Jim Lynch, co-founder of Maine Commercial Tire, says his Hermon facility uses up to 55,000 kilowatt-hours of electricity per month and that the rising cost of electricity is causing him to increase prices on his retread tires. He says he has lost customers to retread facilities in New Hampshire, which has lower energy costs and no sales tax. Gregory Rec/Staff Photographer

Manufacturers in Maine are pushing back against electricity costs that rose sharply this summer as a result of state policy meant to encourage the use of solar and wind power.

The Public Utilities Commission is again looking into how much of a power bill should be used to incentivize renewable energy projects. Manufacturers, policymakers, utilities and others agree that Maine must add more solar and wind energy to reach targets for reduced greenhouse gas emissions. Disagreements focus on how to apportion the cost.

The recent change in how rates are calculated has particularly angered large consumers of electricity.

Jim Lynch, co-founder of Maine Commercial Tire Inc. – a significant energy user that retreads more than 34,000 truck tires a year – said his electricity bill is up $10,000 a year at his Hermon site, adding to the $15,000 a month he’s already paying for 50,000 to 55,000 kilowatt-hours each month, depending on production.

“That’s $10,000 going out the door, for what?” he said. “I just don’t understand.”

Maine Commercial Tire, which has been in business for 34 years, faces competitors who do business in low-tax states such as New Hampshire, Lynch said. He was one of several business owners who complained to regulators about the steep increase.

Milo Chip, a paper products manufacturer that employs four workers, told the PUC its monthly bill is up by $6,000. That brings the full monthly electric bill to more than $10,000, office manager Isabelle McKenna said, adding the business may be forced to close in the near future. A hardwood and softwood pulp inventory should provide a few weeks of chipping, she said. The company has been in business for 12 years.

“It is so horrible,” she said. “It’s not sustainable.”

HOW WE GOT HERE 

State policy requires utilities to collect ratepayer money as part of the net energy billing program that provides generators with credit for renewable power they produce and send to the electric grid. Ratepayers also help fund Maine’s low-income assistance program and some storm recovery costs.

The PUC decided in April 2023 that Versant Power and Central Maine Power should collect money by charging ratepayers a fixed monthly fee as well as others based on electricity use. The revised rates didn’t kick in until this past July for customers of Versant, which serves northern and eastern Maine.

The retread facility at Maine Commercial Tire uses the bulk of the electricity at the company’s Hermon location says Jim Lynch, co-founder of the tire company. Gregory Rec/Staff Photographer

The fixed rates vary by customer class such as residential, small business, small commercial, medium commercial, large commercial and industrial.

Electricity use varies significantly among customers in the different classes. Each customer in a particular class pays the same fixed charge regardless of how much electricity is used. Other rates are based on how much electricity is used.

Generators of renewable energy also are feeling the impact of sharply higher rates. “I have yet to hear from a member who has benefited from the rate design,” said Eliza Donoghue, executive director of the Maine Renewable Energy Association.

In July, just as some were noticing their bills climb, the PUC launched an investigation into the alternate rate designs and may order changes to “adjust for inequities or to effectuate legislative policy directives. ”

Regulators said an analysis showed that the fixed charge affected some larger rate classes “dramatically.” Low electricity users in some classes are paying much more than if billed only on the volume of electricity used and large users in some classes paying much less.

Several manufacturers met recently with representatives of the Governor’s Energy Office, which said it encouraged businesses to participate in the PUC investigation and will ask regulators to act expeditiously in reviewing the effects of the rate change.

DESIGNING EQUITABLE RATES

Versant Power said rates that took effect July 1 increased bills for 55 of 76 large customers – classified based on electricity consumption, voltage and other factors – and doubled or more than doubled the bills of 11. Billed amounts decreased for the remainder.

Curing chambers, which heat tires for three hours prior to a retread being applied to them, are one of Maine Commercial Tire’s biggest electricity draws, according to Jim Lynch, co-founder of the Hermon company. Gregory Rec/Staff Photographer

Net energy billing rules have vexed state lawmakers and regulators for years. Gov. Janet Mills and the Legislature expanded eligibility in 2019, directing utilities to buy power from solar projects with up to 5 megawatts of capacity at fixed rates. The change led to a significant rise in community solar projects, raising questions about the cost of the subsidy.

Deciding how to pay to promote renewable energy has also led to more PUC cases that make an already complicated issue even more difficult to decipher. The Maine Renewable Energy Association urged regulators to consolidate cases “that can address all of the issues and produce a rate design that is equitable.”

“As these lengthy proceedings have amply demonstrated, inequitable results require even more dockets to achieve a rate design that is equitable and within the PUC’s legislative mandate,” the group said.

Tony Buxton, a Portland lawyer who represents the Industrial Energy Consumer Group that speaks for manufacturers, said the issue is inscrutable to most electricity customers. “A typical ratepayer has no chance of understanding how to follow this,” he said.

And Public Advocate William Harwood called the process “procedurally very messy.”

AN EMERGENCY FOR BUSINESSES

Falling costs for solar panels also undermine the case for sizable ratepayer subsidies for the solar industry, said Patrick Woodcock, president and chief executive officer of the Maine State Chamber of Commerce.

“It makes no sense that we compensate . . . to the extent we are,” said Woodcock, who directed the Maine Energy Office under then-Gov. Paul LePage.

Jim Lynch, co-founder of Maine Commercial Tire, says rising electricity costs are becoming an emergency for businesses. Gregory Rec/Staff Photographer