Maine’s new energy-efficiency plan is projected to lower electricity bills for the state’s residents — even those who don’t directly benefit from its rebate and incentive programs.
The plan, set to go into effect in July, is heavily focused on getting electric heat pumps in as many homes as possible. It comes as other states debate rolling back efficiency programs funded by utility customers as a short-term fix to rising energy prices. Maine’s strategy takes the opposite approach: It leverages investments in efficiency and electrification to lower rates for everyone.
“This is bucking the trend,” said Michael Stoddard, executive director of Efficiency Maine Trust, the agency that administers the state’s energy-efficiency plans. “This is our pathway to managing electricity prices while also transitioning the consumers of our state to the highest-efficiency, lowest-polluting equipment that is available.”
Maine has been an aggressive adopter of home heat pumps in recent years. In 2019, the state set the goal of deploying 100,000 heat pumps by 2025, a target it blew by two years ahead of schedule. The state now aims to get another 175,000 heat pumps up and running by 2027. Maine is also a member of a five-state coalition that is collaborating to boost heat pump adoption, lower prices, and train installers throughout New England.
The state’s new energy-efficiency plan is geared toward continuing this progress. It is centered largely on the idea of “beneficial electrification,” a somewhat jargony term that refers to switching from fossil fuels to electricity wherever the move would save money and cut emissions. There are plenty of opportunities to make that swap in Maine, where roughly half of households keep warm with heating oil, which can be pricey and inefficient.
Over the next three years, the incentives in the plan are forecast to support 38,000 new whole-home residential heat pump systems — including 6,500 in low-income households — and weatherization for 9,900 houses. A low-income household can get rebates of up to $9,000 for heat pump installations, and homes at high income levels qualify for up to $3,000. The incentives do not offer any money for residential fossil-fuel-burning equipment.
This strategy should decrease annual heating costs by more than $1,000 each for homes that switch to heat pumps from oil, propane, or electric baseboard heat, but it is also expected to lower electricity prices across the board, Stoddard said. Efficiency Maine Trust estimates the plan will suppress electricity rates by more than $490 million over the long term.
How? Utilities have certain fixed costs, such as maintaining power lines. To pay for them — and this is a bit of a simplification — they essentially divide the expense by the amount of power they expect customers to use in a year, and add that number to the rate they charge per kilowatt-hour. When more heat pumps come online, power demand goes up, so the fixed costs are spread out over more kilowatt-hours, lowering bills for the average consumer.
