C.N. Brown enters competitive electricity market

By Whit Richardson, BDN Staff
Posted Dec. 28, 2012, at 2:54 p.m.

SOUTH PARIS, Maine — C.N. Brown Co. is entering Maine’s competitive electricity market, joining several companies that are vying to sell power to Maine residents and small-business owners for less than the standard offer rate.

C.N. Brown already has a diverse portfolio of energy products, including gasoline, heating oil, propane, wood pellets and natural gas, so selling electricity was “the next natural step for us to take,” Jeffrey Jones, president of C.N. Brown Electricity, told the Bangor Daily News.

C.N. Brown, which also operates 78 Big Apple food stores, 27 Red Shield Heating Oil locations and 20 gasoline service stations, has been buying electricity for its retail locations for roughly eight years, Jones said. The experience gave the company time to become more comfortable with how the electricity market works, he said.

“Then we finally got to the point where we’re trying to diversify our own business and started looking at electricity and natural gas as the next frontiers, you might say, to expand our business,” Jones said. It began offering electricity to customers in New Hampshire earlier this year.

Jones said C.N. Brown Electricity has between 400 and 500 customers as of now. He would like to see that number increase to 10,000 during the first year, a goal made easier because C.N. Brown already has a direct line to 30,000 existing heating oil customers. To sweeten the deal, Jones said C.N. Brown plans to offer a five-cent cash discount on heating oil this winter to customers who sign up to buy electricity from the company.

Maine has had a competitive electricity market since 2000, when the state restructured its energy market, forcing utility companies such as Central Maine Power and Bangor Hydro-Electric to sell their power-generating plants and hydroelectric dams and stick to the delivery business. While the restructuring was designed to reduce electricity prices for Mainers, a competitive market only developed for the large commercial and industrial customers.

Jones said it took 10 years for a competitive electricity market for small customers to develop because there wasn’t any expertise out there to help a company like C.N. Brown enter the market.

“It’s kind of scary dealing with government regulations when starting from ground zero,” he said.

The first company to really target the competitive electricity market for residential and small-business customers was Electricity Maine, which launched in the summer of 2011 and gained 150,000 customers its first year in operation.

Since then, Maine’s competitive electricity market for small customers has grown more competitive with Gulf Oil entering the fray in September 2012, followed by Dead River Co. in October.

Data from the PUC shows that large numbers of Mainers are turning to competitive providers for their power. The number of CMP residential and small-business customers buying electricity from competitive providers has increased more than 1,000 percent in the past year, from 15,681 in October 2011 to 173,237 the same month this year.

In Bangor Hydro’s territory, the change hasn’t been as steep, but the trend is the same: The number of Bangor Hydro residential and small-business customers using competitive providers has increased from 3,564 in October 2011 to 9,479 in the same month this year.

Some customers may be confused by how choosing a competitive provider affects their power bill, but it’s quite simple. Think of it in the same way a person chooses cellphone carriers or oil providers. When a customer signs up with a competitive electricity provider, the power bill will still arrive from CMP or Bangor Hydro, which deliver the electricity, but where the bill says “electricity supply” it will list the competitive provider rather than the standard offer.

In areas currently serviced by CMP, C.N. Brown Electricity is offering a rate of 6.81 cents per kilowatt hour, while the rate in areas serviced by Bangor Hydro is 6.689 cents per kilowatt hour. The current standard offer rate per kilowatt hour for small customers in CMP and Bangor Hydro areas are 7.43 cents and 7.13 cents, respectively.

While the competitive electricity providers such as Electricity Maine and C.N. Brown can offer attractive rates to customers now, there’s no guarantee they will always be able to buy electricity on the open market and beat the standard offer rate, which is negotiated by the Maine Public Utilities Commission as a default electricity option for consumers. For example, the standard offer rate is expected to fall on March 1, 2013, to 6.82 cents per kilowatt hour for small CMP customers and 6.69 cents per kilowatt hour for Bangor Hydro’s small customers.

The falling prices, and reason competitive electricity providers have been able to beat the standard offer for the past 18 months, is that electricity prices on the open market are falling. One of the primary reasons electricity prices have been falling is that natural gas is becoming cheaper as hydraulic fracturing, especially in the Marcellus Shale along the Appalachian Basin, has increased the domestic supply of natural gas.

Tom Welch, chairman of the PUC, estimates the increase in fracking for gas “has had an impact on Maine’s electricity rates probably to the tune of at least a couple hundred million dollars a year in electricity savings.”

C.N. Brown can’t promise electricity customers that its electricity will always be cheaper than the standard offer, but that doesn’t worry Jones.

“The standard offer is a competitor in our eyes,” he said. The standard offer rate may change over time, “and we’re going to do whatever we can to be as competitive as possible. If you can’t beat them on price, you have to beat them on service.”

In addition to its entrance into the electricity market, the company also unveiled a new loyalty program that will offer discounts to customers beginning in mid-January, according to Jones. The loyalty program will begin with customers who make purchases at the Big Apple Food Stores throughout Maine, New Hampshire and Vermont, and then expand to include purchases at C.N. Brown’s service stations, Red Shield Heating Oil locations, and C.N. Brown Electricity.

http://bangordailynews.com/2012/12/28/business/c-n-brown-enters-competitive-electricity-market/ printed on July 23, 2014