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How new electric rates for Mainers using heat pumps or electric vehicles will work

Cobalt is an important component of lithium ion batteries, like those in many electric vehicles
Keith Srakocic
Cobalt is an important component of lithium ion batteries, like those in many electric vehicles

The Maine Public Utilities Commission recently announced plans for a series of new electric rates for those who use electric vehicles, heat pumps or battery storage.

The plan for these new alternative rates drew some criticism from Maine Republican lawmakers earlier this week. But state officials say these new rates will not result in any additional costs for other ratepayers.

One new rate option would encourage businesses and residential customers to charge an electric vehicle overnight, when the demand for electricity is usually less.

Another is designed to appeal to households that use more electricity than the average residential customer.

The new rate schemes are optional. Maine households and businesses can opt in if they want to participate.

"We really are not trying to impose something," said Phil Bartlett, chairman of the Maine PUC. "We are trying to give people an option in a way that can help them to sort of rebalance their bills based on new usage patterns."

Deliberations over these new rates stemmed from state legislation passed last year, which encouraged the commission to design new utility rates that account for battery storage and other electrification policies.

"It's really about trying to make sure that everybody is contributing fairly to the costs of the grid, while not unnecessarily discouraging beneficial policies," Bartlett said.

Versant Power has offered a residential heat pump rate for several years, the company said. But now CMP will offer a similar scheme, which could appeal to Maine households that use a heat pump or charge an electric vehicle at home.

This new rate would only change the transmission and delivery rate for customers who opt in. Delivery rates are split into two parts — a fixed monthly service fee and another fee that accounts for how much electricity a household consumes each month.

Under the new rates approved by the PUC, a household will pay a higher monthly service fee, but a lower fee for each kilowatt hour consumed.

"It simply is a different way to break down the price that they pay, so simply rebalancing the portion of their bill that comes from their monthly service charge, and the portion that comes from their per-kilowatt hour charge," said Michael Stoddard, executive director of the Efficiency Maine Trust.

The new fee structure is a more accurate reflection of the costs that a heat pump user, for example, imposes on the grid, he said.

According to Efficiency Maine, the average Maine home uses 6,620 kilowatt hours a year, a figure that utility companies use to determine how much it'll cost to deliver electricity to their customers on annual basis.

But Mainers who use a heat pump consume more electricity than the average household; total average kilowatt hours range from roughly 10,000 to nearly 17,000 depending on the number of heat pumps used in a home.

The utilities are essentially collecting more from heat pump consumers, above and beyond what the companies have determined it costs to maintain and operate the grid.

For example, a CMP customer who uses one heat pump to supplement an existing oil furnace, consumes about 9,612 kilowatt hours a year at a cost of $955, according to estimates from Efficiency Maine.

Now under the newly approved alternative rates, this same customer would pay $897 and save $58 a year.

A customer that uses heat pumps to heat and cool an entire home uses 16,989 kilowatt hours a year at a cost of $1,604 under the current rate, but would save $309 dollars annually on their CMP bill.

A note, these figures from Efficiency Maine do not include the standard offer, or supply fee. This new rate option only applies to the delivery portion of a household electric bill. There are typically two parts to every bill — one covers the cost of transmitting and delivering electricity, while the other part covers the cost of supplying the energy.

Officials for both the Governor's Energy Office and Efficiency Maine say these new rates will not result in any additional costs for other ratepayers.

Bartlett said the commission will regularly reevaluate these new rate schemes. The utilities will be required to report on how the rates are being used and how they're impacting customers.

"This is sort of a first step in reevaluating how rates are structured, given that we're using the system very, very differently," Bartlett said.

Efficiency Maine has a tool on its website, where Versant customers can plug in their electricity usage and see how their monthly and annual bills could change under this rate option. A

The agency has plans to build a similar calculator for the new CMP rate options as well, Stoddard said.

Updated: October 17, 2022 at 4:28 PM EDT
This post was updated to clarify that Versant Power has offered a heat pump rate for residential customers for several years. The Maine Public Utilities Commission has approved that Versant rate scheme, as well as a similar one from CMP.