The Smart Money: CMP: An economical history

Posted Tuesday, July 8, 2014 in Analysis

The Smart Money: CMP: An economical history

by Gina Hamilton

 Central Maine Power is a corporation that does nothing but deliver electricity now. It used to be a full-service “electric” company, but a number of years ago, owing to a new law, it divested itself of power generation. Even so, it still charges for delivery the same way it used to; that is, you get charged based on the amount of electricity you use.

CMP sends its electricity through major lines, which usually don’t fail but need upgrades every now and then, and through minor ones, which often do fail, especially in storms or high winds or when trees fall on them. Part, though not all, of the reason is that the CMP lines are above ground, rather than buried below ground, but the cost of burying them would be so expensive now that no one would ever be able to afford electricity in such a rural state. When the lines fail, CMP also has a fleet of trucks, and a lot of guys that fill those trucks, and they go out and fix the wires. 

CMP puts a meter on your house that is supposed to give them real-time access to how much electricity you use and when. They were supposed to be more efficient than the old meter they put on your house, and save you scads of money by being able to determine how you were using your electricity and take advantage of “off-peak” electricity rates. They were more efficient for CMP, because now they don’t have to send so many guys around to check your meters.

But for you, here’s the deal. To use the off-peak thing (called Time of Usage in CMP-speak) at all, you have to pay a service charge of $7.67 per month. There is quite a break for people who don’t have appliances that run all day, like hot water heaters and refrigerators and freezers, so it might work well for someone whose water heating is gas or solar and who has a super-efficient refrigerator and perhaps heats with wood. The on-peak cost is about 10.5 cents for delivery, and the off-peak cost is 4.6 cents. On-peak includes the morning hours from about 7 a.m. onward, then again from 4 - 8 p.m., with a “shoulder” period from noon to 4 p.m. that costs 9.11 cents. 

So let’s say your hot water heater isn’t completely impractical to turn on and off, and you get up, take your shower, make your coffee, and turn off your water heater by 7 a.m. You make dead sure all your lights are off and anything that gives a phantom load is unplugged before you leave for work. You leave your refrigerator plugged in, but everything else is completely off.

When you get home, you make dinner on a gas stove, turn on only high efficiency bulbs, and don’t do dishes or vacuum or watch television until 8 p.m. You turn your hot water heater back on, start your dishwasher, wash and dry some clothes, and turn on your laptop. If you live alone, you might be able to do this kind of thing, but the hours are tough for families. And the break you’re getting isn’t that good. Remember, this is only delivery; your actual electricity costs are added to that and those aren’t discounted.

The delivery cost for ignoring all of that is about 7.6 cents per kilowatt-hour and there’s no special monthly charge. For the whole 11 hours a day you aren’t running your hot water heater, that saves you about $0.82, which may or may not be worth the whole rigamarole. After the service charge, that saves you $17.08 per month, if you remember to do all that every work day.

You might well decide you’d be better off using solar hot water, or solar panels to generate some of the electricity you need, or both. And during those hours when you’re not at home, you could offload some of the electricity to the grid.

So many people, in fact, were doing just that, that CMP began to worry about paying for all that stuff — the lines and the trucks and the guys — and decided it might be a good idea to begin to charge a standby fee for people who aren’t buying their share of electricity from the grid if they’re still tied to it.

That seemed like a pox on efficiency, and it was, and it did not go over well, so this week, CMP pulled that plan and put in a plan that would decouple the cost of the delivery from the amount of energy the consumers bought and adopted a formula that would give the utility an incentive to support efficiency.

Of course, we will all pay more. The average increase in our delivery fees are going to be $3 per month, about a 4 percent increase.

The plan goes to deliberation on July 29, but all the intervenors but one who spoke out against the standby fees appear to be on board with this plan. The one who didn’t agree, Environment Northeast, said that the rate design change would increase charges overall for people with below-average usage — that is, people for whom efficiency and conservation are important.

Not covered by the stipulation is the cost of the new large transmission lines that CMP is planning to build. Those costs, and the cost of energy generally, has been on the rise.

CMP had been seeking $41 million in new revenue, but this stipulation cut that to $24 million.

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