Central Maine Power Co. wants customers that generate some of their own electricity from renewable sources to pay higher monthly service charges, but the idea is being challenged as an attack on Maine’s renewable-energy industry.
CMP says its plan would help cover the overall cost of service while keeping such customers on the grid even if they don’t need power all the time. Advocates of solar and wind power say the so-called standby charge would kill the economics of investing in renewable generation and run counter to the state’s policy of encouraging renewable energy development.
The charges would have “a devastating impact” on colleges that are committed to promoting sustainability, said Laurie Lachance, president of Thomas College in Waterville.
In 2012, the college had a 12,600-square-foot solar-electric array installed on its athletic center. The system is designed to supply 11 percent of the school’s electricity. CMP’s proposal would add $38,000 to the college’s bill over five years, a 56 percent increase, Lachance said.
The debate is part of a rate case before the Maine Public Utilities Commission. The case centers on how much CMP can collect in a five-year rate plan through 2019 to cover the cost of distributing electricity, and how that cost will be divided among various types of customers.
The PUC will hold public hearings in the case at 7 p.m. April 2 at the commission’s headquarters in Hallowell and at 7 p.m. April 3 at the University of Southern Maine in Portland. CMP and parties to the case have filed thousands of pages of testimony.
The testimony is now the focus of closed-door meetings in which the parties will try to settle key points and reach an agreement on a rate plan. Since 1995, every five-year rate plan approved by the three-member PUC has been based on agreements reached in such settlement talks.
PAYING FOR DISTRIBUTION SERVICE
For many years, CMP customers have paid for service based on the amount of electricity they use. But overall consumption is falling, as homes and businesses become more efficient and growing numbers of users generate some of their own power with solar panels and small wind turbines.
About 1,000 of CMP’s customers have installed renewable power units, such as solar arrays or wind turbines. The customers range from homeowners to large institutions, including several of Maine’s private colleges.
When those customers are generating power from their own energy sources, they’re not buying it from another supplier, thereby reducing CMP’s revenue. CMP wants to charge those customers a special rate to reflect the fact that even though they aren’t buying power all the time, they expect CMP to provide them with reliable distribution service.
It’s an issue in other states, too, as power companies adapt to increasing power generation “behind the meter,” on-site by small-scale producers.
“They aren’t reducing their dependence on us,” said CMP spokesman John Carroll. “They’re just reducing their dependence on grid-supplied electricity.”
That position has struck a nerve with a wide range of customers, including companies that sell and install wind and solar equipment, colleges that have invested in solar, wind and biomass power on their campuses, and ski areas that buy renewable power.
CMP’s proposal is discriminatory and would stunt the growth of renewable power by increasing the time it takes to repay the investment in solar-electric panels, said Fortunat Mueller, co-founder of ReVision Energy in Portland, which installed Thomas College’s solar-electric array. Every customer in each rate class should pay the same basic charge for service, he said.
CMP’s plan is especially galling, Mueller said, because solar customers, on average, use less energy during periods when the power grid is under the most stress and wholesale prices are high. The classic example is a sunny summer day, when air conditioners are running. That’s when solar panels feed excess electricity to the grid, reducing the need for new, expensive transmission lines.
Lachance, who filed written testimony with the PUC on behalf of the Maine Independent Colleges Association, said Thomas College uses the most electricity on a cold winter afternoon, not in the summer.
“CMP’s proposal to impose a standby charge based upon a customer’s individual peak bears no significant relationship to the likelihood of contribution to the summer peak,” she wrote. “Although, perhaps obviously, many customers have significant usage at the time of system peak, many do not. The winter peaking nature of our usage is a clear example of a customer situation that rebuts CMP’s basic assumption.”
SLOWLY RISING CHARGES PROPOSED
Since 1995, CMP has operated under five-year alternative rate plans. The PUC sets annual performance targets such as service quality, responsiveness and the duration of power outages. CMP is rewarded with a certain level of revenue when it performs well, and can be penalized for falling short. In recent years, CMP has met or exceeded its targets.
CMP also has kept distribution charges relatively flat over the past decade. But when the current rate plan was being developed in 2007, officials assumed electricity sales and demand would grow over the next five years. The deep recession, warmer winters and other factors ruined those projections. Instead, sales were below expectations and the number of customers hardly grew.
To make a profit in line with investor-owned utilities, CMP wants to add $1.03 a month in the first year of the plan to the distribution share of an average home customer’s bill of $74.51. The numbers would rise each year, adding a total of $7 a month in 2018. That proposal is unrelated to the standby charge for customers that generate electricity.
The increase would be for only the distribution portion of the bill. Energy costs, which are tied to the wholesale price of natural gas, and transmission costs make up roughly two-thirds of a typical residential bill.
The increase would fund CMP’s cost of complying with performance targets, such as limiting the duration and frequency of power outages, and cover capital spending such as replacing poles, and maintenance such as trimming trees. Those are typical points of contention in a rate case.
It’s unknown whether the parties in the settlement talks will compromise on the standby charge, which would roughly double the basic monthly charge for self-generators by 2019.
Eric Bryant, who is involved with the case as a senior counsel in the Maine Public Advocate’s Office, said the parties can’t publicly speculate on the confidential talks, but his agency opposes the charge.
“At this point, we don’t like the standby charge,” he said. “But at some time in the future, there may be so many customers that own generators that it will make a difference.”