Solar panels in Damariscotta, Maine. (Evan Houk/ Maine Morning Star)

Maine residential and business utility customers will start to see increases in their energy bills Monday. The reasons behind the hike are multifaceted but the short-term jump is part of a long-term plan that policymakers hope will reduce and stabilize energy costs as Maine transitions to clean energy. 

The Public Utilities Commission approved the rate changes because of continued adjustments required under a 2019 expansion of what is called net energy billing. The policy aims to increase solar power in Maine by requiring utility companies to buy solar-generated electricity, resulting in so-called stranded costs, which are the costs that community solar projects pass on to non-subscribers through their electricity bills.

The increases — which will average roughly $5 to $15 a month —  are also due, in part, to reimbursements for utilities for time spent restoring power during the multiple significant storms this winter. 

Legislative Republicans blame Democrats for the price hikes, saying the law passed by the Democratic majority gives utilities and the PUC no choice but to have ratepayers pick up the tab for the energy transition. Meanwhile, Democrats argue the surcharges the PUC approved could be lower, based on a recent study of the program benefits and adjustments the Legislature made to the program that they say have yet to be fully implemented.

On Thursday, the PUC opened a docket to examine the way it recovers the benefit side of the equation, meaning future decisions could result in decreased rates.  

Overall, climate justice advocates argue that rolling back clean energy gains would not shield Mainers from high rates, noting that the recent jumps are also attributed to the volatility of natural gas prices and that the transition away from fossil fuels will result in stability long-term. Though, they are urging the state to continue to find ways to alleviate the burden of energy costs on ratepayers in the interim. 

What is net energy billing?

Net energy billing had been around for decades before the 2019 policy change but on a much smaller scale. 

For example, someone with a small hydroelectric dam on their property could sell excess electricity to Central Maine Power or Versant, the two primary utilities in Maine, and that was considered net energy billing. 

The 2019 policy changed the landscape in several ways. 

For one, it meant these projects didn’t have to be what is called “behind the meter,” meaning they didn’t have to be on the customer’s land, explained Maine Public Advocate Bill Harwood, whose role is to represent Maine utility consumers. 

“You could have a net energy billing solar project 100 miles from your home or business and claim it as if it was in your backyard,” Harwood explained.

The policy change also allowed utility customers to participate in solar farms up to 5 megawatts in size, incentivizing utility scale projects on acres and acres of land as opposed to solar panels on someone’s personal home.  

(While solar projects are the most common participants in this program, hydro power is also part of the mix, according to the reports utilities file monthly with the PUC.) 

Up from 62 megawatts in 2019, Maine now has 977 megawatts of solar energy installed, with more in the pipeline, though some of those projects may not ultimately come to fruition given challenges with connecting to the grid. 

Interconnection has become a key focus for Matt Cannon, state conservation and energy director for the Sierra Club, who said there hasn’t been a clear path for getting solar online, in part because of disagreements over who is on the hook to pay.  

“It’s one thing to get them built,” Cannon said. “But, how do we get them online? That’s a national issue, and utilities are partly responsible.”

In Maine, Central Maine Power agreed to faster, cheaper hookups after Gov. Janet Mills called for an investigation into why the utility had belatedly told solar farm developers that their projects were causing voltage problems that could cost millions of dollars to fix. 

Even with the difficult interconnection environment, a cost and benefit analysis commissioned by the PUC released in April found that the economic benefits of net energy billing solar outweigh the costs of the program. Specifically, the analysis found that for every dollar spent on the program, ratepayers received $1.29 in benefits.

It is both: this program is providing benefits and there is so much more that needs to be done.

– Lucy Hochschartner, climate and clean enery director at Maine Conservation Voters

Behind the rate changes

Still, ratepayers will see increases in their electric bills starting July 1, in part due to the net energy billing policy, however there is also more at play.

Stranded costs need to be reconciled by the PUC each year based on how much solar power is actually generated. 

According to the Office of the Public Advocate, net energy billing will cost ratepayers $220 million a year by 2025. After the upcoming increase, the state will be roughly 60% of the way there. 

However, stranded costs include more than costs related to net energy billing, said Rebecca Schultz, senior advocate for climate and clean energy at the Natural Resources Council of Maine. 

“There’s so much misinformation out there where we’re lumping together and misinterpreting the cost of this program,” Schultz said. 

For the more than 636,000 electricity customers in central and southern Maine served by Central Maine Power, the short-term increase is mostly due to storm damage reimbursement. 

According to data provided by the Maine Public Utilities Commission, the average CMP bill will increase $15.56 per month, assuming use of 550 kilowatt hours per month. Of this total, $10.29 is attributed to storm damage reimbursement and $5.10 is attributed to public policy, including solar subsidies but also impacts from other long-term contracts for renewable power.

Versant customers — about 165,000 people mainly in the northern and eastern parts of the state — will not see much added to their bill due to storm reimbursements. Those customers are expected to see an average monthly increase of $6.99, with $0.36 for storm reimbursement and $5.61 from public policy costs. 

Conversely, Versant’s Bangor Hydro Power customers — including Hancock, Piscataquis and Washington counties and most of Penobscot County — are expected to see decreases in their electric bills because of the timing of solar projects. 

Lucy Hochschartner, climate and clean energy director at Maine Conservation Voters, explained that the cost increases should be considered relative to what the same future would be under natural gas and without net energy billing. 

“This current rate hike we’re seeing is going to be difficult for people who already cannot afford their utility bill, and this rate hike is not taking into account the benefits of the solar program that you’re seeing elsewhere in your bill,” Hochschartner said. “So, if we didn’t have solar, we would potentially be seeing even higher bills.”

That perspective does not negate the fact that many Mainers are concerned about being able to pay their bills, Hochschartner said. 

“We have a situation here in Maine that low income ratepayers are being squeezed,” Hochschartner said. “They pay a much higher percentage of their household income on electricity costs than I do, and that is a problem that we need to solve. So it is both: this program is providing benefits and there is so much more that needs to be done.” 

The politics of the policy

Maine Republicans blamed Democrats who backed  the solar program for the rate increases during a press conference in late June.

“Your bill is going to go up and when it does, if you are represented by a Democrat in the Legislature send them a thank you note,” said Senate Republican Minority Leader Trey Stewart (R-Aroostook). “It is their fault. It is their fault. They should be held accountable.” 

Stewart, who is seeking re-election this fall, also blamed solar developers, who he said are profiting on the backs of Maine people.

This year, Republicans made several ultimately unsuccessful attempts to scale back or eliminate net energy billing, after opposing adjustments to the program a year prior. 

Last year, the Legislature’s Democratic majority amended the program in an attempt to mitigate some of the adverse effects by limiting eligibility for the subsidies, directing the state to seek out federal funding for incentives and requiring annual reporting on the costs and benefits of the policy. 

The sponsor of that proposal, Sen. Mark Lawrence (D-York), who chairs the Legislature’s Energy, Utilities, and Technology and is also running for re-election, said the high energy prices stem from former Gov. Paul LePage rejecting proposals to move the state away from carbon-based fuels sooner. 

While Maine’s reliance on heating fuels has decreased in recent years, the state remains the most heating fuel-dependent in the country. This reliance became particularly evident at the start of Russia’s war in Ukraine, Lawrence said, pointing to New England oil prices reaching record highs.

“The Republican argument is that other customers shouldn’t be subsidizing people who are buying clean energy, or signing up for clean energy,” Lawrence said. “But we want to encourage people to sign up for clean energy and we want to promote it and that’s why we have that benefit going to them.”

Lawrence said the price hikes in the short-term were expected but that the program is still on track to yield savings for consumers in the long run and prevent price fluctuations by converting to energy sources, like solar or wind, with a fixed fuel component. 

“But the cost of converting from carbon-based producers to non-carbon-based producers, there is always an expense in that and we have to figure out how to justly pay for that,” Lawrence said. 

Views on the policy do not fall squarely on partisan lines, as evidenced by mixed support from Harwood, who was appointed by the Democratic governor. 

“The program has been a smashing success,” Harwood said, referring to solar developers coming to Maine in droves. However, he cautioned, “we’ve ignored the cost of the solar in our haste to get more solar energy quickly.”

People can debate who should pick up the tab: ratepayers, taxpayers, utilities themselves — though Harwood noted that the latter is far fetched. Harwood argues Maine can see the same benefits, but at a cheaper price. State law obligates Maine’s utilities to pay 20 cents per kilowatt-hour for solar energy, even though it costs less than 10 cents to generate, according to an analysis by his office.

Beyond net energy billing

Just as net energy billing is one part of the price increases, it is also only one part in transitioning Maine to clean energy, lawmakers and climate advocates say.

Harwood pointed to other ways the state can focus efforts to incentivize solar, such as through competitive bidding the Legislature has already authorized the PUC to engage in. 

And while the state expands clean energy, Hochschartner with Maine Conservation Voters said it should be looking at ways to relieve Mainers of high energy costs, such as through increased funding for ratepayer relief.

“The thing with these emerging industries is that we’re growing and changing and learning as we need to to meet our clean energy goals,” Hochschartner said.

Schultz from the Natural Resources Council of Maine also thinks revisiting planning standards for battery storage and microgrid policy could be ways to make solar more accessible for residential ratepayers and businesses alike. 

Federal funding is already headed to Maine to expand solar to low-income households, reduce energy costs and create more jobs. This $62 million is expected to go toward incentives for rooftop solar storage and technical assistance for cooperatively owned solar operations.

“We have this incredible opportunity now to use these resources to create a program that will outlive the initial funds and drive the benefits of solar straight to reducing electricity bills,” Shultz said.

The clean energy transition is dependent on more than solar. Lawrence, the senator from York, also pointed to recent state investments in the creation of wind power.

However, Shultz added, the state and country cannot expect to transform the fossil fuel underpinnings of the economy without investing in market transformation. 

“The story of the clean energy transition is one of upfront energy costs to reduce overall costs significantly over the long run,” Schultz said.

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