Prepared on behalf of
Submitted by:
Guy Sharfman
Vice President, Market Analytics
5373 W Alabama St.
Suite 400
Houston, Texas 77056
Phone: (281) 773-9371
Email: guy.sharfman@intelometry.com
Website: www.intelometry.com
April 2023
The Fallacies of the Reform of Electricity Supply:
CEP-Served Residential Retail Electric Market Study
Report
A
Response to the Maine Office of Public Advocate
Page 1 of 23
Table of Contents
I. Introduction ..................................................................................... 2
II. Failure to Address the Directives of LD318 ....................................... 3
III. Fallacies of the OPA Consultant Report ............................................ 6
A. Overview and Critique of the OPA Consultant Report ............................... 7
B. Debunking the OPA Consultant Report: A Detailed Examination ......... 10
1. CEP Customer Decision Making..................................................................... 10
2. CEP Product Innovation ................................................................................. 12
3. CEP Economic Contribution ........................................................................... 12
4. Retail Electric Choice Can Offer Significant Savings Opportunity ................. 13
5. CEP Pricing ..................................................................................................... 16
6. The Gap Between Maine Utility and CEP Pricing .......................................... 20
7. Renewable Products ...................................................................................... 21
IV. Conclusion ...................................................................................... 23
Page 2 of 23
I. Introduction
The report
1
submitted by the Maine Office of Public Advocate (“OPA Report”) pursuant to LD318,
“Resolve, To Direct the Office of the Public Advocate To Study Reforming Maine's System of Retail
Electricity Supply To Provide More Options to Maine Customers and Support Maine's Climate Goals”
(Public Law 2021, Chapter 164) includes a one-sided and biased report prepared by one of the OPA’s
hired a consulting firms entitled the “Reform of Electricity Supply: CEP-Served Residential Retail
Electric Market Report”
2
(“OPA Consultant Report”). At its core, the OPA Consultant Report falsely
claims that Maine residential customers “lose” $20 million per year taking service from competitive
electric providers (“CEP”).
3
The report perpetuates this false claim and other related claims to
recommend the abolishment of the residential retail electricity market in the state of Maine despite
the fact that most CEP electric supply offers currently posted on OPA’s rate comparison website
offer significant savings over prevailing 2023 Maine utility Standard Offer Service (“SOS”) rates. For
example, NRG’s retail brand affiliate, XOOM Energy offers 12- and 24-month residential fixed price
products to all Maine residential customers that save them 26% over the Central Maine Power
(“CMP”) SOS Small rate, 21% over the Versant Power (“Versant”) Bangor Hydro District SOS rate and
13% over the Versant Power Maine Public District SOS rate in every month of 2023.
4
If all residential
customers currently served by CMP and Versant SOS took advantage of the XOOM Energy offers
the total market savings would be nearly $190 million for 2023 alone.
5
Hardly a $20 million loss as
purported by the OPA Consultant Report!
While the OPA Consultant Report proposed recommendation would clearly be deleterious to the
state’s competitive retail electricity market, it would also infamously establish Maine as the first state
in the nation to eliminate retail electricity choice - - a market that first began 23 years ago on March
1, 2000. Further, the OPA’s recommendation regarding its proposed public policy determinant
concerning retail electricity choice casts a chilling effect that impacts all competitive or private sector
enterprises currently in Maine or desires to invest in the future. Today, the OPA is attacking the retail
electricity supply industry, but its recommendation may similarly impact other private enterprises and
1
State of Maine Office of Public Advocate - Retail Electricity Supply Study Report (February 1, 2023)
2
Reform of Electricity Supply: CEP-Served Residential Retail Electric Market (February 1, 2023) prepared by Susan
M. Baldwin and Timothy E. Howington.
3
See OPA Consultant Report, page 1
4
See section Retail Electric Choice Can Offer Significant Savings Opportunity
5
See section Retail Electric Choice Can Offer Significant Savings Opportunity
Page 3 of 23
related business sectors in the future, including home heating oil, telecommunications, cable
television, etc. Moreover, the OPA’s study paternalistically presumes Maine residential customers
lack the knowledge, judgment, or expertise to make informed buying decisions pertaining to their
energy supplier and thus, their freedom to choose their supplier must be eliminated for their
protection. This view is wrong-minded and suggests a degree of elitism.
To be clear, competition is the key driver to obtaining beneficial savings, attaining new and innovative
products and services, and enhancing service quality and value to end-use customers. Nevertheless,
the OPA Study proposes to eliminate residential retail electricity choice in the State of Maine, ignoring
both the letter and spirit of LD 318.
II. Failure to Address the Directives of LD318
Before addressing the core elements of the OPA Consultant Report, it is important to address how
the overall OPA retail study failed to address the legislative directives set forth in the LD318 from the
2022 legislative session. In this regard, OPA’s performance in this matter falls short.
Firstly, in Sec. 1. of LD318, the “Resolve” states “that the Office of the Public Advocate shall conduct a
study of options for reforming the State’s current system of retail electricity supply in ways that will
provide greater competition among retail electricity supply providers (emphasis added) and more
options and protections for customers, including access to renewable and clean energy supply options.
The office shall examine options relating to the State's standard offer system for facilitating the
achievement of the State’s climate goals and beneficial electrification.”
Nonetheless, the OPA’s No. 1 recommendation calls for the discontinuance of the
residential retail electricity market effective January 1, 2024. The OPA Study lacks any
constructive recommendations and/or initiatives to enhance or provide greater
competition among retail electricity supply providers.
In Sec. 2. of LD318, the “Resolve” states the “Authority to retain consultant with regard to study on
reform of retail electricity supply. That, in conducting the study under section 1, the Public Advocate
may retain one or more consultants, including, to the greatest extent possible, persons from
academic or research institutions in the State for analysis and report preparation” (emphasis
added).
While the OPA is quick to publicly castigate many of the Competitive Energy Providers
(“CEPs”) that may have headquarters based outside of the state of Maine (as though that
somehow negates conducting business in Maine), the OPA did not fully disclose the two
Page 4 of 23
lead consulting firms that prepared the OPA Study are located out of state. SM Baldwin
Consulting is in Boston, MA, and Exeter Associates is located in Columbia, Maryland. It is
not entirely clear how these two consulting firms were selected and the OPA’s efforts to
seek out persons from academic or research institutions in the State of Maine for analysis
and report preparation.
In Sec. 3. of LD318, the “Resolve” states that in conducting the study, the Public Advocate shall ensure
that, at a minimum, the following issues are examined.
1. The Public Advocate shall examine methods of protecting customer rights and interests
including through the establishment of a public access website portal through which
customers may obtain information on and shop for competitive electricity supply. The
Public Advocate shall examine the feasibility of a publicly accessible website maintained by
the Public Utilities Commission or by the Office of the Public Advocate that provides current,
independent, and objective information that allows customers to compare terms,
conditions and prices, and value-added service offers provided by competitive electricity
providers, as well as any other information the Public Advocate or the commission
determines would be useful to customers. The Public Advocate shall consider how to ensure
customers may use the website to easily access external publicly accessible websites where
customers may review offers and contract details and execute agreements electronically.
Despite the willingness and interests of CEPs to design and help implement a public access
website portal that provides electricity consumers, especially residential consumers, with
a consumer-friendly, easy to navigate shopping website that clearly discloses competitive
rate plan offers, this important retail market enhancement receives limited consideration
by the OPA.
2. The Public Advocate shall examine the development and adoption of customer protections
that include at least the following:
A. Conditions for, or prohibitions on, any fees for residential customers seeking to
change a product or pricing plan.
B. Credits for excessive call center wait times.
C. Education programs to inform customers about customer choices and protections
and public service announcements by state agencies encouraging customers actively
to shop for electricity supply options before winter and summer seasons when prices
may be higher.
D. Options for allowing retail electricity suppliers to bill for their electricity supply, value-
added services, and products along with the local distribution company’s regulated
charges, as well as an examination of whether retail electricity suppliers should be
allowed to collect electricity bills that include value-added services and products
other than generation supply service and whether nonpayment of those portions of
electricity bills should be subject to the threat of disconnection of service;
Page 5 of 23
E. Publication, at least annually, of a competitive electricity provider report card that
includes, but is not limited to, levels of verified complaints filed with the Public
Utilities Commission against electricity providers.
F. Examining the advantages and disadvantages of variable-rate contracts for residential
customers.
G. Requiring renewable energy products marketed by retail electricity suppliers to be
consistent with the State's renewable energy resources laws.
H. Examining whether retail electricity suppliers should be allowed to conduct door-to-
door sales only if the individual personally attempting to make a sale is employed by
and supervised by the retail electricity supplier and whether the State's existing
consumer protection laws adequately protect the State's retail electricity consumers;
and
I. Programs to protect low-income customers that incorporate energy equity
considerations, including but not limited to a hardship program that provides grants
to qualifying low-income customers on an annual basis; a payment extension
program that allows a qualifying low-income customer additional time to pay a bill
without the threat of termination; a payment plan program that allows qualifying
low-income customers to pay the balance owed in installments along with the regular
monthly bill; a bill discount program that provides qualifying low-income customers
with a fixed discount on their monthly bill; and other programs designed to increase
access to renewable energy for such customers.
While the OPA Consultant Report does indeed provide recommendations related to
consumer protections, many of the proposed measures are presented in a highly punitive
manner directed at CEPs and customers alike. For example, one recommendation called
for the prohibition of variable rate products by CEPs. With the substantial investment of
ratepayer dollars and deployment of advanced or smart meter technology throughout the
CMP and Versant service territories, it seems short-sighted to remove the ability of a
residential customer to obtain beneficial time-varying rate (“TVR”) designs, especially for
those residential customers that have PV solar, electric vehicles, battery storage and/or
heat pumps. CEPs like NRG can provide TVR products that can provide free nights and
weekends or offer energy saving devices designed to help customers reduce or shift their
energy loads to off-peak times when the price of electricity is less expensive.
Another recommendation proposes to discontinue CEP service for those participating in
energy assistance programs, despite beneficial savings that can be realized by these
consumers. It is important to note that a similar recommendation was put forth in the
state of Connecticut based on flawed assumptions and related methodologies provided
by the author of the OPA Consultant Report that unfortunately led to the inability of
economic hardship customers to shop for lower electricity rates offered by competitive
retail suppliers. The action resulted in thousands of customers being denied their right to
Page 6 of 23
obtain lower electricity rates. Accordingly, House Bill No. 6724
6
was introduced in the
Connecticut General Assembly this session to provide these customers some degree of
rate relief. The pending legislation would allow customers who are designated “hardship
cases” to enroll with a retail electric supplier for their electric generation service if their
contracts with the suppliers are entered into on or after March 1, 2023, for the standard
service rate or less.
Short of the abolishment of residential retail electric choice in the state, as proposed by
the OPA Consultant Report, companies like NRG are prepared to work within the
legislative and regulatory arenas to develop and strengthen consumer protection
measures as well as new retail market enhancements that protect and provide greater
value to Maine’s electricity consumers.
III. Fallacies of the OPA Consultant Report
The OPA Consultant Report is a largely one-sided, opinion-based paper that masquerades as a serious,
scientific analysis. However, the report is a highly sensationalized review devoid of critical analysis or
research. The OPA Consultant Report draws upon data points from other jurisdictions and recirculates
many anti-competition themes that have been repudiated and discredited based on flawed
methodology and unsubstantiated data. For example, the OPA Consultant Report presents
rudimentary Energy Information Administration (“EIA”) data, compares it to known Maine utility
Standard Offer Service (“SOS”) rates from 2021 and falsely claims that proves Maine’s residential
electricity market must be abolished. The report further accuses CEPs of providing “fraudulent”
renewable or green energy products to their customers despite providing no evidence to support this
claim. The report was drafted in a manner that offered little analytical or scientific methodology in its
investigation of the Maine retail electricity market. Nevertheless, despite any analytical findings, the
report assails CEPs with pre-conceived and unfounded conclusions resulting in recommendations that
the competitive retail electricity market is harmful and needs to be eliminated in favor of a return to
utility monopoly supply service. As this report will demonstrate, the OPA Consultant Report presents
an elementary view of the Maine residential market, ignores the current state of SOS rates, and
downplays the benefits of consumer choice. Accordingly, the report and its unprecedented as well as
unsettling recommendations should not be used to deny Mainers their right to choose.
6
House Bill No. 6724 at 18- https://www.cga.ct.gov/2023/FC/PDF/2023HB-06724-R000029-FC.PDF
Page 7 of 23
A. Overview and Critique of the OPA Consultant Report
Notably, the OPA Consultant Report claims that Maine “policy makers should phase out the residential
retail electric supply market”
7
. The reasoning the OPA Consultant Report puts forth is the following:
1) CEP Customer Decision Making – the OPA Consultant Report implies that Maine
residential customers, and low-income customers in particular, lack the ability to make
informed buying decisions and therefore, they should be denied the ability to purchase
CEP electric products as an alternative to utility SOS. In other words, choice should be
taken away from these customers for their own good. This highly paternalistic viewpoint
demeans Maine residential customers, who make complex purchasing decisions every
day without assistance. Further, the OPA Consultant Report appears to treat all residential
customers as a homogenous class that makes uniform buying decisions as well as simply
ignores or fails to appreciate the multi-faceted reasoning behind customer purchasing
decisions. For example, three-fifths of Maine households use fuel oil as their primary
energy source for home heating, a larger share than any other state in the United States
8
.
Mainers are perfectly capable of making affirmative buying decisions when it comes to
home heating oil. These energy consumers can lock into a fixed price contract for a fixed
term of service or opt for a month-to-month variable priced contract. Nevertheless, the
OPA Consultant Report suggests that there is a dramatic distinction between home
heating oil and competitive electricity supply.
2) CEP Product Innovation – the OPA Consultant Report uses the word “innovation” multiple
times to state that “there is no evidence of” CEP product innovation
9
, yet never defines
the term “innovation” or explains what threshold must be met for a product to be
considered “innovative.” As such, the OPA Consultant Report simply states an opinion
unbacked by reason, analysis, or evidence of any kind, yet insists this opinion be
considered by regulators as a key motive to abolish retail consumer choice. However, for
innovation to flourish and thrive, it requires the appropriate business and regulatory
environment to do so. As a member of the OPA Retail Study Stakeholder Advisory Group,
NRG noted the types of product innovation that could be deployed in Maine - - products
7
See OPA Consultant Report, page 4
8
U.S. Energy Information Administration (EIA) - Maine State Energy Profile (September 15, 2022)
9
See OPA Consultant Report, page 1
Page 8 of 23
that have already been placed into other markets. Beneficial products that are generally
“bundled” with electricity supply such as community solar, residential battery storage, EV
chargers, home energy management devices, home security technology, home warranty
plans, to name of few. However, as stated above, to make the necessary level of capital
investment to provide these innovative products and services, the business and
regulatory environment need to remain stable and open to competition. The primary
recommendation of the OPA Consultant Report which calls for the discontinuance of the
residential retail electric market effective January 1, 2024, is the antithesis of a stable
market environment. Contrarily, NRG believes that choice and competition benefit
consumers. Moreover, NRG has a vision to help improve the retail electricity market
through product innovation, competitive pricing, and enhanced consumer protection
measures.
3) CEP Economic Contribution – despite having no analytical basis and citing only
rudimentary data analysis, the OPA Consultant Report declares that the “opportunity
cost…of continuing the residential CEP market is substantial”
10
and that CEPs don’t
contribute to Maine’s economy because “with one exception, the CEPs that serve Maine’s
households are headquartered out of state”.
11
The OPA Consultant Report clearly reflects
a highly biased opinion that is only intended to discredit CEPs by suggesting that they
need to be headquartered in Maine in order to provide value and quality service to
Mainers. However, leading companies like Walmart, Apple, Staples as well as countless
others are not headquartered in Maine. Yet, CEPs are being held to a different standard
despite providing electricity supply products that Mainers buy by their own choice.
Finally, it is hypocritical of the consultant to publicly criticize CEPs for being
headquartered out of state when she herself does not reside in the State of Maine and
yet is all too happy to take Maine taxpayer funding dollars.
4) CEP Pricing – using only high-level data downloaded from the U.S. Department of Energy
EIA, the OPA Consultant Report declares that CEPs charge more to serve residential
customers than they should so Maine should return to the old utility monopoly model
that was in place 23 years ago. The report once again suggests that a paternalistic and
10
See OPA Consultant Report, page 1
11
See OPA Consultant Report, page 16
Page 9 of 23
heavy hand must be imposed on residential customers for their own good and their right
to make their own informed buying decisions should be eliminated. The OPA Consultant
Report does this without any serious analysis of CEP product pricing and completely
ignores the consequences of utility monopoly pricing.
5) The Gap Between Maine Utility SOS and CEP Pricing – the OPA Consultant Report
declares that the gap between CEP residential prices and utility SOS residential prices
“increased in recent years.”
12
Setting aside that this so-called gap is meaningless, even
the OPA Consultant Report’s own debatable definition of “recent years” illustrates no
such trend. Additionally, the most “recent years” we currently know of are 2022 and 2023
which saw CMP residential SOS prices rise by a whopping 173% from 2021 and Versant
prices rise by 165%. While the OPA Consultant Report conveniently omits 2022 and 2023
from their CEP/SOS price gap analysis, it is highly doubtful the so-called increasing gap
would have manifested in those years. Moreover, the OPA Consultant Report clearly
demonstrates the analytical “gymnastics” the consultant used to arrive at a pre-conceived
narrative based on a flawed methodological approach.
6) Renewable Products – the OPA Consultant Report declares that, despite not knowing the
composition of CEP renewable or green energy products, such products do not meet the
OPA Consultant Report’s measure of “green.” As such, no CEP green energy products
actually exist, but the ones that do are overpriced. All of Section 6 of the OPA Consultant
Report is pent either accusing CEPs of offering “fraudulent” green products or restating
basic information about renewable energy standards, yet never offers evidence (much
less proof) that CEP green energy products are anything other than what CEPs claim them
to be. Moreover, instead of appropriately using the role of “consultant” as part of the
OPA Retail Study Stakeholder Advisory Group, to objectively examine voluntary
renewable energy products and the types of enhancements that can be made to better
inform electricity consumers of green energy products, the author of the OPA Consultant
Report chose to level false accusations against CEPs. NRG believes a constructive
recommendation would relate to enhancing the customer-facing Environmental
Disclosure Label to make the label contents easier to interpret and understand the type
of product the customer is purchasing.
12
See OPA Consultant Report, page 2
Page 10 of 23
Finally, noticeably absent from the OPA Consultant Report is any discussion of whether Maine
residential customers want the right to choose their energy supplier abolished and discontinued in
favor of utility monopoly supply service. After twenty-three years, the opponents of retail electricity
competition want to deny the right of Mainers to make an affirmative choice. It bears reiterating that
customers are free to remain on utility SOS service if they prefer to, and yet not all of them do. A
competitive market exists precisely because different consumers have different preferences, needs,
and motivations. It is not for the OPA Consultant Report to decide what is best for all residential
customers in Maine.
B. Debunking the OPA Consultant Report: A Detailed Examination
1. CEP Customer Decision Making
Opponents of retail electricity choice continually put forth a false narrative that choosing one’s energy
supplier is too complicated and beyond the capacity of residential consumers. However, residential
customer purchasing decisions, whether for electricity or other products and services, are based on a
range of overlapping factors. Consumers routinely make everyday purchase decisions for common
items such as food, clothing, consumer goods, electronics, etc. Customers also engage in more
complex purchase decisions for things like insurance, lease and rental agreements, financial services,
entertainment subscriptions, and mobile phone and internet service. Shopping for a CEP is no more
complex than these other everyday purchase decisions that customers are accustomed to making. In
making these everyday buying decisions, consumers are motivated by various factors. The snapshot
below from a 2019 KPMG report
13
summarizes some of the dimensions of consumer shopping
decisions. This report summarizes the findings of a survey of thousands of customers worldwide.
Diagram 3.1: Results of KPMG Report
13
Consumers reveal what keeps them coming back - KPMG Global
Page 11 of 23
Of particular note, while price is an important factor in purchasing decisions, it is not the only
important factor or even the most important factor according to the study.
While it may be easy to presume that electricity service is homogenous, CEPs offer a range of products
differentiated along the same consumer preference dimensions:
Table 3.2 – CEPs Serve Consumer Preference Factors
Consumer Preference Factors
Differentiation Opportunities for Retail Energy Supplier
Products
Product Quality /
Consistency
CEP brand reputation
Complaint history
Ease of enrollment, billing accuracy, customer service
quality
Value for money
CEP price competitiveness
Value of amenities, perks, etc.
Availability of fixed price options
Total bill management soluti
ons (energy efficiency, etc.)
Customer service
Customer service experience for billing questions, renewal
process, etc.
Complaint handling
Quality and type of ongoing customer communications
(service portals, consumption analysis, expiration/renewal
notices)
Easy shopping experience
Ease of enrollment process
Troubleshooting enrollment problems
Ease of price discovery and product comparison
Selection/product
assortment
Availability of varying term lengths
Green energy options
Bundled products and services
Amenities/perks
Pricing
Competitiveness of supplier price versus other options (utility,
other suppliers)
Term of service available
Competitiveness of renewal pricing
Availability of longer term, fixed price offers
The OPA Consultant Report ignores the possibility that Maine residential customers can make rational
buying decisions for themselves and simply assumes customers who sign up for higher priced CEP
services are incapable of understanding CEP products. The consultant appears to dismiss that some
customers may want a longer-term contract with a fixed rate plan that can provide a customer with
price certainty and predictability for a 12-, 24- or 36-month term of service. Regardless, the OPA
Consultant Report failed to examine or ignore a recommendation to develop new consumer
educational and outreach initiatives that would constructively assist Mainers to make better and more
informed buying decisions, e.g., fixed vs. variable rate plans, rate plan offers without early termination
fees, seasonable buying opportunities, etc.
Page 12 of 23
2. CEP Product Innovation
Based on the Eco Watch website
14
and data provided by XOOM Energy, as result of Maine’s electric
market restructuring and retail choice, at the very least, the following CEP products are offered to
residential customers that Maine regulated utilities do not offer:
Variable one-month products
Variable price products with two months fixed price
Variable price products with three months fixed price
6-month fixed price products
7-month fixed price products
12-month fixed price products at start and end dates different from the utility
18-month fixed price products
24-month fixed price products
100% renewable products
Green products (products with higher percentage green than the state required minimum)
Products that donate to charity
Products that provide airline miles
In addition to the many products CEPs offer that utilities do not, CEPs also offer customer service
different from the utility, technology such as customer web portals and other amenities that prove
attractive to existing and potential customers. Every one of these things is an innovation that
differentiates a customer experience from utility SOS service.
In addition, Maine utility SOS itself, which is unbundled from delivery rates and sourced from a
competitive wholesale market that is kept honest due to a competitive retail market, is an innovation
of electric deregulation. Further, it is electric deregulation at the retail level that has been
instrumental in the advent of solar, wind, hydrogen, fuel cells, and other technologies introduced
across deregulated states, as CEPs connect with these technologies to bring them to their customer
base. Furthermore, there are also demand side innovations such as smart thermostats and other
energy saving devices that CEPs provide to their customers that reduce demand on the grid. To
suggest, as the OPA Consultant Report does, that electric deregulation has resulted in no innovation
simply ignores reality.
3. CEP Economic Contribution
Using no economic analysis, the OPA Consultant Report once again falsely claims that CEPs do not
contribute to Maine’s economy because only one CEP serving Maine is headquartered in Maine.
15
14
https://www.ecowatch.com/electricity/rates/me
15
See OPA Consultant Report, page 16
Page 13 of 23
Setting aside the absurdity that every CEP must be located in the state in order to contribute to a
state’s economy, nowhere in the OPA Consultant Report is there a discussion of even basic economic
questions such as:
1) Do CEPs serving Maine pay taxes to the State of Maine?
2) Do CEPs serving Maine employ Maine residents as direct employees or contractors?
3) Do CEPs serving Maine employ companies in Maine such as marketing firms, sales firms,
brokers, law firms, lobbyists, etc.?
4) Do CEPs serving Maine rent or own office space or other real estate in the state of Maine?
5) Do CEPs serving Maine provide products that Maine residents opt to buy by their own
choice?
6) Do CEPs serving Maine do business with Maine utilities and generators?
The answer to every one of the questions above is yes, yet the OPA Consultant Report simply ignores
these key economic considerations.
The OPA Consultant Report also claims that CEP residential customers in Maine pay $20 million more
for CEP service annually than they would with utility SOS. The OPA Consultant Report makes this
assessment based on a highly simplified analysis that compared basic EIA data to 2021 utility SOS
prices. The EIA data used by the OPA Consultant Report is high-level and does not break down what
competitive supply products were opted for by any residential customer, when a given product was
purchased, or how it compares to SOS prices for the term of the product. For example, did the
competitive supply product include 100% renewable energy content, an extended term of service,
smart devices, home warranty plans, rewards points, gift cards, etc.? It is highly likely that some
residential customers saved money with CEP service, but regardless, customers opted for CEP service
of their own volition. As such, claiming that there is a $20 million opportunity cost is erroneous on its
face as rational customers signed up for CEP service by their own choice.
The OPA Consultant Report’s $20 million figure also does not account for the high SOS price increases
that occurred in 2022 and 2023. Again, the OPA Consultant Report conveniently ignored 2022 and
2023 SOS price data to better support its anti-competition narrative as opposed to conducting a more
balanced analysis of Maine’s retail electricity market.
4. Retail Electric Choice Can Offer Significant Savings Opportunity
XOOM Energy Offers Nearly $190 Million in Savings Opportunities Over Utility SOS in CY2023
As of April 15, 2023, NRG retail brand affiliate, XOOM Energy offers 12- and 24-month residential fixed
price products at a price of 12.99 cents per kWh available to any residential customer residing in CMP
and Versant service areas regardless of zip code or customer income level.
Page 14 of 23
Table 3.3: XOOM Energy Residential Supply Offers taken on 4/17/2023
16
By contrast, the SOS Small Customer Rate for CMP is 17.631 cents per kWh for 2023
17
, while the
Versant - Bangor Hydro District SOS Small rate is 16.438 cents per kWh for 2023
18
and the Versant -
Maine Public District SOS Small rate is 14.879 cents per kWh for 2023.
19
As such, the XOOM Energy
rate offers CMP residential customers a savings of 4.641 cents per kWh or 26% over SOS, and offers
Versant residential customers a savings of 3.448 cents per kWh or 21% in Bangor Hydro District and
1.889 cents per kWh or 13% in Maine Public District for all of 2023.
Taken across the 2023 calendar year, these savings are quite substantial. Using the same EIA data
source as the OPA Consultant Report, residential customer counts and load are reported for CMP and
Versant. The relevant data taken directly from EIA is provided in Table 3.4 below.
Table 3.4: Maine IOU residential customer counts and load for 2021
20
Using values from Table 3.3 and Table 3.4 above, the total savings for each residential customer that
takes advantage of the XOOM Energy rate can be derived for CY 2023:
Table 3.5: XOOM Energy Available Savings per Residential Customer in 2023
Year Utility
SOS Small Rate
(in $ per kWh)
XOOM Energy Rate
(in $ per kWh)
XOOM Energy
Savings
(in $ per kWh)
Residential
Customer
Annual Usage
(in kWh)
21
2023 Residential Customer
Savings with XOOM Energy
Rate
(in Total $)
16
https://www.maine.gov/meopa/electricity/electricity-supply
17
Standard Offer Rates for Central Maine Power - Residential and Small Commercial Customers | MPUC
18
Standard Offer Rates for Versant Power - Bangor Hydro District - Small | MPUC (maine.gov)
19
Standard Offer Rates for Versant Power - Maine Public District - Small | MPUC
20
https://www.eia.gov/electricity/data.php#sales
21
Figures are derived by dividing Sales (Megawatt-hours) by Customers (Count) in Table 2
Page 15 of 23
2023 CMP $0.17631 $0.12990 $0.04641 7,171 $332.82
2023
Versant - Bangor
Hydro District
$0.16438 $0.12990 $0.03448 6,370 $219.65
2023
Versant - Maine
Public District
$0.14879 $0.12990 $0.01889 6,370 $120.34
Consequently, if all CMP and Versant customers opted to take service under the XOOM Energy rate,
the potential market wide savings would be approximately $190 million, as illustrated in Table 4.0
below (see highlighted below). Moreover, XOOM Energy is prepared to offer this 12.99 cents/kWh
rate offer to all residential customers in CMP and Versant service areas.
Table 3.6: XOOM Energy Available Savings for Residential Market in 2023
Year Utility
2023 Residential Customer Savings with
XOOM Energy Rate
(in Total $)
Customers
(Count)
22
Total Residential Market Available Savings for 2023
(in $)
2023 CMP $332.82 503,190 $167,469,278
2023 Versant $170.00
23
126,991
$21,587,978
Total 2023 Available Savings $189,057,257
CEP Regulation v Monopoly Utility Regulation
The OPA Consultant Report also alleges that the Maine competitive market should be abolished
because “Ensuring compliance with regulations (addressing consumer complaints and pursuing
enforcement actions) is time-consuming and resource-intensive.”
24
This claim is simply another
unsubstantiated attempt by the consultant to discredit CEPs, as one only needs to examine the time
and resources required to regulate monopoly utilities. Cost of service regulation of a monopoly utility
where ratepayers are effectively paying for the electric distribution service requires that every change
in policy, product, system, pricing, and rate tariffs must be thoroughly investigated and approved by
regulators through a time-consuming regulatory process, oftentimes in the form of an extensive rate
case. Conversely, CEPs are supported by shareholder dollars that financially underpin their business
22
Based on EIA 2021 figures
23
Figure derived by averaging the Table 3.0 figures for Bangor Hydro District and Maine Public District
24
See OPA Consultant Report, page 1
Page 16 of 23
model. Moreover, CEPs make independent business and administrative decisions without burdening
regulators and operate within the confines of state law and regulations.
5. CEP Pricing
The OPA Consultant Report claims that in 2021 “The rates that CEPs charged Maine households in
2021 ranged between $0.0670 per kWh and $0.1708 per kWh”.
25
This statement, however, is false
and exhibits a lack of fundamental understanding regarding the EIA data that was relied upon. The
OPA Consultant Report uses EIA data table EIA-861 schedule 4B for 2021
26
. This data table, shows,
among other things, the annual 2021 weighted average price charged by each CEP to residential
customers in each state. It does not show (emphasis added) the high and low price charged by each
CEP to residential customers, any specifics regarding CEP product term, product structure, green, add-
on services, etc. For example, the OPA Consultant Report claims that the lowest price charged by a
CEP in 2021 was $0.0670 per kWh, but that is false. The $0.0670 per kWh price is the “weighted
average” price of all 2021 prices charged by a single CEP. As such, this charge is an average of prices
both higher and lower than the price reported, meaning the lowest price charged by this CEP, much
less any CEP, cannot be derived from this EIA table.
Additionally, the prices shown in EIA-861 schedule 4B encompass contracts that were entered into in
previous years, as well as contracts entered in each month of 2021. It simply cannot be known how
much any one residential customer benefited from any individual CEP product. Finally, there is no
accounting in EIA-861 schedule 4B of additional value provided by any CEP product above the base
commodity. For example, locking in a price for two years may require a premium, and add-ons like
green or additional benefits may impact the product price as well.
The bottom line is that the authors of the OPA Consultant Report fundamentally do not fully
comprehend the EIA data sets that they are using in their assessment of the Maine retail electricity
market yet are using this data to recommend the complete dissolution of the residential electricity
market. Given the serious public policy implications, the impact on residential electricity consumers,
and chilling message that Maine is not open to business, one would expect a study with more gravitas
and scientific rigor before denying residential customers their freedom to choose their energy
supplier.
25
See OPA Consultant Report, page 1
26
table12.xlsx (live.com)
Page 17 of 23
Monopoly v Competitive Pricing
Another key element ignored by the OPA Consultant Report is the change in Maine retail electricity
pricing that took place as the result of deregulation. Chart 3.7 below shows the history of CMP
residential monopoly electric service prices from 1981 through 1999, the year right before
deregulation began. This data was obtained from the CMP website.
27
Regrettably, we could not find
equivalent data for Versant (BHE).
Chart 3.7: CMP Monopoly Pricing
As shown in the chart, there was a consistent rise in the CMP monopoly price prior to deregulation.
In fact, prices from 1981 to 1999 increased from $0.06668 per kWh in 1981 to $0.13391 per kWh in
1999, an increase of 101% in just 18 years. This story is not unique to electric monopoly service across
U.S. states, as, with few or no exceptions, monopoly utilities continually lobby regulators to approve
rate increases over time. In 2000, when Maine deregulated, the CMP monopoly price split into a
27
https://www.cmpco.com/wps/wcm/connect/cmpagr_account/account/nc_understandyourbill/pricing/historicalpricing
$0.00000
$0.02000
$0.04000
$0.06000
$0.08000
$0.10000
$0.12000
$0.14000
$0.16000
1981198219831984198519861987198819891990199119921993199419951996199719981999
CMP Residential Monopoly Pricing
1981 - 1999
Assumes a residential customer using 750kWh per month
(in $ per kWh)
CMP Monopoly Pricing
(in $ per kWh)
Page 18 of 23
delivery service price and an SOS price. Although we were not able to obtain the residential SOS price
for each year in the set below, Chart 3.8 shows how the CMP monopoly price prior to deregulation
compares to the combined CMP residential delivery price plus SOS price (for the years we had data)
from 2000 through 2021, a period of over twenty years.
Chart 3.8: CMP Monopoly and Unbundled Pricing
Note: CMP SOS prices for 2000-2001 and 2011-2014 could not be located. As such, no SOS prices (denoted in blue) for those
years appear on the chart. However, this does not change the general point of the chart.
As shown on the chart, for the next 22 years after deregulation began the total combined price of
CMP residential service (delivery plus SOS) rose from the 1999 monopoly price of $0.13391 per kWh
to the combined delivery plus SOS price of $0.15795 in 2021, an increase of only 18%. Forcing
customers back to monopoly service will undoubtedly create a never-ending cycle of price increases
as competition will not be there to keep utility prices in line.
Page 19 of 23
Price Increases in 2022 and 2023
Beginning in 2020, changes in federal government energy policy, combined with geopolitical forces
resulted in a steady increase of fuel prices that has not yet abated. This trend, in turn, caused
electricity prices across the country to rise in 2022 and 2023. CMP residential default prices increased
a whopping 89% in 2022, and another 29% in 2023.
Chart 3.9: CMP Pricing with 2022 and 2023 Added
Note: CMP SOS prices for 2000-2001 and 2011-2014. As such, no SOS prices (denoted in blue) for those years appear on
the chart. However, this does not change the general point of the chart. .
It is important to understand that energy price spikes caused by prevailing market conditions, federal
government policy, geopolitics, or severe weather events like Winter Storm Uri cannot be simply
wished away or negated by abolishing consumer choice. The key to dealing with energy price volatility
is competition, which protects consumers with long run volatility hedges in the form of fixed price
contracts, as well as drives innovative solutions that bring prices down in the long run.
Page 20 of 23
Monopoly utilities across fifteen states lost billions of dollars because of Winter Strom Uri. The
customers of those monopoly utilities are now being forced to pay for these losses so that monopoly
utility shareholders are kept whole
28
. Conversely, the shareholders of CEPs impacted by Winter Storm
Uri had to honor their customers’ fixed price contracts despite losing hundreds of millions of dollars.
Maine CEPs are no different. Residential CEP customers that entered 12 and 24-month fixed price
contracts in 2020 and 2021, before SOS price spikes began, have, and will get their price for the
contract term regardless of how much money they save or how much money CEP shareholders lose.
Further, unlike the electric distribution companies, CEPs that may lose money on these or any
contracts, are not subject to cost-of-service recovery and must absorb these costs. The OPA
Consultant Report appears to ignore this key market distinction entirely, focusing instead on a
historical year deliberately chosen before Maine utility SOS price spikes began in order to amplify an
anti-competition narrative.
6. The Gap Between Maine Utility and CEP Pricing
The OPA Consultant Report claims that there has been a growing gap “in recent years” between CEP
prices and Maine utility SOS prices, but the notion of a universal gap between CEP pricing and utility
SOS is erroneous on its face. Each Maine utility provides one residential SOS price for a single product
and term with no add-on options. By contrast, CEPs offer an array of residential offers that encompass
different prices for different products with different start dates, terms, levels of green, and an
assortment of bundled service options. As such, any comparison between CEP and SOS should be
based on overall value to the customer, which may or may not be based on price alone. A customer
locking in a 100% green product for 24 months that also provides airline miles may opt for that product
regardless of whether the prevailing SOS price is lower or not. However, to the OPA Consultant Report,
consumer preferences are irrelevant, the product price comparison to SOS at the time of contract is
the only thing that should ever matter.
There is also no evidence that a trend of a widening gap between CEP prices and utility SOS rates has
existed “in recent years” or ever. The OPA Consultant Report simply makes this up. The initial claim
by the OPA Consultant Report is that the gap between CEP and utility pricing “increased in recent
years” because “In 2018, on average, households paid between $150 and $200 more for electricity
per year if they purchased from CEPs”, but in “2021, on average, households paid between $310 and
28
See Beyond Texas Evaluating Customer Exposure to Energy Price Spikes: A Case Study of Winter Storm Uri,
February 2021
Page 21 of 23
$340 more for electricity per year if they purchased from CEPs.”
29
However, a chart provided in a later
page of the OPA Consultant Report shows the so-called “overpayment” to CEP’s in 2019 was between
$306 and $347 and in 2020 was between $269 and $309.
30
In other words, even if the OPA Consultant
Report’s values were blindly accepted, there is no indication of any trend. One could just as easily say
that the gap between CEP residential prices and utility SOS residential prices decreased in recent years
because the OPA Consultant Report’s CEP overpayment value is higher for 2019 than it is for 2021.
The OPA Consultant Report also ignores the steep rise in Maine utility SOS prices in 2022 and 2023
which would show any gap between CEP and SOS pricing decreasing.
Other Markets
The OPA Consultant Report claims that there are “examples of harm” in other jurisdictions in terms
of consumer overpayment to CEPs with respect to utility default rates. The OPA Consultant Report
lists six states and also a “Nationwide” category.
31
However, the so-called “examples of harm” are
nothing but subjective arguments, some even coming from the lead author of the OPA Consultant
Report, which were refuted and not universally agreed upon. For example, the OPA Consultant
Report’s “example of harm” in Maryland sites a paper titled “Maryland’s Residential Electric and Gas
Supply Markets: Where Do We Go from Here?” prepared by Susan M. Baldwin and Sarah M. Bosley.
32
Much like the OPA Consultant Report, however, this paper was an opinion piece debunked under
scrutiny
33
. Additionally, in the case of Illinois, one of the six states listed, no “example of harm” is even
provided. Finally, it should also be noted that electric deregulation has not been abolished in any of
the states listed, much less nationwide.
7. Renewable Products
Despite presenting no evidence or proof the OPA Consultant Report accuses CEPs of offering
“fraudulent” green products and once again implies that Maine residential customers are not astute
to shop for CEP service. The following are direct quotes from the OPA Consultant Report:
29
See OPA Consultant Report, page 1
30
See OPA Consultant Report, page 28
31
See OPA Consultant Report, page 29
32
See OPA Consultant Report, page 75
33
https://www.resausa.org/new-analysis-reveals-flaws-in-recent-maryland-opc-and-the-abell-foundation-reports-
on-retail-energy-market-independent-study-finds-electric-suppliers-could-have-saved-maryland-consumers-more-
than-203/
Page 22 of 23
“The “greenness” of CEP products is ambiguous at best and likely based on out-of-region
fuel sources.”
34
“Consumers may not understand that standard offer service is the same “shade of green”
as is CEPs’ basic products – because standard offer service is also based on a fuel mix that
comports with Maine’s renewable portfolio standards.”
35
“A CEP pitching a “green” product generally does not provide the basis for this labeling. It is
not clear, for instance, whether it is asserting that its product exceeds the minimum RPS
requirement or merely complies with it. Further, if a CEP is asserting that it exceeds the
minimum requirement, the basis for such a claim may be inaccurate or misleading, for
instance regarding whether their incremental purchases are compliant with Maine RPS
certification requirements. As a result, a CEP claim that it is offering a “green” product could
be misleading.”
36
“The electricity being marketed [by a CEP] is not any “greener” than standard offer service,
but consumers believe that it is.”
37
“Consumers don’t realize they are paying a larger mark-up to purchase products marketed
as renewable than they would for other equally (or more) effective climate-friendly
options”
38
To summarize, despite presenting no evidence or proof, the OPA Consultant Report claims as fact
that:
1) CEP green products may not exceed Maine’s minimum green requirement.
2) Utility SOS is just as green as CEP green products.
3) Maine residential customers are not smart enough to shop for green products.
4) CEP green products are overpriced.
CEP “green” products are defined as those that provide two basic categories or levels of renewable
or green energy:
Level 1: The minimum state mandated requirements designed to meet Maine’s annual
Renewable Portfolio Standards (“RPS”) compliance obligation.
Level 2: Voluntary green energy above the minimum state mandated requirement.
The OPA Consultant Report simply engages in speculation when stating that any CEP green product
does not meet the definition stated above. Further, not a single example is provided that
demonstrates how Maine CEPs buy renewable energy credits (“RECs”) or how much they pay for RECs.
34
See OPA Consultant Report, page 2
35
See OPA Consultant Report, page 2
36
See OPA Consultant Report, page 39
37
See OPA Consultant Report, page 48
38
See OPA Consultant Report, page 48
Page 23 of 23
It is also speculation to suggest that CEP green products are “not any “greener” than standard offer
service.” Maine utility SOS only provides the state mandated minimum RPS requirements, while CEP
voluntary green products provide a substantially higher percentage of green than the annual RPS
minimum.
IV. Conclusion
Making significant changes to the rules, market structure, or design of Maine’s retail electric market,
much less abolishing it, should only be considered after a thorough analytical review and careful
consideration of the public policy considerations and related consequences of such changes on
customers. Accordingly, the unsubstantiated and prejudicial opinions provided in the OPA Consultant
Report do not meet this critical threshold test and thus, should be dismissed as a valued resource,
especially policies that may lead to the elimination of consumer choice in the State of Maine.
