Maine electricity cost increases driven by natural gas pricing

Maine's increased electricity costs in the past year were yet again driven by increases in the cost of natural gas, according to the most recent annual report from Maine utility regulators.

The Maine Public Utilities Commission regulates electric, gas, telephone, and water utilities, as part of a regulatory system intended by statute to achieve multiple purposes, including to ensure safe, reasonable and adequate service, to assist in minimizing the cost of energy available to the State’s consumers, to ensure that the rates of public utilities subject to rate regulation are just and reasonable to customers and public utilities and to reduce greenhouse gas emissions to meet the greenhouse gas emissions reduction levels.

The Commission issues various reports, including an annual report to the Legislature presenting an overview of the Commission's work in the prior calendar year. The Commission's most recent annual report, released in February 2023, covers the 2022 calendar year.

According to the 2022 report, wholesale electric energy costs nearly doubled year-over-year, driven by increased natural gas pricing:

Wholesale electricity market costs to Maine consumers for the period December 2021 to November 2022 were $1,067,263,891. This is approximately a 77% increase from the $603,233,815 market costs the year prior. Between the two periods, wholesale energy costs increased 86% and capacity costs increased by 29%. The increased electricity costs were driven by the highest natural gas costs the region has experienced since 2014.

These recent gas-driven price increases continue a trend established in prior years, as the 2021 report shows:

Regional wholesale energy prices in the ISO-NE Real-Time market during the 12-month period ending October 31, 2021 averaged $40.7/MWh, about 71% higher than prices during the prior 12-month period. From December 2020 – February 2021, prices averaged $52/MWh, which is about 73% lower than the prior winter period.

According to the 2021 report, with respect to supply rates, "The increases reflect prevailing energy market conditions, including those in the regional electric power market in which prices are strongly influenced by natural gas." The report documents increases in other energy products: between October 2020 and October 2021, natural gas prices increased by 94.8%, and heating oil prices increased by 121.7%; by comparison, between November 2020 and November 2021, wholesale electricity prices increased by 126.3%.

The Maine PUC's findings align with recent reports from regional grid operator ISO New England Inc., which concluded that increased energy costs in New England throughout 2021 and 2022 were driven by high natural gas prices.