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Maine Debates Having a Publicly-Owned Electric Utility

Lawmakers heard hours of testimony regarding a proposal to create a consumer-owned utility out of the state’s two major electric companies. Many residents support the idea, but some critique the plan as a “government takeover.”

(TNS) — Lawmakers heard sharply contrasting predictions Thursday on whether a consumer-owned utility created from Maine's two major electric providers would lower costs and improve service or leave ratepayers saddled with debt and less reliability.

During hours of testimony, supporters said a forced buy-out of Central Maine Power Co. and Versant Power would allow residents to assert control over electric infrastructure and costs as the state makes critical decisions about its energy future. If lawmakers agree, voters would decide in a statewide referendum later this year whether to stick with CMP and Versant or make the historic transition to a consumer-owned utility.

"Every month right now, the 800,000, captive combined customers of CMP and Versant pay monopoly rent for the use of a monopoly grid," bill sponsor Rep. Seth Berry, D- Bowdoinham, told members of the Legislature's Energy, Utilities and Technology Committee. "With Pine Tree Power, we will pay a lower monthly bill and, equally important, it will no longer be a rental payment but rather a mortgage payment. We will save money, invest in and improve the grid, and build our own equity."

Berry and bill supporters are hoping to build on years of growing customer dissatisfaction over high rates, prolonged power outages and perceived foot-dragging on clean energy initiatives to create a consumer-owned utility for most of the state. Although Maine currently has eight smaller consumer-owned utilities, the forced sale of the state's two dominant electric providers' assets — at a cost estimated from $5 billion to $13.5 billion — would be unprecedented.

Opponents, meanwhile, portrayed the proposal as a "government takeover" of Maine's utility grid and accused proponents of cherry picking data to paint a rosy picture that is unlikely to materialize with a consumer-owned utility. Instead, they predicted the initiative would trigger a long court battle, introduce politics into utility decision-making and saddle ratepayers without guaranteeing lower rates or improved service.

Representatives of both CMP and Versant also sought to cast Berry's proposal as being at odds with progress toward achieving an ambitious set of climate-related goals adopted by the administration of Gov. Janet Mills and the Legislature.

"The idea that the government may force the divestiture of Maine's two privately owned transmission and distribution utilities is perhaps the single largest variable in terms of disruption to that process," said John Flynn, president of Versant Power. "To achieve our climate and grid modernization efforts, we need everyone working together. We have neither the time nor the money to waste on polarizing fights."

More than 90 people had signed up to testify on L.D. 1708 — the majority of them in support — forcing lawmakers to decide whether to continue into the night or pick up the issue again on Friday.

Berry's bill — which is the third version of a proposal he first introduced in 2019 — would direct the Maine Public Utilities Commission to find CMP and Versant "unfit to serve" because of low customer satisfaction, reliability issues and high rates when compared to similar companies nationwide.

That would kickstart a process to use revenue bonds — not taxpayer-financed general obligation bonds — to buy out CMP and Versant's transmission and distribution networks based on fair market value. While Berry and supporters estimate that figure at roughly $5 billion, the utilities and their backers have estimated the price tag could be $13.5 billion.

The Pine Tree Power Company would be run by an elected board, but day-to-day operations of the consumer-owned utility would be managed by a private company hired for the task. The consumer-owned utility would still be regulated by the Maine PUC.

While supporters said that structure would ensure ratepayers to have a voice, others questioned whether elected board members would introduce politics or lead members to make decisions not in the best, long-term interest of the utility and its customers.

That was one of the concerns raised by four former PUC commissioners — Thomas Welch, William Nugent, Sharon Reishus and Mark Vannoy — who served a combined 42 years on the regulatory body. The four expressed skepticism that the bill would yield the predicted benefits and said it could undermine progress on the state's climate goals.

"We are concerned that this governance structure envisioned by L.D. 1708, comprised of elected officials, will politicize the management of the new utility and in turn lead to underinvestment in Maine's transmission and distribution systems and undermine the PUC's regulation of the new utility going forward," Welch said.

While Berry's bill said existing employees would be hired by the new operator, that is a point of dispute between the two sides. And the 2nd District of International Brotherhood of Electric Workers came out in opposition to the bill this week, largely based on concerns about impacts on the unionized utility workers.

A frequent and vocal critic of CMP, Berry first introduced a version of the bill in 2019 after the botched rollout of a new billing system, lengthy power outages and other public relations problems seriously harmed CMP's reputation. The company is also embroiled in a heated, costly political and regulatory debate over a proposed 145-mile-long high-voltage transmission line through Maine to allow Massachusetts to purchase hydropower from Quebec.

After failing to garner majority support from committee members last year, Berry made numerous changes to the bill, including the provision to require voter approval of the transition to a consumer-owned utility. He and other supporters said Thursday that a consumer-owned utility would provide Maine with "independence" from foreign, investor-owned utilities that are more motivated by profit than in making the investments needed to help transition Maine to electric vehicles, solar energy and home heat pumps.

"An electric utility that consistently ranks the lowest in reliability and satisfaction in the country cannot be trusted to support or uphold the means to these necessities," said Emily Rochford, a Burnham resident speaking on behalf of the Maine Youth for Climate Justice Coalition. "Establishing a consumer-owned utility cannot worsen the reliability, service, or affordability of electricity as these values are clearly not being held by the current investor-owned utilities."

Seeking to counter supporters portrayal of money-hungry international companies, CMP and Versant officials both said their parent companies invest significantly more in Maine's grid than the amount of dividends sent back abroad.

"We have seen over $3 billion of investment in CMP's system over the last 10 years . . . and the equity infusions that have come to finance (projects) are far in advance of any dividends that have been taken out of Maine and delivered to our parent company," said Eric Stinneford, CMP's vice president, controller and treasurer.

Dozens of people testified in support of the bill or submitted written comments urging lawmakers to approve it.

"We have decades of failure by the (investor-owned utilities) to justify saying 'enough is enough," Steven Weems, executive director of the Solar Energy Association of Maine, said in written comments. "Now we ask for bold legislative leadership, to start us on the path to a new, brighter era, by imagining a statewide consumer-owned utility and sending this possibility to the voters.

Berry's bill has garnered support from Democrats, Republicans and independents in the Legislature.

Sen. Rick Bennett, R- Oxford, said the state is "driving toward a carbon-neutral future" yet he accused the international owners of CMP and Versant of ignoring that future. CMP is owned by the Spanish energy giant Iberdrola and Versant is a subsidiary of ENMAX Power, which is located in Calgary, Canada.

"This ownership model has been a disaster, draining money from Maine while leaving us with the most outages, the longest outages, the worst customer service and among of the highest rates in the country," Bennett said.

But the bill has yet to gain an endorsement from a key player: Gov. Janet Mills, who has set ambitious goals for reducing emissions of climate-warming gases.

The administration as well as the Maine PUC testified neither for nor against the bill. However, Dan Burgess, director of the Governor's Energy Office, said the bill "raises substantial and serious questions that deserve a great deal more examination and research by the Legislature than is likely allowed during the current session."

Additionally, the Office of the Public Advocate, which represents ratepayer interests in matters before the Maine PUC, took no position on the bill but expressed concerns about the financial risks ratepayers could face under a consumer-owned utility.

Others warned of a long and costly legal fight ahead.

"It is a government takings," said David Littell, a former commissioner at both the Maine Department of Environmental Protection and the Maine Public Utilities Commission. While Littell represents Versant Power as an attorney, he told lawmakers he was testifying on his own behalf Thursday based on his years of work on utility and climate-related issues.

"This is going to be an extensive legal fight in state and federal courts, in front of the PUC and in front of ( Federal Energy Regulatory Commission) if this happens," Littell said. "Someone can't show up and tell you they are going pay half of the value of your house and have you say, 'Yes, that sounds fine to me. I am going to take it.'"

(c)2021 the Portland Press Herald (Portland, Maine) Distributed by Tribune Content Agency, LLC.
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