Understanding your electricity bill

Posted Oct. 21, 2012, at 2:23 p.m.

On a monthly power bill from Bangor Hydro-Electric or Central Maine Power there are two separate costs: those for electricity supply and those for the transmission and delivery.

The development of a competitive electricity market only affects the supply side of your power bill. If you choose a competitive provider, you still pay your bill to Bangor Hydro or CMP. The only thing you will notice is that where your bill lists electricity supply, it will list the name of your competitive provider — for example, Electricity Maine, Gulf Energy, or DR Power, Dead River Co.’s electricity supply business — instead of the standard offer.

However, it doesn’t matter whether you buy your electricity from a competitive provider or use the standard offer — everyone pays transmission and delivery costs to the utility.

The transmission and delivery costs cover upkeep of the transmission infrastructure. It also includes what are known as “stranded costs,” which are a remnant of deregulation.

When Bangor Hydro and CMP were forced to sell their generating assets, they had existing long-term contracts with third-party power suppliers that still had to be honored. However, in the newly competitive marketplace, the contracts forced the utilities to pay more for the power then it was worth on the wholesale market. The difference is the stranded cost.

The burden to Mainers of the stranded costs has lessened over the years. In 2002, CMP residential and small business customers were paying 1.4 cents per kilowatt hour to cover the stranded costs. Today, those same customers are paying 0.3 cents per kilowatt hour.

Bangor Hydro’s residential and small business customers were paying 3.2 cents per kilowatt hour in 2002 to cover stranded costs. Today, they’re paying 1.3 cents per kilowatt hour.

Most of Bangor Hydro’s remaining stranded costs will be paid off by 2018, and most of what is left of CMP’s will be paid off by 2016, according to Tom Welch, chairman of the Maine Public Utilities Commission.

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