Electricity rates in Maine are under pressure due to a combination of factors, including dependence on fossil fuels for electricity generation, growing storm-related costs, aging infrastructure, and inflationary pressures. Maine is part of the New England electricity grid, which is heavily dependent on natural gas for electricity generation and supply. This means Maine ratepayers take on substantial risk when gas prices rise. Transmission and distribution charges are less volatile, but have been rising due to increased equipment and construction costs, aging infrastructure in need of replacement, and storm repairs.
The Maine Department of Energy Resources engaged Brattle to analyze the primary drivers of electricity price volatility in Maine and to identify solutions for mitigating their impacts. Brattle’s analysis finds that volatility in natural gas commodity prices is the primary driver of recent electricity price spikes, with storm-related costs, aging infrastructure, and inflationary pressures also contributing to rising rates.
Looking ahead, expanded US liquefied natural gas exports and rapid growth in data center demand are poised to put additional upward pressure on natural gas and electricity prices. The report “Factors Driving Electricity Prices in Maine” published by Brattle finds that Maine can mitigate long-term cost and risk exposure by accelerating clean energy development, investing in load flexibility and energy efficiency, and strategically electrifying end uses that currently rely on fossil fuels.
Access the report here