BANGOR (AP) – Maine households will pay an average of $10 more per month for electricity as a result of higher standard offer rates approved Tuesday by the Maine Public Utilities Commission.

The standard offer will increase from roughly 5 cents per kilowatt hour to about 7 cents for customers of Central Maine Power Co. and Bangor Hydro-Electric Co. effective March 1, according to PUC Commissioner Tom Welch.

The new rate will result in a 17 percent increase, from 11.7 cents per kilowatt hour to 13.7 cents, for Central Maine Power customers, and a 14 percent increase, from 14.8 cents to 16.9 cents, for Bangor Hydro customers.

The standard offer is the default rate consumers pay in the absence of buying electricity from a power supplier. When Maine’s electric utility market was deregulated five years ago, regulators anticipated strong competition from generators eager to sell power to homes and businesses. But that competition never materialized because many power suppliers believed they couldn’t sell enough electricity in Maine to justify the cost of coming.

Deregulation forced CMP and Bangor Hydro to sell their generating systems but remain in business as regulated transmission and distribution companies. Bills listed separate rates for electricity, transmission, and distribution costs.

Some of the nearly $1.3 billion gained by Bangor Hydro and CMP from the sale of the generators has been – and continues to be – passed on to consumers through lower transmission rates. But the anticipation of power suppliers wooing customers just like telephone companies fizzled quickly.

Less than 1 percent of Bangor Hydro and CMP’s combined 577,000 residential consumers rely on any source other than the standard offer provider for their electricity supply.

The comparison between a restructured and nonrestructured marketplace is hard to make, state public advocate Stephen Ward said. Most of the electricity sold in Maine is produced by generators that use at least some natural gas, which has doubled in price in recent years.

If Bangor Hydro and CMP still were power generators, they could have gone to the PUC at any time and asked for price increases to cover the cost of skyrocketing natural gas rates, Ward said.

Mainers have been protected from rising electricity rates because in December 2001 the PUC locked in a three-year standard-offer rate. Residential users in Bangor Hydro’s service territory have been paying 5 cents per kilowatt-hour for standard offer, while homeowners in CMP’s territory have been paying 4.95 cents.

But changes in the energy market have resulted in higher production cost for electricity suppliers.

“The energy markets, generally natural gas, oil in particular, coal as well actually, have risen pretty substantially in the last year or so,” Welch said. “But if you adjust it for inflation, the new price is still below the price before deregulation.”

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