December 17, 2017
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Mainers spent up to $38 million more than they had to on power in 2016

By Darren Fishell, BDN Staff
Updated:
George Danby | BDN
George Danby | BDN
Companies promising electricity savings to Maine homeowners have instead cost them as much as $98 million since ramping up operations in 2012, according to an updated Bangor Daily News analysis.

Home electricity customers in Maine spent as much as $98 million they did not need to from 2012 through 2016, according to an updated analysis by the Bangor Daily News.

New annual sales reports show Maine customers could have saved as much as $38 million in 2016 if they had bought electricity at the standard price set each year by state regulators instead of from retail suppliers, called “competitive electricity providers,” such as Electricity Maine or FairPoint Energy.

Since 2012, those above-market costs would be enough to pay for the electricity of roughly 200,000 average Maine households for all five years.

In the updated analysis, the above-market costs range between $76 million and roughly $98 million over five years, depending on different federal and state sources of information on retail supplier sales.

Those companies sell only electricity supply directly to customers and are separate from utilities like Central Maine Power Co. and Emera Maine, which maintain the power lines that deliver electricity from generators to end users.

The latest figures come as the retail power industry tries to limit the reach of new state consumer protections in a law that took effect Nov. 1, in response to an initial Bangor Daily News investigation of retail supplier pricing.

That investigation found retail electricity sellers often used low introductory rates to entice customers into contracts. In many cases, they would automatically renew those customers later into above-market rates and could charge a fee for customers to exit those deals.

[How electricity providers siphoned more than $20M from Maine customers]

Numerous customers told the Bangor Daily News they felt the companies took advantage of them, in reports that also prompted a pending class-action lawsuit against Maine’s largest retail supplier, Electricity Maine.

Among other things, the law sets limits on companies automatically re-enrolling customers in new contracts, requiring notices by physical mail and actual approval from customers if the new rate is an increase of 20 percent or more. For customers re-enrolled automatically, without an affirmative response, it prohibits companies from charging a termination fee if the customer wants to exit the plan.

Regulators have shown some interest in additional consumer protections, as well, asking utilities and retail suppliers whether they should further limit the marketing practices of retail suppliers, including contracted sales fleets working on commission.

In a brief filed with regulators Thursday, the Retail Energy Supply Association argued that an outright ban on door-to-door sales may violate constitutional free speech protections.

The industry association urged the Maine Public Utilities Commission “to refrain from adopting broad, sweeping requirements to address specific areas of concern.”

Regulatory staff said they anticipate applying new consumer protections to both residential and small commercial customers, and they floated the idea of requiring competitive sellers to tell customers what the standard going rate is for power at the time of sale.

The industry association has balked at both proposals, saying the moves go beyond the letter of the law. Both Emera Maine and Central Maine Power Co., which the PUC also asked to comment on the new rules, said the new protections should apply to small commercial customers, too.

Electricity Maine dominated the market with early ads promoting savings, but it and other companies continued to shed customers in 2016 as its average price remained around 60 percent higher than the default rate approved by state regulators, according to reports filed annually with the U.S. Energy Information Administration.

As of July, retail suppliers had about 124,000 small customer accounts, down from a peak of about 221,000 in the summer of 2013, according to regulatory records.

For Electricity Maine, that’s meant two years of roughly 18-percent declines in its customer count, with sales dropping about 23 percent last year. While the company charged residential customers above-market rates in 2016, it in January found a way to undercut the standard rate for Maine state government, offering power at 6.1 cents per kilowatt hour for the year.

The competitive electricity market opened in 2000, when the state broke up utility monopolies, requiring companies like Central Maine Power Co. and Emera Maine to sell their power plants.

The change meant companies could begin marketing and selling electricity directly to homeowners, but that market remained relatively untouched until 2012 with the entry of Auburn-based Electricity Maine.

Since then, Electricity Maine has taken in about $57.7 million in above-market revenues, after its former Maine-based owners had promised customers early on never to exceed the state’s standard rate. Its founders sold the company to the Houston-based Spark Energy last year, for $28 million.

The latest data show other competitive suppliers are also struggling to beat the standard rate. The figures from 2016 show that, on average, no supplier offered savings to their customers.

That’s not to say some customers did not save. But, if they did, it was on the back of someone else paying higher rates.

In general, the industry has rejected the idea that its electricity and standard offer power are the same, thereby rejecting straight price comparisons by the Bangor Daily News, Connecticut regulators and others, showing that retail suppliers’ electricity costs more, on average.

They argue such comparisons are not fair because the unregulated electricity market allows companies to offer plans for electricity from entirely renewable sources or with other attributes that might lead to a higher price. But individual companies and the trade group representing retail suppliers have declined to provide information on just how many plans offer such attributes.

A report due out from regulators early next year could provide more insight into those questions.

The consumer protection law also called for the Maine Public Utilities Commission to conduct its own pricing study of retail suppliers, which will likely be more detailed as it relies not on annual reports but information from the companies themselves.

The analysis is due to the Legislature’s Energy, Utilities and Technology Committee by Feb. 15, 2018.

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