Maine Residents Face Electricity Supply Cost Hike in 2024

Most homes and small businesses in Maine are preparing for an increase in electricity supply costs starting in January 2024. According to an analysis by Competitive Energy Services, a Portland-based consulting firm, rates could rise by approximately 15%, translating to an average increase of around $8 per month for typical households in 2026. This anticipated rise comes in addition to a controversial request by Central Maine Power (CMP) to increase its distribution rates, a proposal currently under review by the Maine Public Utilities Commission (PUC).

The distribution rate increase has sparked significant backlash from consumers, many of whom are already grappling with inflation. By early October, the CMP proposal had attracted a record 617 public comments, indicating widespread concern among customers. Andrew Price, president and CEO of Competitive Energy Services, noted, “Affordability is becoming a big issue, a big political issue. There’s definitely outrage out there with CMP’s proposed distribution increases. The supply hike is going to feel like there’s some piling on.”

Electricity rates are on the rise nationally as well, with consumer prices having increased by 13% since 2022, according to the U.S. Energy Information Administration. Projections indicate further increases next year, driven in part by the demand for new power plants to support expanding data centers. However, Maine’s expected supply cost increase is primarily linked to rising wholesale natural gas prices, which are anticipated to escalate further in 2026.

The increase in natural gas prices is largely attributed to the United States becoming the world’s largest exporter of liquefied natural gas (LNG). Federal estimates suggest that LNG shipments could double by 2030, a goal aligned with former President Donald Trump‘s vision for an “American Energy Dominance.” While this growth supports the national economy, it poses challenges for energy consumers in New England, where around half of the region’s electricity is generated from natural gas. The cost of gas significantly influences the marginal price for electricity generation across the New England power grid.

The PUC is set to review annual bids from generators for the standard supply service in December, with market conditions suggesting an increase is likely. PUC Chair Philip Bartlett explained, “It’s fair to say that electricity prices track natural gas prices. So if we see changes in natural gas prices, they will be reflected in electricity costs.” As suppliers assess future energy costs, they often hedge against rising gas prices by increasing their generation contract rates.

Electricity supply rates in Maine have fluctuated considerably over the years, ranging from approximately 6 cents to 16 cents per kilowatt-hour. Recent figures indicate that standard offer supply rates are around 11 cents per kWh for both CMP and Versant Power’s Bangor Hydro District. Between 2014 and 2024, Maine saw the third-fastest growth in total electric rates in the U.S., attributed to several factors, including natural gas prices and an overly generous state solar reimbursement policy.

New England’s energy market faces unique challenges due to its constrained gas pipeline system, which struggles to meet demand during the coldest winter days. This often necessitates the use of more costly LNG.

The influence of LNG extends beyond Maine, as the shift away from coal plants has made natural gas the leading fuel for electricity generation in the U.S., accounting for 42% of the energy supply. The recent increase in LNG exports, primarily to Europe and Asia, is further contributing to the upward pressure on domestic gas prices. Data from the Institute for Energy Economics and Finance Analysis indicates that exports are now exceeding half the amount of gas used at U.S. power plants.

While some groups, including the American Petroleum Institute, argue that LNG exports have minimal impact on domestic residential gas prices, this claim does not directly address the implications for electricity rates. Heather Sanborn, Maine’s public advocate for utility customers, expressed concern that the state lacks sufficient tools to manage supply costs effectively. Her office receives daily inquiries from residents worried about the affordability of electricity, prompting calls for the PUC to explore alternative procurement methods for standard offer contracts.

A new bill passed in the Maine Legislature instructs the PUC to consider soliciting bids more frequently and for varying contract lengths to help mitigate rate volatility. While Bartlett noted that minor adjustments are being explored, he cautioned that no significant changes are expected that would substantially lower supply costs.

Looking to the future, both Sanborn and Bartlett emphasized the need for increased investment in renewable energy sources. Enhancements in solar, wind, and battery storage capacity could help stabilize natural gas price fluctuations. Sanborn remarked, “To the extent we’re not building grid-scale storage or offshore wind, we are allowing natural gas to be the marginal cost setter in our region.”

As Maine residents brace for rising electricity costs, the trajectory of energy prices remains a pressing issue that could have far-reaching implications for households across the state. This story was originally published by The Maine Monitor, a nonprofit and nonpartisan news organization.