Central Maine Power is Maine’s largest utility with more than 636,000 customers in a state of fewer than 1.4 million people. (Getty Images)
Amid the dueling figures, the TV spots, door-knocking campaigns, demonstrations and recriminations, the fate of one of the most ambitious public power campaigns in modern U.S. history may come down to a simple question.
Are Maine’s two largest electric utilities unpopular enough to be voted out and replaced with something brand new?
On Nov. 7, Mainers will decide whether to initiate a public takeover of the state’s two investor-owned utilities, Central Maine Power and Versant, which together service more than 96% of Maine’s electric demand, called “load” in industry jargon.
The ballot initiative, called Question 3, would create a new nonprofit company, Pine Tree Power, to purchase the electric transmission and distribution systems currently operated by the for-profit utilities, which have been plagued by poor reliability rankings, blasted for high prices and are bottom of the barrel for customer satisfaction.
Proponents contend creating Pine Tree Power is a common-sense move that will lower rates, deliver better customer service and reliability and help speed a transition to renewable energy, all while keeping control close to home.
Critics, including campaigns bankrolled with millions of dollars from Versant and Central Maine Power, argue the initiative is a monumentally expensive gamble with a crucial public service that comes with no guarantees of improvements over the status quo.
Outside of Maine, though, utility experts and public power advocates are watching. And while there’s debate about how much spillover effect Pine Tree Power’s passage might have elsewhere, there’s broader agreement that nothing like it has been seen at the state level since Nebraska began absorbing investor-owned utilities into public power districts in the 1930s and 1940s.
“This idea that you’d have a state initiative, there are a lot of situations that are similar but I think most similar would be what happened with Nebraska,” said Ted Kury, director of energy studies at the University of Florida’s Public Utility Research Center. ”But, certainly, exactly like this? No.”
‘A wake up call’
Seth Berry, a former seven-term Democratic member of the Maine House of Representatives who lives in Bowdoinham, said he came to the legislature in 2006 with a focus on climate and energy policy. As he delved into issues involving the electric grid, including rooftop solar, net metering and transmission siting, he saw a troubling pattern emerge.
“From the start, the utilities were the obstacle to Maine’s efforts to make an affordable and rapid shift to clean energy independence,” he said, adding that in policy debate after policy debate, “the two large investor-owned utilities just wanted all the cake and then some for themselves.”
One example was the since-repealed “gross metering” rule instituted by the Maine Public Utilities Commission, which one solar owner compared to “the supermarket making us weigh vegetables we grow in our gardens and charging us for them.” Another was when Kennebunk’s small municipal utility, which had lower rates and better reliability, attempted to expand to serve the rest of the town — into territory served by Central Maine Power —and was stonewalled by the bigger utility, Berry said.
“That was a wake up call for me as well,” Berry said. “They came with a very reasonable request. … CMP just shut them down, no way, no how.”
Berry co-founded the Our Power campaign to advocate for a bill he sponsored that would have created Pine Tree Power by legislative action, subject to voter approval. The bipartisan legislation passed in 2021 but was vetoed by Democratic Gov. Janet Mills.
At the time, Mills said the bill was “just not the appropriate vehicle to do what it aims to do,” though she called CMP and Versant’s performance “abysmal.” A 2022 report by the Citizens Utility Board, an Illinois consumer advocacy group, ranked Maine 49th out of 50 states and the District of Columbia for reliability, though the state did better on measures of affordability and renewable energy production.
“I think we’re well beyond the point of debating whether our utilities can do better. They can and they must,” the governor said. But she called the legislation “a patchwork of political promises rather than a methodical reformation of Maine’s complicated electrical transmission and distribution system.”
She still has reservations about the ballot initiative, invoking H.L. Mencken in a radio interview earlier this month: “‘For every complex problem there’s an answer that is clear, simple and wrong,’” she said. “This might be the wrong answer to a complex problem.”
Sen. Rick Bennett, a Republican from Oxford who carried the Senate version of the legislation Mills vetoed, said the state’s political and business leadership “across the board” is more sympathetic to corporate interests like CMP and Versant than regular people, who are preoccupied with rising bills, poor customer service and reliability problems.
Bennett cited an “Eggs and Issues” breakfast on Sept. 14 hosted by the Portland Community Chamber of
Commerce that only featured opponents of the initiative.
“It’s that sort of one-sided bias among the elites in Maine that infuriates those of us that are more concerned about the policy issues than coddling incumbent power companies that send our excess rates overseas to foreign shareholders,” Bennett said. “There’s a lot of pent-up resentment over how the incumbent investor-owned utilities have managed to take inordinate amounts of political power in the system and turn that into really sweetheart kinds of rate arrangements.”
CMP’s parent company, Avangrid, is owned by Spanish company Iberdrola. Versant is owned by ENMAX, which has the city of Calgary, Canada, as its primary shareholder. And the Pine Tree Power campaign has made much of those arrangements.
“CMP and Versant spend more time working for their owners — the governments of Calgary, Qatar, and Norway — than the people of Maine,” the Pine Tree Power website says, referring to the financial institutions operated by the governments of Qatar and Norway that are two of Iberdola’s largest shareholders. “They’ve been raising rates, threatening our energy security, allowing countless outages and trying to divide us with expensive ad campaigns… all so that they can take hundreds of millions in profit each year from our communities.”
‘Potential for disaster’
Critics, though, say Pine Tree Power is trying to capitalize in part on rising portions of electric bills that are outside of Versant and CMP’s control and overselling the merits of voting them out — with no guarantee of better performance.
“It could be five to 10 years before Mainers ever see a plan for how Pine Tree Power will operate,” said B.J. McCollister, a spokesperson for Maine Energy Progress, a “ballot question committee” similar to a PAC that is funded by ENMAX, Versant’s parent company.
“They have no operations plan at all. The private, for-profit company they will hire to run the grid won’t be determined until after the election of the board.”
Maine’s utility industry is restructured, meaning utilities only operate transmission and distribution systems — they don’t own power plants. CMP, Maine’s largest utility with more than 636,000 customers in a state of fewer than 1.4 million people, charged residential customers 28 cents per kilowatt hour in 2023, per a presentation by the Maine Public Utilities Commission.
But the biggest piece (nearly 60%) of that is the supply, or power generation, portion of the bill. Across New England, which is highly reliant on natural gas generation, average electric prices increased from 24.6 cents per kilowatt hour in June 2022 to 28.3 cents per kilowatt hour in June 2023, according to the U.S. Energy Information Administration. That was the highest regional price in the nation outside of Alaska and Hawaii. Like in much of the country, where about 40% of electricity is produced by natural gas generation, prices spiked as a result of the Russian invasion of Ukraine.
“More than half of all electricity in New England is generated by natural gas, and therefore natural gas essentially sets the market price for electricity in our region,” the governor’s energy office said.
The distribution portion of CMP’s bill rose from 4.9 cents per kilowatt hour in 2013 to 6.6 cents in 2023. (Transmission rates, a separate charge, are generally set by the Federal Energy Regulatory Commission).
“There are a couple of things being used by the proponents [of Pine Tree Power] on people who don’t know anything more than they get a bill,” said Barbara Alexander, a former division director at the Maine Public Utilities Commission who now runs her own consulting practice. She says she has not been paid by proponents or opponents of the referendum, which she nonetheless opposes.
“The distribution part of the bill has risen less than inflation over the last 15 years,” Alexander said. However, earlier this year the Maine commission did approve significant distribution rate increases to both Versant and CMP, which the companies’ critics characterized as a callous cash grab at a time when Maine ratepayers are struggling to pay bills.
Alexander said the Maine legislature and the utility commission have done a good job of holding Versant and CMP accountable for performance problems, including a $10 million fine CMP was hit with in 2020 for billing problems and poor customer service as well as setting new standards for reliability and planning to help Maine meet its climate goals. Opponents also note that if Pine Tree Power runs afoul of regulators, there will be no shareholders to punish, only ratepayers.
“This is an issue that is fully within the control of our current regulatory system,” Alexander said. “We have the tools to make sure these utilities have been operating in the public interest.”
Pine Tree Power, which will have to add the cost of the acquisition in its new rates as well as the expense of hiring a contractor to actually run the electric grid, “creates all the potential for a disaster, frankly,” she added
“How are we guaranteed anything better? I just don’t see it,” Alexander said.
Pine Tree Power’s supporters say it’s their opponents who are pushing misleading claims and numbers.
Among the biggest punching bags in the debate is how much it will cost Pine Tree Power to take over the incumbent utilities’ assets. Willy Ritch, a spokesman for Maine Affordable Energy, another ballot question committee bankrolled by CMP, says it will cost Pine Tree Power $13.5 billion, based on a “relatively conservative” formula that assumes the assets will be sold for twice their value.
“Utilities are typically priced at a multiple of their assets,” he said.
Pine Tree Power supporters call that figure drastically inflated. It comes from a study the utilities commissioned that inflated the value of their assets, then assumed that the companies would continue to invest in the grid, even though they would then be in the process of being acquired, they argue.
“The consultant reached the $13.5 billion figure by assuming 1) that both CMP and Versant will be substantially increasing their rates of investment in utility plant between now and the time of acquisition, and 2) that the purchase price will likely be in the realm of double this swollen book value,” wrote Peter Murray, a public utility lawyer in Portland, in an op-ed in the Portland Press Herald. “First, there is little basis for assuming that a utility on the verge of being acquired will likely double down on its investment in plant. … Second, it is extremely unlikely that the marketplace for utility property will support a purchase price equal to double book value for Maine utility assets.”
Ultimately, courts will decide the fair-market value of the utilities’ assets, according to a fact sheet from the state Office of the Public Advocate, which has not taken a position on the initiative but noted that the transition “may be lengthy” if voters opt to create Pine Tree Power, citing a time frame of five to 10 years to resolve litigation, form the new company and elect board members.
“These kinds of takeovers – on a much smaller scale – have led to delays that have stretched out for years,” said Sarah Durdaller, a spokesperson for the Edison Electric Institute, which represents investor-owned utilities. “And no state has ever sought to take over its predominant electric company, let alone two of them at the same time.”
If you can lie about something long enough and put enough money behind it you can persuade people that there’s some veracity behind what you’re saying.
– Sen. Rick Bennett
There’s also varying projections about what will happen to rates if Pine Tree Power comes into existence. A study commissioned by the PUC and released in 2020 found that rates were likely to increase in the short term due to the cost of financing the acquisition but would likely come down over the long term due to lower financing costs and tax savings.
“There is significant uncertainty related to the acquisition price, the operator’s management fee, the actual financing costs of PTP, and the future rate of growth in utility capital assets,” the Public Advocate’s Office wrote in the fact sheet. “These factors make it difficult to predict with certainty whether the acquisition will result in net savings to ratepayers.”
Another analysis by Maine economist and utility regulation expert Richard Silkman says the commission’s report “seriously misstated the financial consequences to Maine ratepayers” and lowballed the savings from the public power takeover.
The Pine Tree Power campaign says it will save ratepayers $9 billion over 30 years by operating as a nonprofit and using revenue bonds to finance the acquisition. In their most recent rate cases, both Versant and CMP’s “return on equity,” or profit, was set at 9.35%. The average ROE approved for U.S. electric utilities in rate cases during the first quarter of 2023 was 9.71%, up from the 9.54% average in 2022, according to S&P Global.
“The interest rates on those bonds are so much lower than the profits we are forced to pay for shareholders,” said Lucy Hochschartner, a spokesperson for the Pine Tree Power initiative.
Bennett, who represents a rural western Maine district served by CMP, says the utility isn’t well liked by his constituents. Yet, what he called a “disinformation campaign” — that Pine Tree Power is a “government takeover,” that it will cost $13.5 billion and that taxpayers are on the hook — has started to create questions “that our side hasn’t had the resources to respond to fully yet.”
“If you can lie about something long enough and put enough money behind it you can persuade people that there’s some veracity behind what you’re saying,” he said.
Public power, of course, isn’t a radical idea. There are 98 towns in Maine already served by consumer-owned utilities, according to the Our Power campaign.
And according to the American Public Power Association, about 2,000 communities across the country have a public power utility. Those utilities serve more than 49 million Americans.
In the past 20 years, there have been 18 new public power utilities formed, said Ursula Schryver, the association’s vice president for strategic member engagement and education. Their rates are typically lower and their electric service is more reliable, the APPA says. But campaigns to “municipalize” for-profit utilities are often beset by misinformation and scare tactics, she said.
“Really it’s to discourage communities from looking at their options,” she said. “They’ll typically say it’s going to be expensive, take years and cost a lot of money. … They’re going to have PR campaigns (and) push legal challenges to drag it out and make it as expensive and as long and scary as possible.”
If Maine’s initiative passes, she said, “it would definitely spur more interest both from larger cities and other states that might want to do something similar.”
And while most public power campaigns — such as Winter Haven, Florida’s successful municipalization effort, are small — some have been more on the scale of what Maine voters are contemplating. In 1998, after the Long Island Power Authority in New York replaced the investor-owned incumbent utility, it reduced electric rates 20%, the association says. LIPA currently has 1.1 million customers, though it hasn’t been immune to debates about its debt, rates and public-private business model.
“There are no guarantees in any business model,” Berry said. “Fundamentally, having more say is a good thing. Having a nonprofit business model is a good thing when it’s a monopoly. … The big picture that we see across the country over time is public power does a better job.”
On Nov. 7, Maine voters will decide whether to replace their two large investor-owned utilities, Central Maine Power and Versant, with a new public company called Pine Tree Power.
Governance: Pine Tree Power would be governed by a 13-member board. Seven of those members would be elected from districts across Maine and the remaining six would be appointed by the elected members. All would serve staggered six year terms and get $110 a day plus expenses. A company would then be contracted to run the system. The new utility’s rates, debt issuances, contract with the operator and construction of any major new transmission lines would be subject to approval from the Maine Public Utility Commission .
Cost: This figure is very much in dispute. Opponents, including groups funded by the existing utilities, contend that taking over their systems would cost Pine Tree Power and its ratepayers $13.5 billion. Pine Tree Power proponents say it would be significantly less. One veteran Maine utility lawyer noted in a recent op-ed that Versant’s parent company, for example, paid $1.4 billion for the whole company just three years ago and estimates the actual acquisition price for both at about $7.5 billion. Ultimately the courts, or a court-appointed arbitrator, will decide the value of Versant and CMP’s assets if no agreement can be reached, per a fact sheet from the Maine Office of the Public Advocate. (A separate referendum question, which Pine Tree Power opponents got on the Nov. 7 ballot, is an attempt to knee-cap the fledgling utility if it’s approved by forcing it to go back to the voters if it wants to borrow more than $1 billion.)
Rates: The Maine Office of the Public Advocate says that uncertainty over the purchase price, management fees, financing costs and other factors make it “difficult to predict with certainty whether the acquisition will result in net savings to ratepayers.” An economic analysis performed for the Maine Public Utilities Commission consultant London Economics found the takeover was likely to raise rates in the short term but lower them in the long term. Another review cited by Pine Tree Power, which says it can lower rates by getting rid of the hundreds of millions in profits Versant and CMP make every year, found that it would save Maine ratepayers $9 billion over 30 years starting immediately.
How long until Pine Tree Power is up and running? Five to 10 years, the public advocate estimates, citing the need to form the new utility, elect the board and litigate the acquisition and the price.
What about climate goals? Versant and CMP are transmission and distribution utilities and in Maine, a “restructured” state, such utilities are generally prohibited from owning generation assets like power plants, wind turbines or solar arrays. “Thus, any impact on climate goals would be related to measures such as facilitating the transition to electric vehicles or integrating renewable energy resources into the grid,” the public advocate says.
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