New electricity price rates could mean significant savings for Mainers who use heat pumps during the winter, or drive electric vehicles. Press Herald file photo

If you’re a Central Maine Power customer whose home is warmed with a heat pump, you may be able to have electricity delivered starting in January for next to nothing. You could potentially save hundreds of dollars a year, compared with the delivery rate you’re charged now.

But there’s a catch. You’ll only save money if you consume lots of electricity in the winter and much less in the summer. If you run your heat pump frequently for air conditioning in the summer, then this new deal, called the Seasonal Heat Pump rate, isn’t for you.

Perhaps you have an electric vehicle or a heat pump water heater. If so, you’re using a lot more power year-round than most households. It’s possible that another choice, called the Electric Technology rate, could be a better fit and save you the most money.

Starting next month and ramping up later in 2023, many Maine electric customers will be able to pick from a range of new options for what they pay for delivery rates. These new rates create incentives to use heat pumps, buy electric vehicles or install storage batteries, rewarding you for running and charging these devices with special rates that are less expensive than the common delivery rates.

Change is coming because Maine is about to enter a new era of electric rate design, the framework that utilities use to set prices for their services. It’s being driven by recent laws aimed at fighting climate change. These laws nudge residents away from fossil fuels for heat and transportation in favor of electric technologies that ultimately can be powered by renewable energy and deployed when they are most beneficial to the distribution grid.

These rate design changes expand on special charges that have been available for years, but not widely embraced in Maine, such as those that differ depending on the hour of the day. That program, known as time-of-use, also is undergoing an overhaul.

Because rate design is complicated, utilities expect some customer confusion. Some policymakers also are skeptical that the changes will work as planned and lower overall energy rates. That said, larger trends are poised to create a high level of interest.

More than 110,000 heat pumps have been installed in Maine in recent years, according to Efficiency Maine, which manages a state rebate program for them. New federal rebates and tax credits included in the Inflation Reduction Act are expected to be available later next year. Maine is in line to get millions of dollars to help people pay for heat pumps, water heaters, upgrade their electric panels and related expenses.

At the same time, 8,500 electric vehicles are registered in Maine. The number is expected to grow quickly as manufacturers bring new models to market over the next two years and more federal subsidies become available.

As these new rates kick in, there are some important things all customers should know.

Steve Kahl, a professor at Thomas College, is shown last January adjusting one of two heat pumps he installed at his energy-efficient house in Waterville. Rich Abrahamson/Morning Sentinel

First, these new rates are completely optional. If you’re content with the familiar delivery rate, there’s nothing you need to do.

Second, the new CMP rates are two-year pilot programs approved recently by the Public Utilities Commission. The heat pump program is capped at the first 5,000 customers who enroll and affirm that they have at least one heat pump installed. The technology rate has no participation limit.

Versant Power, which serves eastern and northern Maine, also has an updated set of rates for heat pumps and heat pump water heaters. The company plans to roll out more rates for electric vehicles and battery storage in April.

Third, these new rates are designed to be revenue-neutral. That means all customers should pay the same proportion of utility expenses, so cheaper rates aren’t being subsidized by people who don’t have heat pumps or electric cars.

Lastly, these new delivery rates have nothing to do with electricity supply rates, such as the state-run standard offer. Supply rates are the other half of your total monthly bill. They reflect the cost of generating power and are set to rise sharply again in 2023. The companies providing that power next year are subsidiaries of New Brunswick Power and NextEra Energy.

CMP and Versant only deliver electricity; they don’t generate it. But both companies also are asking the PUC for increases in their delivery rates, cases that will play out next year.

Are the new delivery rates right for you? How do you decide?

Both Versant and CMP plan to promote the options on social media and through their websites. CMP also is designing an online calculator, so customers can plug in their specific power use information and consider what might work best.

DO THE MATH

“It’s important not to just look at your average usage, but your pattern of usage,” said Linda Ball, CMP’s vice president for customer service.

Ball suggests that customers check their average use per day, which is displayed on the first page of their bill, and multiply by 30 to get a rough monthly usage. But they also should consider if that usage varies a lot by season, and by how much.

Here are three examples, which assume using more power in the winter and less in the summer.

Start by taking the typical delivery rate that the vast majority of CMP households have, known as Rate A. It’s 8.6 cents per kilowatt-hour, with the first 50 kWh included in the service charge.

•  Using 550 kWh a month in the summer and 1,000 kWh a month in the winter, a customer would pay $915 a year on Rate A, $868 a year on the technology rate and $926 a year on the seasonal heat pump rate. In this case, it’s better to stick with Rate A. CMP is preparing an online calculator, so customers won’t have to know all the assumptions. But the above example includes: The $13.66 service charge for the first 50 kWh, paid over 12 months ($163.92); 55o kWh for six months at 8.6 cents/kWh ($259.26); and 950 kWh for six months ($492.59). That adds up to $915 a year.

•  Using 550 kWh in the summer months but consuming 1,500 kWh in the winter, Rate A is $1,175 a year, the technology rate is $1,025 and the heat pump rate is $938. In this case, either the technology or heat pump rates are better deals.

•  Using 550 kWh a month in the summer but going to 2,000 kWh in the winter, Rate A rises to $1,434 a year. The technology rate is $1,183 a year, and the heat pump rate is $950. In this case, using 500 kWh more in each of the winter months only pushed up the yearly cost of the heat pump rate an additional $12, making it the best choice for those who use a lot of power in the winter, but little in the summer. “When you use more in the winter,” Ball said, “Rate A is no longer the best deal.”

The calculus for the Electric Technology rate is different. Like the heat pump rate, it has a higher monthly delivery charge than Rate A – $31.67 versus $13.66. But the kilowatt-hour charge is lower than Rate A – 5.3 cents versus 8.6 cents. And the technology rate stays the same year-round, instead of spiking with the heating season.

That might make the technology rate a less risky choice for many households, according to Michael Stoddard, executive director at Efficiency Maine, even those with heat pumps. He’s concerned that some people with heat pumps will underestimate their summer usage and end up paying a premium to be cool.

“People don’t always have a clear sense of what their seasonal usage will be,” Stoddard said. “You need to be realistic and see if you’re going to use a lot of air conditioning in the summer.”

UPDATING RATES

Versant has had a special household heat pump rate for years, but will be expanding the program in both its Bangor Hydro and Maine Public districts. To qualify, 50% of a customer’s electric use must be attributed to heat pumps or heat pump water heaters. As with CMP, rates are higher during the summer and lower from October through April. New rates for electric vehicles and battery storage are expected in April, as well as additional rates after Versant finishes upgrading its smart meters.

“Because these rates are new and updated, we expect that our customers will have questions,” said Shelby Hartin, a Versant representative. “Our customer service representatives are prepared with information to answer questions customers may have about our new and updated rates for heat pumps, heat pump hot water heaters and electric vehicles.”

A new time-of-use rate also is available for customers who charge electric vehicles or have battery storage units. Time-of-use rates reward customers for charging when demand on the electric grid is lower, typically overnight. It’s available now in the Bangor Hydro district, and will extend to northern Maine after a meter replacement project wraps up.

Both the CMP and Versant rates were products of negotiated settlements at the PUC. They received input from a wide range of interests, including the Office of Public Advocate, the Governor’s Energy Office, environmental advocates and the Industrial Energy Consumer Group, which represents mills and factories.

At the PUC’s deliberations in late September, the three commissioners said these new rates signaled the start of efforts to support state policies to move heat and transportation to renewable electric sources that residents can afford, the concept called beneficial electrification. Philip Bartlett, the PUC chair, noted that CMP and Versant will file annual reports that document how many customers are participating and the impact the new rates are having. He urged the parties to keep fine-tuning the programs.

“This is an important first step in updating and improving rate design,” Bartlett said.

This story has been updated to reflect corrected rate and cost calculations provided by Central Maine Power.