June 20, 2018
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How we calculated the premium customers paid for electricity

BDN File | BDN
BDN File | BDN
By Darren Fishell, BDN Staff
Updated:

Electricity suppliers report their revenue and total megawatt-hours of power sold to different customer classes for the year. They submit it to the U.S. Energy Information Administration on a document called a Form 861.

That data formed the basis of our cost comparison. It includes competitive suppliers that charge at variable rates and generators selected each year by state regulators to provide standard offer supply as a default option.

The reporting is not comprehensive; it includes only the largest power generators each year. Gulf Electricity, for instance, did not report in 2013 or 2014 because it didn’t produce enough power to meet the reporting threshold. But it did in 2015.

Still, by our estimates, the EIA reports covered approximately 90 percent of customers in Maine between 2012 and 2014, based on a comparison with monthly state data on competitive supply customers.

The Form 861 data provides the most comprehensive look at how the state’s largest competitive suppliers compared on price.

We identified two groups of electric generators selling to Maine homeowners: those that won the state standard offer bid and those that marketed and sold electricity directly to residential customers.

For each group, we calculated an annual average cost of electricity by dividing residential electricity sales by the megawatt-hours sold. Using those numbers, we projected the difference if customers had all bought power at the standard offer rate.

For each year, we multiplied the price difference per megawatt-hour by the number of megawatts sold by competitive suppliers. In 2012, that number reflected savings for customers. In 2013 and 2014, it reflected customers spending more.

We asked the Maine Office of the Public Advocate, Connecticut Office of Consumer Counsel, the Retail Energy Supply Association and the founders of Electricity Maine to review our key findings.

Tim Schneider, Maine’s Public Advocate, said the disparity aligned with pricing information his office has tracked monthly and anecdotal information gathered from consumer complaints. Consumer advocates in Connecticut said while they could not weigh in on the BDN’s use of EIA data, our findings aligned with their reports.

The Retail Energy Supply Association declined to comment on the BDN’s methodology when provided a description of our analysis and findings, but called the similar analysis in Connecticut “comparing apples and oranges.”

The BDN also consulted with electricity data experts at the U.S. Energy Information Administration about the contents of Form 861 filings. The EIA did not review or comment specifically on our analysis.

The data give a sense of how the prices compare in aggregate but don’t necessarily show that all customers of competitive suppliers would have been better off getting the standard offer in 2013 and 2014. As with a casino, individual players may have won in those years, but the house, as always, was the winner.

 

Correction: Due to an editing error, a previous version of this story mischaracterized the standard offer price. It is set through a competitive auction run by state regulators.


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