Gulf Oil enters Maine’s electricity market

Posted Sept. 18, 2012, at 8:37 p.m.

Maine residents and small-business owners can now purchase gasoline for their cars and electricity for their homes and businesses from the same company.

Gulf Oil, based in Framingham, Mass., announced Tuesday it is now selling electricity to Maine residential and commercial customers, and can do so at a price lower than the “standard offer” customers get through providers such as Central Maine Power and Bangor Hydro-Electric.

Selling electricity was a “logical step” for Gulf Oil, Rick Dery, the company’s senior vice president and chief marketing officer, told the Bangor Daily News.

Gulf Electricity, as it’s being branded, first began selling electricity in Connecticut earlier this year, and anticipates being able to offer its services in Massachusetts next month, he said. “It’s an exciting time for Gulf as we reinvent ourselves as an energy provider,” he said. “We’re more than just a retail gasoline provider.”

Cumberland Farms, which owns Gulf Oil LP, operates more than 100 gas stations in Maine, Dery said.

Gulf Oil is entering the competitive electricity market that Maine lawmakers created in March 2000, when they deregulated the state’s electric industry. Deregulation meant Central Maine Power Co., Bangor Hydro-Electric Co., and Maine Public Service Co. couldn’t both supply and deliver electricity to the state’s residents and businesses. So the companies sold off their generating assets and stayed in the delivery side of the business. The goal was to increase competition for consumers — and therefore lower electricity costs — but while it helped large commercial and industrial customers, the biggest consumers of electricity, lower their electricity rates, the small residential and commercial customers haven’t realized much benefit, until now.

In an effort to keep the process simple, the Maine Public Utilities Commission created a “standard offer.” The PUC would put out a bid for supplying electricity, select the lowest bid and accept on behalf of Maine consumers. Most customers accepted the standard offer because there wasn’t much choice. No companies really saw an advantage of spending the time, money and effort to market their services and educate Maine customers about their right to buy electricity on the competitive market.

But that’s changing. Gulf Oil is joining a few other “competitive electricity providers,” or CEPs, which have started selling electricity to Maine residents and small businesses. Auburn-based Electricity Maine, which began selling electricity last year, says it has grown its base of residential and small-business customers to 150,000.

FairPoint Energy, a subsidiary of FairPoint Communications, is also selling electricity, guaranteeing 10 percent savings to Maine customers who sign up.

Customers who switch to CEPs still pay their bill through Bangor-Hydro or CMP, which remain the providers, but the electricity itself will come from Gulf Electricity, say, or Electricity Maine.

Another benefit of a competitive market for electricity is that consumers have the ability to choose more environmentally friendly energy sources.

Dery said Gulf Electricity would be offering “green energy” options. “Green energy is more expensive, but it’s certainly something we’ll be making available to our customers,” he said.

As more companies begin marketing their ability to sell electricity and consumers become educated, the amount of electricity being provided by CEPs is increasing, according to data from the PUC. In July 2012, CMP delivered CEP-supplied electricity to nearly 150,000 “small class” customers, those using less than 20 kW a month. That represented nearly 28 percent of CMP’s total load to that class of customer, a significant increase from July 2011, when 3.8 percent of the load came from CEPs, according to the PUC.

Bangor Hydro’s customers have been slower to sign up with CEPs. According to PUC data, Bangor Hydro in July 2012 supplied electricity from CEPs to nearly 7,900 small-class customers, those using less than 25 kilowatts a month, which represented 10.1 percent of the load being delivered to that class. That’s compared to 5.8 percent of the load coming from CEPs in July 2011.

Maine Public Service hasn’t seen any increase in customers signing up with CEPs. In July 2012, it had 32 small-class customers buying electricity from CEPs, representing 0.4 percent of its load to that class. In July 2011, it delivered CEP-supplied electricity to 31 customers, according to the PUC.

Companies such as Gulf Oil are able to sell electricity — a commodity — at a lower cost because it’s bought on the open market, Dery said. The company has a commodity desk and is making purchasing decisions on an hourly basis, trying to anticipate usage and hedge those purchases. “They do a pretty good job,” Dery said.

For example, the current standard offer rate for CMP residential and small-business customers is $0.0744 per kilowatt hour, according to the PUC. Gulf Oil’s current fixed rate is $0.0699 per kilowatt hour, according to Dery.

“There are other providers, but what makes Gulf unique is we’re already in the energy space,” Dery said. “We’re not just in it for electricity. That offers us opportunities for cross marketing and cross promotions on our other offerings.”

In other words, don’t be surprised if within the next few months you drive into a Gulf gas station or walk into a Cumberland Farms convenience store and see posters advertising Gulf’s ability to not only sell gasoline, but also the electricity you use in your home.

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