August 20, 2008

The Reasons Energy Costs Are High in Maine


According to Richard Davies, head of the Maine Public Advocate office, there are three reasons energy prices in Maine are higher than in other regions of the country, even though they are lower than those in other New England states.

Maine has no public power projects, such as the dams owned and operated by the Tennessee Valley Authority, to help reduce power generation costs, Davies said recently. It also has a cold climate, which prompts heavy use of furnaces or stoves that also use electric power to run motors or fans.

The biggest reason, however, is the cost of oil and natural gas, which have gone up steeply in the past three years, Davies said. Maine tends to use electricity generated from these fuels, which are cleaner but more expensive than the coal used to fire power plants in the Midwest and South, he said.

Maine's residential electricity users tend to pay about 15 cents per kilowatt-hour, which includes power and transmission costs, according to Davies. In other regions where electricity is cheaper, residential users pay about 8 to 10 cents per kilowatt-hour, including transmission costs.

The national average cost of electricity for residential customers in March was 10.5 cents per kilowatt-hour, according to the Energy Information Administration.

"That is up fairly substantially to what it was three or four years ago," Davies said. "That [couple of cents] difference can be a big factor."

A typical residential user consumes roughly 500 kilowatt- hours a month, he said, which for Mainers would translate to a bill of about $75 a month. Residents of offshore Maine islands who get their power from local electric co-ops, which have rates of about 30 cents per kilowatt-hour, typically pay about $150 a month, island officials have said.

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