electricity guide, vol- maine（电力指南,卷——缅因州）.doc

Electricity Guide, Vol. 8 Anatomy of Your Electric Service: How Distribution Rates and Service Are Regulated Your electric bill is made up of two parts: delivery and supply. The price for the supply portion, your standard offer, is set by the forces of competition. The price for the delivery portion remains fully regulated and consists of three different elements: transmission, distribution, and stranded costs. Transmission service, involving high voltage bulk power lines, is regulated by the Federal Energy Regulatory Commission in Washington. Stranded costs and distribution service are regulated by the Maine Public Utilities in Commission in Augusta. What follows is a brief description of how the distribution portion of your rates is regulated. Alternative Rate Plan (ARP). In Maine, Bangor Hydro Electric Company’s (BHE) and Central Maine Power Company’s (CMP) distribution rates are determined by an Alternative Rate Plan (ARP). These plans represent a change from the way utilities have traditionally been regulated. BHE and CMP are in the second and third years, respectively of their ARPs. Both ARPs end on Dec. 31,2007. The principal component, in both the BHE and CMP ARPs, is a Price Cap Formula (PCF), which is intended to represent the expected changes in costs for the typical firm in the industry. Rates are changed annually by taking the prior year’s rates and making certain complicated adjustments determined by inflation, industry-wide productivity, input price differentials, transitional efficiencies, and numerous external factors. The expectation is that the rates under the PCF regime will be lower than those that would have prevailed if the utilities had continued to be regulated in the traditional way. To date, these annual changes have resulted in lower rates. See tables below. In exchange for this, the utilities are allowed to cut costs and keep the savings during the course of the ARP. In this way, an ARP provides a cost-cutting incentive