Jun. 28—A jump in federally mandated, regional transmission rates that's due to affect nearly every electric utility in New England will contribute to a projected double-digit increase in what Central Maine Power customers will pay on their bills starting Aug. 1.
The annual adjustment to finance new high-voltage transmission lines and maintain existing ones will result in a 9 percent overall increase in the region, according to CMP. But the pending tariff will hit Maine's largest utility especially hard, increasing rates by $70 million, or roughly 25 percent.
The state Office of Public Advocate said the transmission increase likely would translate into the largest one-time hike ever in retail delivery rates for CMP.
The pending hit will come on top of money CMP is trying to recover through rates to help pay for restoring power after a series of major storms last year.
To help blunt the impact, CMP is asking the Maine Public Utilities Commission to consider deferring some storm charges and hold an overall residential rate hike to under 10 percent. For an average home customer, that would add an extra $8.65 a month to an $88 total bill that includes electric supply as well as transmission and distribution costs.
The Office of Public Advocate is seeking even more immediate relief. It's asking regulators to defer any storm recovery until next year.
The PUC will decide how to handle the matter during deliberations set for July 14.
News of CMP's pending rate hike is coming at a bad time for the company. It has been battling to discourage the Maine Legislature from passing a bill, L.D. 1708, that would create a consumer-owned distribution utility to replace CMP and Versant Power. The measure lost by a single vote on June 16 but is expected to be taken up again when lawmakers reconvene Wednesday.
Even though CMP can't do anything about the federally regulated charges, that distinction is likely to get lost or downplayed in the emotionally charged debate.
Adding to possible confusion is the fight over the controversial $1 billion New England Clean Energy Connect transmission project. The new tariff charge isn't associated with that venture; those costs are being born by Massachusetts electric customers.
The transmission tariff, set by the Federal Energy Regulatory Commission and not by states, is paid by utilities and passed through to their customers. To varying degrees, it will impact both investor-owned companies such as CMP and Versant Power, and consumer-owned utilities, according to the PUC.
Several consumer-owned utilities have a so-called transmission adjustment clause, the agency said, which automatically calculates the transmission rate increase.
"These increases would still happen, even if we had consumer-owned power," said Susan Faloon, a PUC spokeswoman.
But CMP's tariff charge this year is especially high, according to Eric Stinneford, a CMP vice president, who characterized the problem as "a double whammy."
Part of the FERC formula is based on peak power demand, and CMP's was growing in 2020. A second factor is a "true-up" calculation that reconciles forecasted investment costs with what actually happens each year. CMP had a multimillion-dollar credit in 2019 but incurred a charge for a similar amount in 2020.
Asked on Monday how CMP would convey this complicated information and its sudden, unanticipated burden on customers, Stinneford said: "It's a difficult message, for sure."
TRANSMISSION COSTS UP
All this is happening at a time when investments in New England high-voltage lines have made transmission costs the fastest growing part of a typical household electric bill.
Data compiled by CMP for state regulators shows that from 2011 to 2020, transmission rates doubled. By comparison, distribution and electric supply costs each went up roughly 15 percent during that period. Put another way, transmission charges now account for roughly 3.5 cents of the all-in, 16 cents-per-kilowatt-hour residential rate.
The transmission tariff is an added complication to CMP's annual compliance filing, a process in which the PUC examines the company's expenses and can approve or reject price changes. Typically, those changes go into effect on July 1, but the PUC has agreed to put them off until Aug. 1.
The cost of restoring power after five major storms in 2020 is the largest driver of distribution rate changes this year, CMP said. Restoration cost more than $70 million, and through a formula by which customers and investors share the expenses, CMP is asking the PUC to recover a total of $26.5 million.
To ease the burden, the company is proposing that most of the expense be spread out over four years. CMP is proposing to finance costs over the period, and the PUC is examining the potential impact.
The Office of Public Advocate, which represents utility customers, acknowledges that storm cost deferral won't mitigate the magnitude of the pending transmission tariff.
"The level of increase is unprecedented," Andrew Landry, the deputy public advocate, wrote in comments filed Monday. "Its impact is compounded by the continuing adverse economic impacts of the COVID-19 pandemic, from which customers are still recovering, as well as the complete lack of notice to customers about the potential level of change, undermining any opportunity to prepare."
'A BALANCING ACT'
Stronger, more frequent storms linked to climate change are leading utilities nationwide to harden their distribution systems. In the Northeast, where falling trees are the major causes of outages, companies including CMP are trimming trees, installing sturdier poles and stringing insulated wires, among other strategies. But the process takes time and costs money. Utilities across New England and New York are under fire from customers, politicians and regulators for prolonged outages and charges that they aren't doing enough to make their systems more resilient.
Maine has among the highest frequency of outages in the country. Last year, the PUC approved a request from CMP to try an aggressive tree-trimming project in the Jackman area, where power outages are common. But it rejected a request to introduce the program more widely.
"It's definitely a balancing act, between cost and reliability," Faloon said, noting that the agency is evaluating the issue as part of a case dealing with service quality and overall performance.
CMP says that since 2017, shareholders have assumed $41 million in storm-related costs. But supporters of a consumer-owned utility have expressed the view that the ability to borrow money at a lower interest rate through bonding would reduce the costs of upgrading the electric grid.
In a separate but related matter, the Public Advocate is asking the PUC to approve a plan to make CMP replace a 5-mile transmission line in the Brunswick area with a so-called "nonwires alternative."
A new law requires the Public Advocate to explore less costly alternatives to traditional hard-wired infrastructure investments. A study done for the office suggested that a combination of battery storage, energy efficiency, and combined heat and power generation could eliminate the need to rebuild the transmission line. That would improve reliability while saving ratepayers more than $8 million, the office estimates.