it will be 4.5 cents per kwh. In Maine Public Service’s territory, it is a bit more complicated because prices depend on what classes of services you take. Each service (i.e. each meter) is considered a separate customer account. Some services may be at 20 kW, others at 50 kW and some may be even larger. Size will determine into which of the three standard offer classes a given service falls. For the residential/small non-residential service in MPS’s territory, the price will be 4.3 cents per kwh. For medium non-residential, the price will be 4.25 cents per kwh. For the large non-residential class, it will be 4.0 cents per kwh. You may wish to contact MPS in order to determine into which standard offer class or classes your municipality’s various accounts fall. For the smaller consumer-owned utilities such as Eastern Maine Electric or Houlton Water Company, you should contact your delivery utility directly.

• These prices will remain in force for one year, with the exception of residiential/small non-residential customers in CMP’s territory where the standard offer price of 4.1 cents per kwh will last for two years.

• NOTE: For customers in the two larger standard offer classes in CMP’s service territory, and for all standard offer customers in the Bangor Hydro service territories, there is some uncertainty with regard to price. This is a result of the PUC’s rejection of the standard offer bids and the requirement that the delivery utility procure standard offer power at the wholesale price. The uncertainty arises because it is not yet known what wholesale price can be procured. If it is higher than the prices set (those listed above), the PUC could raise the quoted prices. If it is lower, the quoted prices will not change, but customers will receive refunds at a later time.

• Now you can compare competitive offers you may receive to the standard offer price.

• Make sure the company seeking your service has a license from the Public Utilities Commission. You may call the PUC at 287-3831 or view a current list on the Web at http://janus.state.me.us/mpuc/Electric%20Supplier/licensees.htm.

• Consider joining with other municipalities or electric customers as an aggregation. Most competitive suppliers who approach you are likely to welcome this approach and offer assistance. This will increase your bargaining power and could lead to more attractive rates.

Aggregating Citizens. Some municipalities have considered whether to aggregate on behalf of their residents. Remember that in order to do so, citizens will need to affirmatively choose to join the municipality; by doing nothing they will receive standard offer service. In other words, citizens in Maine must "opt in" to a municipal aggregation. The Legislature has considered and rejected "opt out" aggregation for municipalities.

Delivery Service. As indicated, delivery service will remain regulated and will remain the responsibility of your current utility. Thus, if there is an outage caused by lightning or weather, it must restore service in the same manner as it does today. The price for delivery service will be roughly two-thirds of the current total price. Part of this amount is to pay off historic costs made uneconomic by competition, so-called stranded costs. Many of these costs will be gone within a few years as these historic obligations are paid off.

To obtain more information about electric restructuring please see either or both of the following web sites: www.pucfact.com or janus.state.me.us/meopa/serv01.htm. The PUC maintains a restructuring phone number: toll free: 1-877-PUC-FACT. Or, you may call the Public Advocate at 287-2445.

EDITOR'S NOTE: Next month, the Maine Townsman will feature a couple of articles on municipal aggregation.