AUGUSTA, Maine - State energy officials are warning Maine businesses to get ready for a challenging winter: A predicted surge in demand for natural gas is expected to more than double the price of electricity for the average commercial customer.
State officials are describing a nearly unprecedented regional spike in electricity costs, particularly for mid-sized businesses such as grocery stores and sawmills, which will see the highest monthly price in seven years.
"It's going to go up pretty dramatically," says Maine Public Advocate Tim Schneider. Schneider says the warning applies to those customers who pay the state's so-called "standard offer" rate for electricity prices - meaning they choose not to shop around on the competitive market for better rates. He says a typical customer can expect their monthly electricity bill to increase by about 130 percent over the next three months, to more than $2,000.
Schneider is one of several state energy officials who signed on to a statement this week warning Maine's business community to prepare for high prices as the end of the year approaches. He says the winter spike is a result of the region's increasing reliance on natural gas, which leads to pipeline constraints during the colder months.
"On those cold days in winter, there's not enough natural gas pipeline capacity to feed our electric generation fleet," Schneider says. "It's competing with demands from other uses, including local distribution companies who are using it for their gas supply to heat, and during that period of time we're reliant on other resources which are much more expensive, and it drives electricity prices higher."
And until that problem is solved, observers say a pattern of seasonally-inflated power prices could happen every year - an unwelcome prospect for Maine's industrial energy users.
"This is not good - at all," says Lisa Martin, executive director of the Manufacturers Association of Maine, which represents more than 300 companies. "I mean, they're going to be hit pretty substantially because manufacturers are very high users of electricity in their facilities."
State officials estimate that about half of Maine's commercial energy customers use the standard offer rate, and Martin says the challenge now will be to help those customers find more competitive offers, which could garner them cheaper electricity.
Maine businesses are also being encouraged to counteract the approaching price spike by investing more in energy efficiency measures and using less power.
"One of things that happens when you see high prices of this kind is that things that might not be cost-effective in the lower price become cost-effective, and the paybacks can be shorter," says Tom Welch, the chair of Maine's Public Utilities Commission. "So we absolutely encourage people to use whatever energy they use as efficiently as possible, and as carefully as possible, and that will have an effect on their bills."
And Michael Stoddard of Efficiency Maine, which promotes conservation and offers incentives in the form of rebates, is also messaging the business community.
"Our message to business customers throughout Maine is the same as it's been all year," Stoddard says. And that message is to lower costs by investing in high-efficiency lights and equipment.
Stoddard says between 1,500 and 2,000 businesses generally take advantage of Efficiency Maine programs annually - a figure he can see doubling in the coming year, with higher prices on the way. He says Efficiency Maine customers typically see a reduction in their power use of between 10 and 30 percent.
Furthermore, says Stoddard, by making these investments, businesses are not only helping their own bottom line, "They're also demonstrating good corporate citizenship, and the reason is that, during these winter months when the prices of electricity are going higher, they will be reducing demand on the grid, and by reducing demand at that time, they will actually be pushing down the price of electricity that everyone else is paying."
The oncoming increase in standard offer electricity prices only applies to businesses - for now. Residential customers will know in March just what their new standard offer rate will be for the following year, and state officials are warning them to also expect a substantial increase.