Maine’s solar policies drive another big electric rate increase

Maine regulators approved another big hike to electricity bills Tuesday for customers of the state’s major utilities, driven by solar subsidies that have been criticized by the state’s ratepayer advocate in recent weeks.

The Maine Public Utilities Commission said the $135.7 million in new increases it approved from July 1 through mid-2024 cover so-called stranded costs, which are the impacts of long-term contracts for renewable power and net energy billing programs on Central Maine Power and Versant Power.

The increases come on the heels of both companies getting approval to raise distribution rates in stages starting on July 1. The new stranded rates result from residential and community solar projects with above-market costs. Public Advocate William Harwood said in April that those policies will cost $220 million by 2025, prompting criticism from the solar industry.

The new rates including the stranded costs will also be effective July 1. CMP customers will see an increase of about 5.8 percent, or $5.95 on average, to their monthly electric bill, the commission said. Added to a credit they have been receiving and that will end on July 1, the total increase will come to $8.90 monthly.

Versant Bangor Hydro District will see a rise of 9.3 percent, or $8.77 monthly, which when added to the credit customers have been receiving totals $12.97 per month. Versant Maine Public District will increase rates about 6.5 percent, or $5.47 per month, and when added to the current credit totals $7.91.

That amounts to a total of $95 million that CMP can collect from customers from July 1, 2023 through June 30, 2024, according to the utility regulator.

Versant will have a two-step increase on July 1 and Jan. 1. Bangor Hydro District will be able to collect about $26.3 million in July and increase that to $32.6 million in January. The Maine Public District will collect $5.9 million July 1 and increase that to $8.1 million in January.

“As with the recent distribution rate increase, we understand that any increase is not ideal and comes at a time when people are already impacted by inflation,” Maine Public Utilities Commission Chair Philip Bartlett said.

He said it is important to realize that a short-term increase will reduce the state’s dependence on fossil fuels. Community solar projects can help drive down costs over the long term, he said.

The solar policies at issue date back to 2019, when the Democratic-led Legislature and Gov. Janet Mills enacted them to boost the solar industry. It led to a massive boom in solar projects, but the subsidies are tied to global energy prices that have risen during the COVID-19 pandemic.

Lawmakers have passed two rounds of fixes aimed at reining in costs. There is another debate now over rivaling proposals from a leading Democrat who wants to leave the program largely intact and a Republican who wants to give the utilities commission the authority to cull back subsidies.

The solar industry has said cost estimates from Harwood and the utilities are based on inflated predictions of the planned projects that will actually come on line. On Tuesday, the Coalition for Community Solar Access, a regional industry group, said the majority of the hike is based on “erroneous assumptions and unsubstantiated claims.”

Correction: An earlier version of this story used figures for rate increases that the Maine Public Utilities Commission revised on Wednesday.