A cold snap that froze much of North America in February is partially to blame for higher natural gas prices that are driving up the cost of electricity for Mainers next year.
The Maine Public Utilities Commission announced this week that most residential customers of the state’s two primary electric utilities will see the electricity supply portions of their bills rise by more than 80 percent.
Electric bills are divided into the distribution portion that goes to the utility and the supply portion that goes to energy producers.
Versant Power residential customers who buy the standard offer will see the price of their electric supply rise 89 percent, from 6.2 cents per kilowatt hour to 11.68. The new rate will take effect Jan. 1 and remain in effect through 2022.
Central Maine Power Co. residential and business customers buying the standard offer will see an 83 percent increase in their supply rates next year, with the price of power rising from 6.45 cents per kilowatt hour to 11.82.
Typical customers of both utilities using 550 kilowatt hours per month can expect to see their bills rise by about $30 per month, or $360 for the year.
Higher natural gas prices are a primary driver of the increased electricity costs, according to the Maine Public Utilities Commission. Natural gas prices on the spot market last month were 70 percent higher than they were in the first half of 2021, and Maine’s electricity supply, which is unregulated, is subject to market prices that can fluctuate.
In addition to steadily rising natural gas prices, another contributing factor to the higher energy costs is a cold snap last February that affected most of the country, when extreme weather led to natural gas production freeze-offs and inventory disruptions that are still reverberating, according to the U.S. Energy Information Administration.
In response to the cold snap, some suppliers had to purchase natural gas at spot-market prices that were higher than anticipated, and then passed them onto customers via higher retail prices, the federal agency said in a March report.
Domestic energy production has also declined in recent months, leading to a scarcity of natural gas supplies that has put pressure on the commodity and led to a corresponding uptick in prices, said Charlie Summers, the president of Maine Energy Marketers Association.
“When there’s less natural gas around, that then drives the cost of demand,” Summers said, leading to a demand for other sources like oil, “which powers everything from electrical generation plants to home heating systems to gasoline.”
“It’s sort of a perfect storm in that regard,” he said.
Since taking office in January, President Joe Biden has quashed plans for a number of oil pipelines and temporarily blocked new permits for drilling on public lands, citing campaign promises to shift U.S. energy dependence to more climate-conscious options.
Maine has the lowest average electricity price of any New England state but “price increases are being driven by volatile global energy markets and will cause too many Maine people to reach deeper into their pockets this winter to pay their bills,” said Dan Burgess, the director of the governor’s energy office.
The public utilities commission selected bids for both Versant and CMP customers’ power supply through a competitive process, and the commission announced the results of those bids this week.
Though Versant doesn’t generate or supply its own electricity, it does bill on suppliers’ behalf, so customers turn to the company for understanding how their bills are itemized and priced, said spokesperson Marissa Minor.
Minor urged residents to approach Versant if they needed help paying their new electrical rates.
“We can explore payment plans as well as financial assistance opportunities through low-income and debt-forgiveness programs,” she said.
The governor’s office has also stressed the importance of Mainers weatherizing their homes ahead of the cold months to save money on heating.
Gov. Janet Mills authorized $25 million to help low-to-moderate income residents cover the costs of insulating and weather-proofing their homes through funds from the American Rescue Plan. Another $70 million is available through community action programs like Penquis and MaineHousing’s home energy assistance program to help Mainers pay their heating and electric bills.