The Maine Public Utilities Commission report to the Legislature's energy committee on Jan. 6, 2022, warned that there will be significant upward pressure on electricity rates over the next few years because of natural gas price increases, grid modernization investments and other factors. Credit: Lori Valigra / BDN

Natural gas prices and grid modernization investments will drive up overall electricity rates in Maine and New England over the next few years, the state’s utility regulator said in a Thursday report.

The report summarizing the Maine Public Utilities Commission’s annual activities, which came at the request of the Legislature’s energy panel, follows the 30 percent rise in electricity rates for most Mainers starting Jan. 1. That hike reflected an almost 95 percent increase in natural gas prices from October 2020 through October 2021.

New England’s heavy reliance on natural gas to power its electric grid also caused the regional grid operator, ISO New England, to issue a strong warning in December that New England could face its first rolling power outages this winter if a prolonged cold spell hits.

The utilities commission, charged with keeping electricity rates reasonable, also cited reliability improvements by utilities, increased intensity of storms causing power outages, increased costs of labor and materials and transmission investments by Maine and New England to boost reliability and resiliency as factors that would pump up rates.

The commission said it is “critical” that Maine accelerate its electric grid infrastructure modernization so it is compatible with new technology and that it improve its capacity to transmit electricity bidirectionally, meaning power could be converted more easily between different types of electricity systems.

The commission hired a consultant last year to study the design and operation of Maine’s electric distribution system with a focus on uses in heating and transportation. The regulatory body said upgrading electrical transmission and distribution infrastructure and using new technologies “will likely be costly and produce upward pressure on electric rates.”

Measures to make the grid more reliable and resilient to storms are also costly. Central Maine Power Co. invested more than $7 million in a trial project in Jackman, installing stronger utility poles and wires that are less likely to rupture or disconnect from felled trees and branches. The utility also cut a broader swath of vegetation to get branches away from wires.

The commission said it is still analyzing the results of the project to see if it added enough reliability to outweigh any potential costs to consumers, and whether such measures could be justified throughout the state.