Most Maine homes and small businesses can expect the cost of their electricity supply to go up in January.

Nine out of 10 Maine homes receive their electricity supply through the state-run standard offer program. They’re likely to see an estimated 15 percent or so jump in rates, according to an analysis done for The Maine Monitor by Competitive Energy Services, a Portland consulting and energy procurement firm.

The projected increase could boost average supply rates for a typical home by roughly $8 a month in 2026. 

The supply rate hike would be separate from whatever happens with a recent, controversial request by Central Maine Power to increase its distribution rates to upgrade its aging network of wires, poles and substations. That proposal, now at the Public Utilities Commission, has been met with strong opposition from inflation-weary customers, triggering a record 617 public comments by early October.

“Affordability is becoming a big issue, a big political issue,” said Andrew Price, Competitive Energy Services’ president and CEO. “There’s definitely outrage out there with CMP’s proposed distribution increases. The supply hike is going to feel like there’s some piling on.”

Rising electric rates are becoming a national issue, too, with the prices consumers pay up 13 percent since 2022 and projected to rise again next year, according to the federal Energy Information Administration, a non-partisan branch of the U.S. Department of Energy. In some regions, the growth is tied to building more power plants to meet demand at new data centers.

But Maine’s expected supply cost increase has nothing to do with artificial intelligence or CMP’s case. Instead, it’s tied largely to wholesale natural gas prices that are on track to keep rising in 2026.

Prices are up in part because the United States, which has become the world’s largest gas exporter, is projected to double the volume of liquefied natural gas shipped overseas by 2030, according to federal estimates. LNG exports are part of President Donald Trump’s goal of unleashing a “Golden Era of American Energy Dominance,” growing the country’s gross domestic product and adding jobs.

But higher natural gas prices are bad for energy consumers in New England. That’s because half the region’s power is generated by plants that burn natural gas. The cost of gas in turn sets what’s called the marginal price for what other forms of generation are paid for supplying New England’s power grid 24/7.

Wholesale gas prices are being watched closely now because the Maine PUC is planning next month to review the annual bids it receives from generators offering the standard supply service in 2026. There’s no way to know the precise outcome until the days the bids are accepted, but market conditions are pointing to some increase, according to Philip Bartlett, who chairs the PUC.

“It’s fair to say that electricity prices track natural gas prices,” he said. “So if we see changes in natural gas prices, they will be reflected in electricity costs.”

Electricity suppliers study cost projections on energy futures markets, and if they see gas prices rising next year, Bartlett explained, they hedge that risk by charging more for generation contracts.

“Any upward swing in gas prices is bad news for electricity prices,” he said.

Supply rates have been volatile

Mainers have received their electricity supply from an unregulated energy market for 25 years, although some residents still think their utilities are involved because the charges are included in their monthly bills. Due largely to natural gas, supply costs have become the most volatile and largest component of an electric bill.

And they’ve been on a roller coaster in recent years, ranging from roughly 6 cents per kilowatt-hour to 16 cents. They plunged during the pandemic in 2020, soared after Russia’s invasion of Ukraine roiled global energy markets, and have eased over the past two years.

Today, according to the latest figures collected by Maine’s Department of Energy Resources, standard offer supply rates are roughly 11 cents per kWh for CMP and Versant Power’s Bangor Hydro District.

Maine’s total electric rates grew at the third fastest rate in the country between 2014 and 2024, according to an analysis conducted last April by The Monitor. An overly generous state solar reimbursement policy and the costs of repairing the delivery grid following severe storms were contributors, but natural gas prices were the leading factor, the analysis found.

New England is especially vulnerable to price swings because the region’s constrained gas pipeline system doesn’t have enough capacity on the coldest winter days, requiring injections of more-costly LNG to meet demand. 

The role of LNG

But LNG now is playing a role in pushing up electricity prices elsewhere in the country. As aging coal plants have retired, natural gas has become America’s leading fuel for electricity generation, meeting 42 percent of the need. At the same time, a growing share of American gas is being shipped overseas from new export terminals. 

It’s headed primarily to Europe, for cutting dependence on Russian energy. And it’s going to Asia, to meet growing energy needs and to blunt tariff pressures from the Trump administration. Recent data from the Institute for Energy Economics and Finance Analysis, which promotes sustainable energy, found that, for the first time, the volume of gas being exported was more than half the amount being used at American power plants.

Although gas production and prices are always changing, the overall trend is pushing up the price of gas burned in America. The federal Energy Information Administration’s October outlook projected that a key market price used to forecast costs would rise from $2.20 per million BTU last year to $4.10 in January.

The idea that exports are pushing up gas prices isn’t universally embraced. The American Petroleum Institute, for instance, recently highlighted a report from S&P Global that found LNG exports had no major impact on domestic residential gas prices, although that report didn’t directly address the influence on electricity rates. 

Campaigning last year, Trump said he intended to slash energy and electricity prices in half within 12 to 18 months. And while gasoline prices have eased a bit this year due to lower crude oil costs, electricity generation has gone in the other direction.

“We’re not on track for any Trump policies to cut electric rates for Maine ratepayers,” said Heather Sanborn, Maine’s public advocate for utility customers.

Sanborn said her office hears daily from Mainers concerned about affordable power but that the state has limited tools to address supply costs. One strategy, endorsed by her office and AARP Maine, is to explore different methods for the PUC to procure standard offer contracts. 

A bill passed this year in the Maine Legislature directs the PUC to look into soliciting bids more than once a year and for varying lengths of time, in an effort to smooth the volatility in rates.

Asked about the effort, Bartlett said his agency contracted for a procurement study that recommended minor adjustments but “nothing earthshattering” that would significantly lower supply costs for Mainers. A report to the Legislature is due in January.

One strategy that could help over time, both Sanborn and Bartlett noted, is to build more cost-effective renewable energy capacity in the region. Solar, wind and battery storage deployed at certain hours can help dampen the volatility of natural gas, they said. Solar, for instance, can reduce the time gas plants need to run when demand is high, such as on a summer afternoon when air conditioners are cranking.

But federal support for clean energy has largely evaporated, especially for solar and wind, with the Trump administration doing what it can to hamstring renewable projects in favor of fossil fuel generation.

“To the extent we’re not building grid-scale storage or offshore wind, we are allowing natural gas to be the marginal cost setter in our region,” Sanborn said. 

This story was originally published by The Maine Monitor, a nonprofit civic news organization. To get regular coverage from The Monitor, sign up for a free Monitor newsletter here.