Dive Brief:

• Maine Gov. Janet Mills last week directed her energy office to intervene at the state’s Public Utilities Commission and oppose Versant Power’s request for a 31.5% increase to its distribution rates. The utility said the nearly $33.5 million increase to annual revenues is necessary to replace its metering system and to build a new substation, among other system improvements.
• The electricity grid needs to be strengthened “but the timing must be balanced against costs now facing Maine people and businesses today,” Mills said in a statement.
• New England consumers are bracing for higher electricity bills this winter, driven by high prices and international competition for U.S. natural gas. 

Dive Insight:

All signs points to higher electricity bills this winter, in particular for the New England region, where the natural gas system is constrained.

The U.S. Energy Information Administration warned of higher electricity prices nationally in its September Short Term Energy Outlook and said New England wholesale electricity markets could reach more than $100/MWh this year, almost double 2021 prices.

Versant Power, in a statement, said it understands no one wants to see higher bills, but the utility “has a responsibility to deliver reliable service.” The utility filed its petition for a rate change on Oct. 3.

“Our request for a distribution rate change is composed of thoughtful investments in our electric system so that we can continue to reduce the number and impact of outages, protect the grid from increasingly severe storms, and provide the level of service our customers deserve,” the utility said.

The utility proposed increasing rates as of summer 2023 and said that for an average residential customer using 500 kWh per month, the increase will add about $10.50 to each monthly bill.

The Maine Governor’s Energy Office also intervened over the summer to oppose a three-year rate increase request by Central Maine Power. Other New England states are also looking for ways to help consumers. New Hampshire regulators are investigating new ways for utilities to purchase power, and in Rhode Island, elected officials have called for rate increases to be spread out or for utilities to absorb additional costs.   

Electric grid upgrades are necessary, Mills said, but the timing of rate increases “must be balanced” against the high costs consumers are currently paying.

Versant’s request comes at a time of already high electricity prices, “driven by global energy market volatility from the Russian invasion of Ukraine and exacerbated by New England’s dependence on natural gas,” the governor said.

New England depends on imported liquefied natural gas for both heating and electricity generation. Consumer advocates say increasing LNG exports from the United States, along with increasing demand for it, are driving prices higher.

In a July letter, governors of the six New England states asked U.S. Secretary of Energy Jennifer Granholm to help ensure the region has adequate LNG supplies this upcoming heating season and beyond.

“While our immediate focus is on this upcoming winter, the ramifications of Russia’s invasion and the realignment of natural gas supplies will have long-term global consequences and could have adverse impacts in New England,” they wrote.

The United States is the world’s largest LNG exporter, according to the EIA. And while global LNG supply growth is expected to slow this year, Bank of America analysts in a Monday research note said the United States “is set to drive supply growth YoY in 2023 thanks to the Freeport LNG restart and the YoY effect of Calcasieu Pass' ramp up this year.”

The continued growth of U.S. LNG exports is concerning to consumer advocates, who say it is driving up the price of natural gas at the expense of domestic consumers while energy companies profit. The impact will vary by region, but for New England the price increases will be “pronounced,” Tyson Slocum, director of Public Citizen’s energy and climate program, said in an email.

“DOE is performing zero analysis of the impact LNG exports are having on exacerbating energy poverty and decreasing energy security for tens of millions of American families,” Slocum said. “Our domestic energy markets simply cannot handle this insane volume of exports.”