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Space Heating Discount Scrutinized

Fortnightly Magazine - November 1 1995

While approving a proposed rate discount program for new electric heating customers, the Maine Public Service Commission (PSC) has ruled that the program must meet "permanent load" requirements designed to protect ratepayers. Bangor Hydro-Electric Co. had filed proposals to market power to new electric heating customers at 5 cents per kilowatt-hour, as a temporary addition to its load requirements, with a price floor based on short-run marginal costs. Clarifying its rules on flexible rate programs, the PSC said that load is considered "permanent" where customers are expected to make significant investments to take advantage of the proposed rate. Rates for permanent load programs must be based on long- rather than short-term costs. Nevertheless, the PSC approved the proposal subject to conditions it will apply at the utility's next rate hearing, which shift the risk of revenue loss associated with the discounts to shareholders. Re Bangor Hydro-electric Co., Docket Nos. 95-701; 95-702, July 21, 1995 (Me.P.U.C.).

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