Maine Electricity Costs Set to Rise Amid Supply Rate Concerns

Residents and small businesses in Maine should prepare for an increase in electricity supply costs starting in January 2026. According to an analysis conducted by Competitive Energy Services, a Portland-based consulting firm, the average electricity supply rate is projected to rise by approximately 15%, resulting in an additional cost of around $8 per month for typical households. This increase comes as nine out of ten Maine homes rely on the state-run standard offer program for their electricity supply.

The anticipated hike in supply rates is distinct from a controversial request by Central Maine Power (CMP) to raise its distribution rates. This proposal, currently under review by the Maine Public Utilities Commission (PUC), aims to upgrade the aging infrastructure of wires, poles, and substations. It has faced significant pushback from consumers already grappling with inflation, leading to a record 617 public comments submitted by early October.

“Affordability is becoming a significant concern for many residents,” noted Andrew Price, president and CEO of Competitive Energy Services. “The reaction to CMP’s proposed distribution increases has been one of outrage. The impending supply hike will likely feel like an additional burden.”

The rising cost of electricity is not limited to Maine; it is part of a broader national trend. According to the Energy Information Administration, consumer electricity prices have increased by 13% since 2022 and are expected to rise again next year. This trend is often linked to the demand for new power plants, particularly to supply energy to emerging data centers.

In Maine, the expected rise in supply costs is primarily attributed to increasing wholesale natural gas prices. The U.S. has become the world’s largest liquefied natural gas (LNG) exporter, with projections indicating that the volume of LNG shipped overseas will double by 2030. While this increase supports national economic goals, it poses challenges for energy consumers in New England, where around half of the region’s electricity is generated from natural gas.

The Maine PUC is closely monitoring wholesale gas prices, especially as it prepares to review annual bids from generators for the standard supply service. Chair Philip Bartlett stated, “Electricity prices tend to track natural gas prices. Any changes in gas prices will have a direct effect on electricity costs.”

The volatility of supply rates has been a concern for Mainers for many years. For the past 25 years, residents have received electricity from an unregulated market, which has seen supply costs fluctuate dramatically. Rates have ranged from approximately 6 cents to 16 cents per kilowatt-hour, impacted by various factors including the COVID-19 pandemic, global events like Russia’s invasion of Ukraine, and seasonal weather patterns.

Currently, standard offer supply rates are around 11 cents per kilowatt-hour for CMP and Versant Power’s Bangor Hydro District. Between 2014 and 2024, Maine experienced the third-fastest growth in electric rates in the United States, largely due to rising natural gas prices.

New England’s reliance on natural gas makes it particularly susceptible to price fluctuations. The region’s limited gas pipeline capacity often necessitates the use of more expensive LNG during peak demand, especially on the coldest winter days.

LNG exports are influencing electricity prices across the country as well. With the retirement of aging coal plants, natural gas has surged as the leading fuel for electricity generation, supplying 42% of the nation’s energy needs. Meanwhile, the growing share of gas being exported is raising concerns about its impact on domestic energy prices. Recent data indicates that the volume of gas exported now exceeds the amount consumed at American power plants.

The Energy Information Administration has projected that a key market price used to forecast costs will rise from $2.20 per million BTU last year to $4.10 by January. While some sectors argue that LNG exports do not significantly affect residential gas prices, the broader implications for electricity rates remain debated.

As residents express concerns about the affordability of power, Maine’s public advocate for utility customers, Heather Sanborn, emphasized that the state has limited options for addressing supply costs. Her office, along with AARP Maine, supports exploring alternative methods for the PUC to procure standard offer contracts, including soliciting bids more frequently to mitigate rate volatility.

Despite these discussions, Bartlett noted that while some minor adjustments may be made, significant reductions in supply costs are unlikely. A report outlining procurement recommendations is expected in January.

Both Sanborn and Bartlett highlighted the potential for building more cost-effective renewable energy sources to help stabilize electricity prices over time. Increased deployment of solar, wind, and battery storage could alleviate reliance on natural gas during high-demand periods.

As the energy landscape evolves, Maine’s residents will continue to face challenges related to electricity costs. The ongoing discussions and potential policy shifts will be crucial in determining how the state navigates these complex issues moving forward.