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Electricity supply providers & standard offer, utility companies, and how to get the best price when buying electricity


Utility deregulation leaves us with one company to deliver our power (CMP or Bangor Hydro are the 2 big ones) and another company to provide it.  There is only one choice for delivery for your address but you can choose the electric supply provider.  Each year the Maine Public Utility Commission opens a bidding process and the winner is the "standard provider".  If you do not pick a different provider then you default to the standard.  The CMP year generally starts March 1.   The MPUC maintains a list of providers on their web site. Despite a long list of suppliers most do not do residential and many of those that are listed are not active.   If you look at your CMP bill on the 2nd page it shows who your supplier is and the rate you are paying. 

Some families choose providers that generate clean power, such as Maine Green Power, even though it may be a bit more expensive.  A few years back Electricity Maine did a huge amount of marketing because their electricity supply price was lower than CMP's standard offer.  These days their marketing focuses on being a Maine company.  CMP's parent is a Spanish corporation.  

  • Many families switched to Electricity Maine. 
  • Many families did not monitor their bill or check back to see how CMP pricing changed the next March. 
  • Many families took advantage of Electricity Maine's offer to lock in a lower rate if they signed a long term contract. 
  • Many families don't know that at the start of 2014 Electricity Maine's rates were higher than the standard offer by more than 10%--sometimes 25% if you had  a long term contract.  In March of 2014 CMP standard offer increased 10.8% and Bangor Hydro 13.2%.   Electricity Maine has a posted rated until September that is about 5/1000 of a cent lower than CMP's standard offer.  

If you want to beat the system each March check the new price for the standard offer.  Check what the other suppliers are offering for a price and decide what to do for the next year.  We expect electric rates to keep going up.  Bringing more natural gas lines into the state will allow electric production at a lower cost so we doubt we will see huge price spikes.  The only reason to lock in to a contract would be you think prices will rise quickly.

Maine Green Power might cost a bit more but you are buying clean power generated here in Maine.  They money stays here.  You are supporting Maine's renewable industry.  Plus you can feel good about lowering your environmental impact. 

Watch out for some companies that offer low intro rates, such as Xoom energy.   Xoom Energy Customers have seen their rates double or triple when the intro period expired.  If you are offered a promotional rate make sure you allow time to review options and take the initiative to call the company to find out what the new rate will be.  Do not rely on them to tell you your rate will change.  In 2015 we have seen Ambit enter the Maine electric supply market.  Like Xoom they use a mulitlevel marketing concept.  Ambit rep's get paid for clients who switch their electric supply to Ambit.  Additionally they are expected to sign up other rep's, and make a small bit of money off each client their rep's enroll.  Time will tell if Ambit proves to be a good value.  You will want to make sure you pay close attention to contract expiration dates.  Unlike Xoom, Ambit currently allows you to terminate your contract at any time with no penalty.  

Many suppliers have clauses in the contract that allow them to raise the rate if a payment is late.   You may not notice a small increase but it can add up over time.  A good habit is to check the rate on your CMP statement every month if you are not using the standard offer which is fixed for a year. 

Standard offer electric supply rates are expected to increase

In 2014 CMP  filed for a rate change with the PUC.  They asked for the world, including solar surcharges, changing the bills to mostly fixed charges (currently $9.50), and of course a rate increase.  Due to the tireless efforts of many groups and individuals that testified against the plan they did not get most of what they requested.  Unfortunate we are going to see the supply portion of our bills soar.   An October 2014 story in the Press Herald stated that the residential electric supply rate should increase from 7.5 cents to 11.5 cents by March 2015 and cost the average customer, using about 540 kilowatt hours, $21.60 more every month.   Even worse are commercial accounts which have rates that change monthly rather than annually.  They will see an increase to about 14.9 cents by January 2015.  This is a 130% increase.   Commercial rates did rise but not as much as expected.  Surprisingly residential supply rates actually dropped in March 2015.  What saved us was the unexpected huge drop in oil prices.  Generally the RFP for electric supply is a 3 year contract to meet 1/3 of demand.  This splitting into 3 chunks helps stabilize residential and small commercial user rates.  Because of the low oil prices a bid was submitted that was well below the others as the supplier was able to burn oil for electricity production.  The catch was they would provide only a 1 year contract, not 3.  So in December 2015 this 1 year contract will expire along with the other 1/3 chunk.  This means at the end of the year the standard offer RFP will need to meet 2/3 of the demand.  Since electric rates have skyrocketed throughout the north east there is no reason to think the supply bids are going to come in low. 

This makes solar an even better investment.  Before the rate increase it took just over 10 years to recoup your investment in photovoltaic (PV) panels.  With a 25 year warranty and 40 year life expectancy solar was already a great value providing 30+ years of free power.   The rate increases makes the solar payback even quicker.  

Just like owning your own car is better than leasing, owning your own power plant is less expensive than buying electricity from CMP each month.  With an annual rate of return of 8%+ you would be hard pressed to find any other financial investment that performs as well. 

Impact of rate increases on use of heat pumps

Because heat pumps are so energy efficient, 350%+, there is almost no other way to heat your home for so little money.  Even gas boilers cannot even reach 100% annual operating efficiency and oil is lucky if it hits 70%.   With electric rates at 15.5 cents compared to a tankless coil oil boiler a heat pump was like buying oil for < $1.50 a gallon. Even with the rate increase to 19 cents, it is like oil at $1.70.  Heat Pumps will continue to be a bargain.  Plus with heat pumps you have the option of adding solar panels and letting the sun heat your house for free.  We doubt oil prices will ever see a long term drop and they are predicted to increase faster than the cost of electricity.   .



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