Bangor Hydro Files Alternative Rate Plan with Maine Public Utilities Commission

Business Wire,  August 1, 2001  

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Business Editors & Energy/Utilities Writers

BANGOR, Maine--(BUSINESS WIRE)--Aug. 1, 2001

Bangor Hydro-Electric Company (NYSE: BGR) today announced it has filed a proposal with the Maine Public Utilities Commission (MPUC) for an alternative rate plan (ARP) that will reduce overall electricity prices for most customers served by Bangor Hydro by approximately 8%. The plan includes stable standard offer prices for a four-year period beginning March 1, 2002. The filing of this proposal is required pursuant to an order issued by the MPUC on January 5, 2001, approving the merger between Emera, Incorporated and Bangor Hydro.

"Bangor Hydro's proposed alternative rate plan is intending to reduce the overall cost of electricity, a critical concern of most of Bangor Hydro's customers," stated Carroll Lee, Senior Vice President and Chief Operating Officer of Bangor Hydro. "Since the beginning of restructuring, overall costs for our residential customers have increased by 18% solely due to increases in the price of standard offer service. Standard offer service is administered by the MPUC and had been expected to be provided pursuant to competitive bids. However, for the first two years since the commencement of restructuring, the MPUC has rejected such bids and ordered BHE to obtain power supply arrangements satisfactory to the MPUC in order to provide the service. Unfortunately, the price for standard offer service has been high, reflecting high power supply costs. Now, we have developed a plan that allows us to reduce and stabilize this price for a four-year period beginning March 1, 2002. At the end of that time, we expect reductions in our charges for delivery service will also be possible, since a significant portion of the costs related to our pre-restructuring commitments will be paid off."

Under the most innovative part of Bangor Hydro's ARP proposal, the company will agree to arrange for power supply resources in order to serve small and medium standard offer customers, i.e., those customers who do not choose to purchase their generation service from competitive energy suppliers. Since restructuring of the electricity industry began on March 1, 2000, the MPUC has ordered BHE to arrange for such standard offer service, rather than accept bids from potential suppliers. In its ARP proposal, Bangor Hydro is committing to continue this important service and set the price for standard offer service at 5.5 cents per kWh, subsequent to revision prior to MPUC approval of the plan, a 25% reduction from prices currently being charged for this portion of electricity charges. The overall electricity price, including delivery charges of Bangor Hydro, will decline by approximately 8%.

In addition to agreeing to reduce and stabilize electricity prices, Bangor Hydro's ARP proposal includes incentives to improve the efficiency and the service quality of power delivery services to Bangor Hydro customers.

Under Bangor Hydro's plan, customers will be assured of reductions in their electricity costs, should they choose to remain standard offer customers. If they find suppliers that are willing to offer better terms for their generation service requirements, customers will be able to reduce their cost by additional amounts.

Bangor Hydro previously gave notice to the MPUC of its intentions to file this plan and filed information to support parts of the plan on June 29, 2001. The filing of the complete plan is expected to result in further review and consideration of the merits of the plan in the next few weeks.

"We are hopeful that the MPUC will consider our plan and find that it is the best approach to the provision of electricity services to our customers," stated Lee. "We intend to work closely with the MPUC and interested parties in order to facilitate their review of our plans and to develop improvements to it which are identified through this review."

Bangor Hydro (www.bhe.com) is an electric utility serving a population of 192,000 in an area encompassing 5,275 square miles in eastern and east coastal Maine. Bangor Hydro is a member of the New England Power Pool and is interconnected with other New England utilities to the south and with the New Brunswick Power Corp. to the north. Visit Bangor Hydro on the web at http://www.bhe.com.

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