Bangor Hydro rate increase draws few complaints

Bangor Hydro-Electric Co. meters are seen outside an apartment building in Bangor recently.
Bangor Hydro-Electric Co. meters are seen outside an apartment building in Bangor recently.
Posted March 17, 2011, at 8:50 p.m.

BANGOR, Maine — An opportunity for Bangor Hydro Electric customers to weigh in on a proposed rate increase Thursday netted testimony from only one person, surprising members of the Public Utilities Commission who expected more of a crowd.

The PUC is in the midst of a months-long consideration of Bangor Hydro’s proposal to increase what it calls its “stranded cost” rate. The PUC is not required to hold a public comment forum, but opted to hold Thursday’s hearing because of a heavy volume of letters from concerned ratepayers earlier in the process.

At the end of the hearing, which lasted 15 minutes, PUC commissioner Vendean Vafiades quipped that the low turnout may have had something to do with the holiday.

“Is it because it’s St. Patrick’s Day?” she asked.

Milton Rennebu, who was the lone person to testify, took the proceedings very seriously. He drove to Bangor from Cherryfield to attend. He was critical of Bangor Hydro’s proposal.

“Basically this boils down to a bad business deal that Bangor Hydro went into and now they want to recover their losses. If you’re running a business you have to absorb costs like this by yourself.”

The stranded cost rate increase proposed by Bangor Hydro is a process that has happened every three years since 2000, when the Legislature required Maine’s electrical utilities to sell their electricity generation facilities. The point was to make it illegal for a single company to own both the generation and distribution infrastructure and therefore create competition in the electrical market.

Bangor Hydro, as well as Maine’s other electrical utilities, still purchases power on long-term contracts, even though the market makes electricity prices vary widely. The stranded cost is the gap between what Bangor Hydro is contracted to pay for electricity versus what it actually costs. Between March 1 of this year and March 2014, Bangor Hydro seeks to recover $17.8 million in stranded costs.

Bangor Hydro is seeking a 26.6 percent increase in its stranded cost rate, which according to rate manager Gradon Haehnel translates to an increase of approximately $1.38 per month on an average homeowner’s bill. The small impact of the change is because the stranded cost portion of a bill represents around 10 percent of the total bill. The rest is generation, transmission and delivery expenses. Because of a drop in the supply portion of the bill, customers’ rates will actually fall $1.27 a month.

Despite only one in-person comment Thursday, others are fighting the rate increase on the grounds that it is illegal and unaffordable.

“I propose, commissioners, that neither property owners, residents, nor current or potential business owners can afford increased energy costs in Maine,” wrote Rusty Gagnon of Eddington in a letter to the PUC dated Feb. 20. “Bangor Hydro Electric Company has failed to show that any rate increase is appropriate, justified or necessary. It has shown poor management and a failure of the public trust. Therefore, their request for a rate increase should be denied.”

Helen Patterson of Brownville objected to the proposal in a letter dated Feb. 11. “No stranded costs whatsoever should be recovered in this case nor in any other by Bangor Hydro Electric Company,” wrote Patterson. “What’s more, all the money taken from ratepayers for stranded costs illegitimately is owed back to them. It should be paid back lump sum, cash.”

Commissioners at Thursday’s meeting said they couldn’t discuss the issue in detail because it is an ongoing case. There are several more steps in the PUC’s deliberations. A PUC staff person at Thursday’s hearing said a decision is expected in late May.

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