An intricate formula developed by federal and New England energy regulators is the reason for the second announcement of an electricity rate reduction in as many weeks.
Due to a change in the transmission tariff for the supply of power, Central Maine Power customers’ average residential bills will decrease by an additional 4% in 2019, the company said on Wednesday.
On January 1st, CMP will reduce the cost of delivery from 12.2 cents per kilowatt hour to 11.7 cents. For those who are still suffering from the consequences of inflation, this is excellent news—this is the second announcement of lower rates in as many weeks.
Maine electric bills are divided into two sections: delivery and supply. The electrical generators bear the supply expenses, whereas local utilities bear the distribution costs.
According to CMP spokesperson Jon Breed, the Federal Energy Regulatory Commission, ISO-New England, and the region’s grid operator developed a complex formula that determines the delivery rate. According to him, the tariff is related to the price of local and regional transmission service.
According to Breed, the FERC tariff is the same for all utilities in New England and is revised yearly.
Thankfully, this year’s upgrade resulted in a decrease for CMP consumers, he stated.
The standard offer rate for supply in 2024 was authorized by the Maine Public Utilities Commission two weeks ago. This rate is the default for nine out of ten residential and small business customers who do not have contracts with competitive energy providers for electricity. The new rate is a 35% reduction over the existing rates.
According to Breed, the average CMP basic package customer will save around $35 per month as a result of these reductions.
A rate hike for CMP was approved by state utility regulators in June. This means that the average home’s total energy bill would increase by about $5 per month by the middle of 2025 and by little over 1%, or $1.67, starting in July. This hike included funds to modernize the distribution infrastructure to improve dependability, stave off storm damage connected to climate change, and allow for sustainable energy expenditures. It was part of a compromise with Maine’s public advocate.
That amount is distinct from supply and delivery expenses, but according to Breed, it will be a “net negative” by 2024 because to the decreased transmission and distribution rates.
