Milo factory may close after being hit with new $6K solar subsidy charge, manager says

A new $6,000 solar subsidy charge in the monthly Versant Power electricity bill for Milo Chip may force the factory to close, its office manager said.

The factory, which employs four people and produces sanitary paper products in Milo, has been breaking even with surging labor, fuel and insurance costs, office manager Isabelle McKenna said.

Prior to this new charge, an average monthly Versant Power electric bill was less than $5,000 for the factory, McKenna said. That additional monthly $6,000 is a cost the business cannot absorb. And because it is a fixed cost, the factory is still stuck paying the monthly flat fee even if sales — and its electricity usage — are down.

The cost has pushed the factory over a threshold where operating will leave them “bleeding dry,” McKenna said. Milo Chip filed a public complaint regarding its Versant bill with the Maine Public Utilities Commission.

The charge — noted on bills as a “public policy charge” — took effect July 1 and comes from the state-mandated and long-controversial solar subsidies, with costs ranging from $11.64 a month for residential customers to more than $9,000 a month for businesses .

Solar subsidies were designed to encourage companies to build renewable energy sources in Maine. However, the implementation of the program is creating surging electricity bills for some businesses that will either be passed along to customers or lead to job losses, the state’s public advocate warned. It’s predicted that ratepayers will have to make up an annual estimated $220 million in solar subsidies by 2025.

A 2019 law applied net energy billing to community solar farms to incentivize them to build and offset the costs. In short, Versant and Central Maine Power Co. buy a kilowatt hour of solar energy from the community solar projects at 20 cents a piece, while they sell the electricity to consumers for about 5 cents a kilowatt hour. That 15 cent difference is made up through the subsidy cost, Public Advocate William Harwood told the Bangor Daily News.

A good way to think of it is like a sales tax, he said. The question is who pays for it.

“This is where you end up with the circular firing squad,” Harwood said. “Every ratepayer group is claiming, ‘It shouldn’t be me. It should be some other rate payer.’”

Versant doesn’t own, control or profit from the programs, spokesperson Marissa Minor said. The Maine Public Utilities Commission is supposed to ensure the cost of the programs is supposed to be fairly spread among customers.

“While we can’t control these costs, we work to inform customers about what impacts like this mean for them,” Minor said.

CMP had previously incorporated the charge into its billing, but Versant’s fixed charge is just now being seen in customers’ July bills. The two companies will have to make up $130 million in solar subsidy costs due to the net energy billing program from July 2024 to July 2025.

“It’s a statewide problem but in Versant it caught people more by surprise or dramatically. It seems to be more stirred up there,” Harwood said.

Commercial customers saw a new line item ranging from $421 to $9,694, depending on what energy use class they are in, according to Versant’s tariff sheet.

How much the new charge affects a business varies. There are six rate classes, which divide commercial ratepayers based on how much electricity they use. If a business uses less than the average amount of electricity in its class, then the set charge will hit harder than it will for a company using an above average amount of electricity in its class, Harwood said.

Take two companies in the same rate class, who pay the same fixed cost. A company with below average electricity use will see its bill driven way up, while the above average company’s bill has higher energy costs, meaning that new charge won’t look as bad to the bottom line, he said.

“Everyone is getting hurt but some are getting hurt a lot and some are getting hurt a little,” Harwood said.

It is possible for a business to change rate classes to minimize the public policy charge, but multiple requirements must be met, Minor said.

Jeff Dyer receives three monthly Versant bills as the owner of the seasonal Forest Ridge Campground in Ellsworth , for a total of $12,000 to $20,000 a month during peak operations, he said. His billing cycle covered part of July, and each bill had a roughly $200 charge for the solar subsidy, according to copies of the bills shared with the BDN.

Each bill will see a $421 public policy charge once the new subsidy is fully incorporated in the bill, according to Versant’s rates.

“As a business owner we are able to increase our rates to recoup some of the costs but that’s just going to make people not come and not spend tourism dollars in the state of Maine,” Dyer said. “It’s going to shoot the state’s revenue right to hell.”

Residential Versant customers in the Bangor area have a $11.64 fixed charge for the subsidy, but the average bill dropped because of changes to the standard offer rate. Versant customers in Aroostook County saw an average increase of $6.99.

Only the Legislature can change the cost to ratepayers, Harwood said. It can choose to eliminate the subsidy or change how much ratepayers must cover. A bill to eliminate the subsidy failed to become a law during last summer’s legislative session.

People upset over the charge need to stay focused on the issue and make sure elected officials know, Harwood said.

“Call your state senator or state representative and tell them how unhappy you are,” he said.