Maine utility regulators have been warning of a big increase in electricity prices this winter. The problem is that the northeast is heavily reliant on natural gas for electric power generation. With limited pipeline capacity, the region’s growing demand for gas can’t be met.
Natural gas is the largest source of electricity generation in Maine, followed by renewables (mostly biomass, but also wind) and hydroelectric. Maine had the lowest average electricity retail prices in New England at the end of 2013, according to the Energy Information Administration. Energy costs in New England are well above the national average, largely because the region has no indigenous energy sources, such as coal or gas, or large public hydroelectric projects.
Maine also is unusual because residents remain highly dependent on heating oil. Last year, 64 percent of Maine households used oil to heat their homes, compared with 5.5 percent nationally. With dropping crude oil prices, heating oil prices also have declined, with the national average about $1 per gallon less than it was at its peak in February.
Still, natural gas is a more economical and environmentally friendly alternative, so homeowners, businesses, schools and others continue to switch their heating systems from oil to gas.
But this further increases demand for natural gas. And since heating customers generally have priority for the gas supply in winter, gas-powered electric plants have to pay more for the region’s limited natural gas supply.
Hence, rising electricity prices will soon hit consumers. Regulators warn the cost of electricity itself — not the distribution costs — could double. Beyond the winter spike, the Maine Public Utilities Commission will soon set standard offer — how the vast majority of Mainers buy their electricity — rates for the next two years. Because of the constrained natural gas supply, the rates will be higher than they are now.
The PUC, with a push from Gov. Paul LePage, is considering a plan to further raise electricity rates to use the money to buy pipeline capacity to increase the amount of natural gas that comes to Maine in hopes of ultimately lowering electricity prices.
But in the short run, Maine and New England aren’t going to diversify their energy mix — or substantially increase pipeline capacity — so the focus must be on conservation.
The Efficiency Maine Trust, which oversees the state’s work to improve energy efficiency, says it invested more than $36 million in energy efficiency over the last fiscal year, according to the trust’s annual report, released last month. That will result in nearly $265 million in avoided energy costs over the lifetime of the changed undertaken, such as installing more efficient machinery and lighting.
The number of businesses undertaking energy efficiency projects has doubled since last year. Interest has not been as great at the residential level. But, rising prices are likely to spur more activity. Efficiency Maine offers financial support for work such as adding insulation to homes, installing pellet boilers and buying more energy-efficient appliances.
The simplest way to reduce energy use and cost is through more efficient lighting, which also is in increased demand during the winter. Replacing traditional incandescent bulbs with compact fluorescent bulbs or the newer LED lights can save money and electricity. Replacing just one 100-watt incandescent bulb with a fluorescent can save more than $16 in one year.
On high electricity use days, efficiency measures reduce Maine’s electricity usage by 3 percent. This won’t solve Maine’s energy woes, but it is a part of the solution that’s readily available to us.