Residential customers of Central Maine Power could see their bills increase by $1.67 next month as a result of a compromise with state officials over the utility’s request for higher rates.

The three-year, $67 million plan, worked out by CMP and the Office of the Public Advocate and announced Wednesday, would translate into a series of increases, the first taking place in July with a 1.1% hike for customers. The additional cost of $1.67 per month is an average based on a home using 550 kilowatt-hours of electricity.

Under the agreement, CMP would receive an increase of $16.75 million on July 1, and additional step increases of the same amount on Jan. 1 and July 1, 2024, and Jan. 1, 2025. CMP requested the hikes in its electricity distribution rates to cover capital costs the company says are focused on increasing reliability and upgrades to withstand climate change.

The Public Utilities Commission must approve the agreement before it can take effect. A hearing has not yet been scheduled.

Negotiators who helped reach the deal on behalf of Maine consumers said the increase pales in comparison to the $90 million to $105 million CMP was originally seeking, which proposed increasing the average customer’s bill by as much as $10 a month by 2026, beginning with a monthly hike of about $5 by September.

“The settlement is not perfect,” said Andrew Landry, deputy public advocate, “but it represents a significant reduction from CMP’s initial request.”

Gov. Janet Mills had stated her opposition to CMP’s three-year spending plan before a settlement was announced. A spokesperson for Mills did not respond to a request Wednesday night for the governor’s reaction to the agreement.

Last May, CMP asked state regulators to approve a three-year spending plan that would have raised bills for a typical home customer by as much as $10 a month by 2026, beginning with a monthly hike of about $5 by September.

The request immediately drew opposition from the public advocate, representatives of low-income and elderly groups, and the Mills’ administration.

Regulators were scheduled to consider the company’s request in July before they indefinitely put the process on hold for settlement talks.

CMP, which serves roughly 640,000 customers in central and southern parts of the state, had an incentive to reach an agreement. A referendum campaign to take over the assets of CMP and Versant Power and form a public distribution utility called Pine Tree Power is heating up ahead of a vote in November. Moving past the rate case might spare CMP some negative publicity just as Mainers are weighing the merits of the takeover plan.

Pine Tree Power supporters criticized the agreement Wednesday, calling it a “bad deal for Mainers.”

“Mainers cannot afford any additional rate increases while supply costs continue to go through the roof,” Pine Tree Power said in an emailed statement.

Electricity supply rates have soared over the past two years in Maine, largely because of spikes in prices for wholesale natural gas used to fuel many New England power plants. Those rates aren’t controlled by CMP or Versant, which distribute power but don’t generate it.

Compounding the problem, electric rates also are set to rise in July as part of an annual adjustment of utility expenses. That increase, estimated at $9 per month by the public advocate, is largely to pay for long-term power purchase agreements approved by the PUC and the net energy billing costs associated with renewable energy contracts such as community solar farms. CMP is required by law to enter into those contracts.

Shortly before the CMP settlement agreement was reached, the PUC approved another settlement the public advocate reached with Versant, in which Versant customers will see their total electricity bills rise by roughly 4% – an average of $5.25 a month – starting July 1.

A second increase of the same amount would go into effect next year.

The two-part phase in for the Versant rate hike is designed to help ease the impact on customers, the PUC said. It will amount to an increase of approximately 14% in the distribution rate in July 2023, and approximately 12.5% to the distribution rate in January 2024.

“A rate increase is not something the commission takes lightly,” PUC Chair Philip Bartlett said. “In this case, the parties came together to put forward a reasonable compromise that balances the need for investment with customer impact, while also ensuring accountability for improved reliability.”

The new rate includes funding for infrastructure investments, smart meter upgrades and inflation. The pricing agreement also includes system reliability requirements for Versant if it misses new, stricter service quality standards related to frequency and duration of outages, call answering metrics, billing accuracy and other criteria.

If Versant fails to meet any of them, it can face financial penalties of up to $3 million a year.

“Ultimately, we wanted to ensure that these reliability investments lead to tangible benefits for customers,” Bartlett said.

Versant Power serves 164,000 customers, mostly in eastern and northern Maine.

Staff Writer Tux Turkel contributed to this report.