Dead River expands into electricity supply business

By Whit Richardson, BDN Staff
Posted Oct. 04, 2012, at 1:55 p.m.

SCARBOROUGH, Maine — Dead River Co. has expanded its energy portfolio by entering the electricity supply business.

The company can sell electricity to residential and commercial customers in Central Maine Power Co.’s and Bangor Hydro-Electric Co.’s coverage areas at rates lower than the “standard offer” available from the utility companies, Bob Moore, the 103-year-old company’s CEO, said at a press conference Thursday morning.

Moore also said the company has received approval from the Public Utilities Commission to sell discounted off-peak electricity that can be used for electric thermal storage units, which can store electricity and convert it to heat for a home or business.

“Off-peak electricity is the concept of using electricity at night, when the demand, and therefore the costs, are low — roughly the price equivalent of $2.90 a gallon for home heating oil,” Moore said. As of Oct. 2, the statewide average price for No. 2 heating oil was $3.68, according to the state Energy Office.

Dead River will sell electricity through its subsidiary, DR Power LLC, which was created in May.

While Dead River supplies the electricity, it does not generate, transmit or deliver it to customers. All transmission and delivery of the electricity will continue to be handled by CMP and Bangor Hydro, which means consumers still would receive their electricity bills from these utility companies and pay the same transmission and delivery costs, but the supplier would be listed on the bill as, say, DR Power instead of the standard offer.

Companies such as Dead River can sell electricity to customers as a result of Maine’s deregulation of the electric industry in March 2000, which created a competitive electricity market aiming to lower electricity prices for consumers.

Deregulation meant CMP, Bangor Hydro and Presque Isle-based Maine Public Service Co. couldn’t generate, 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, leaving other companies, known as “competitive electricity providers,” or CEPs, to compete on the supply side.

The idea was the competition among CEPs would lower electricity costs for consumers, but while it helped large commercial and industrial customers — the largest consumers of electricity — lower their electricity rates, the massive majority of small residential and commercial customers stayed with the “standard offer” and haven’t realized much benefit from deregulation.

During the past year, however, several companies have entered the competitive electricity market, capitalizing on their ability to sell electricity for less than the standard offer and educating consumers on their ability to purchase electricity on the competitive market. Other CEPs that have entered the market include Auburn-based Electricity Maine, Gulf Electricity, and FairPoint Energy, a subsidiary of FairPoint Communications.

Moore said Dead River would promote its electricity supply business to its existing customers, and eventually market the service to attract new clients. While the “standard offer” is a bulk price the Maine Public Utilities Commission solicits from suppliers, CEPs can buy electricity on the open market, Moore said. The company is working with a broker in New Hampshire but it’s likely Dead River at some point would become its own broker, he said.

While the standard offers for CMP and Bangor Hydro small customers is $0.074 per kilowatt-hour and $0.071, respectively, Moore said Dead River can offer electricity closer to $0.069 per kilowatt-hour.

Entering the electricity supply business wasn’t on Moore’s radar until about a year ago when Biddeford-based Thermal Energy Storage of Maine approached the company about selling electric thermal storage, or ETS, units, Moore told the Bangor Daily News.

ETS “is a remarkably simple concept,” Adam Cote, CEO of Thermal Energy Storage of Maine, said at the press conference.

It is not a new technology — in fact, it was developed after World War II — but it has not seen widespread use in this country, Moore said. ETS technology is able to convert off-peak, low-cost electricity to heat and store it in high-density ceramic bricks for use 24 hours a day.

“This technology has the potential to change the energy picture in Maine,” Cote said in a statement.

Though Moore wasn’t familiar with ETS technology before Cote’s company approached Dead River, he said he was sold on its merits and the chance to offer the company’s customers another option to heat their homes. So it became a situation, he said, where “if we’re selling these electric units, why don’t we get certified to sell electricity too.”

ETS units made sense because they also offered another way to take advantage of low prices for natural gas, which Moore estimates is used to produce nearly half of Maine’s electricity.

“In a way, electricity is like natural gas by wire,” Moore said. “If the economics don’t work to actually build and sink a pipeline to points in Maine for natural gas, the next best thing is to take advantage of natural gas pricing through electricity.”

Dead River not only sells off-peak electricity for ETS units, but also can sell and install the units.

Also promoting the use of ETS units is CMP, which today announced it is offering a limited number of rebates for customers who want to install an ETS heater at their home or small business. Customers opting for a single-room heater will receive $1,500 off the purchase price, while those who prefer to install an ETS furnace to heat their entire home will be offered a $4,500 discount, according to a media release from the company.

CMP said its ETS program was developed in response to a new state law that allows utility companies to develop programs to reduce heating costs and provide energy-efficient heating options for Maine consumers. According to CMP, the PUC unanimously approved the program last month.

http://bangordailynews.com/2012/10/04/business/dead-river-planning-to-sell-electricity-but-not-generate-transmit-or-deliver-it/ printed on September 21, 2014