What are stranded costs?
A. Prior to March 1, 2000, Maine’s electric utilities were responsible for generating as well as delivering power. In some cases, contracts were signed or facilities built that are now too expensive to compete in the competitive generation market. Because these costs were approved by the PUC at the time and may be recovered by the utility, they are now “stranded” by the move to a competitive industry. The PUC regularly conducts reviews of these costs to insure that they are legitimate and that the utilities are making bona fide attempts to reduce them. There are two important things to remember about stranded costs. First, they are going down and will eventually be paid off, like a mortgage. For example, CMP’s stranded costs will significantly decrease in 2008, though they will not be entirely gone until 2015. Second, they would be in rates even if the industry had never been restructured.
