The Maine Public Utilities Commission (PUC) has announced that it will be splitting up the purchase of the state’s electricity amidst pricing uncertainty.
Typically, the PUC chooses an electrical supplier through a competitive bidding process once a year to provide a fixed “standard offer” price for power throughout the year.
This year, however, the state will be purchasing half the upcoming year’s supply this month and then buying the remainder of what is projected to be needed next year at some point this fall.
“There’s a concern that by going and procuring the entire thing all at once, you could potentially just end up on a bad day with higher prices or you could, just by procuring so much, actually end up influencing the market,” said PUC chair Phil Bartlett, according to reporting from Maine Public.
Bartlett cited the ongoing war in Iran as a potential catalyst for price volatility that could result in higher costs later this year when the state typically procures its power contract.
“We have seen considerable price volatility related to the war in Iran which has a significant impact in New England because of the fact that we rely on [liquefied natural gas],” Bartlett said.
“It’s very difficult to know whether the war in Iran will be over or the Strait of Hormuz will be open between now and November,” Bartlett said in deliberations about the plan last week, according to the Portland Press Herald. “In my view, we’re well-served by providing some limited hedge.”
The cost of electricity in Maine is closely tied to the price of liquefied natural gas because New England’s power grid relies heavily on gas power plants.
Ultimately, the PUC agreed to select a provider responsible for 20 percent of the annual electric load for CMP and Versant’s Bangor-area district, known as the Bangor Hydro District, as well as 40 percent of the load for Versant’s public district in northern Maine.
Next year’s electricity prices will be released after the rest of the PUC’s purchasing is completed in the fall.
