Energy Policy

Battle over consumer-owned utility pits Gov. Mills against her legislative allies

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If a bill recently approved by the Maine Legislature’s Committee on Energy, Utilities and Technology (EUT) is passed, Maine voters may be presented with a referendum question this November that would replace Central Maine Power and Versant Power with a privately-operated nonprofit utility. But opposition recently voiced by Governor Janet Mills may indicate a conflict with her own party and an intention to veto the bill if it reaches her desk.

On June 1, the EUT Committee held a work session on LD 1708, “An Act To Create the Pine Tree Power Company, a Nonprofit Utility, To Deliver Lower Rates, Reliability and Local Control for Maine Energy Independence.” 

At the conclusion of the meeting, by a vote of 9-2, the committee voted to move the bill forward for consideration by the full legislature.

If both the legislature and Governor Mills approve the bill and it becomes law, voters in November will be presented with the following referendum question: 

“Do you favor the creation of the Pine Tree Power Company, a nonprofit, privately operated utility governed by a board elected by Maine voters, to replace Central Maine Power and Versant Power, without using tax dollars or state bonds, and to focus on delivering reliable, affordable electricity and meeting the State’s energy independence and Internet connectivity goals?”

If voters approve the referendum, LD 1708 would go into effect.

LD 1708, “An Act To Create the Pine Tree Power Company, a Nonprofit Utility, To Deliver Lower Rates, Reliability and Local Control for Maine Energy Independence”

If implemented, the bill would create the Pine Tree Power Company, a privately-operated, nonprofit utility run by a governing board of 11 members, seven of whom would be elected, voting members and four of whom would serve as expert advisory members.

The voting members of Pine Tree Power Company’s governing board would each represent five of Maine’s Senate districts, in which they must have lived for at least three months, and would serve 6-year terms. The advisory members would be elected by the voting members, serve 4-year terms and would collectively be required to have expertise in utility law, management, regulation or finance, clean energy and the environment, the concerns of utility employees and the concerns of electricity consumers.

Elections for the voting members of the governing board would follow a nonpartisan process similar to that already used for county commissioners, which require a candidate to collect between 300 and 400 signatures on a nominating petition. Candidates would also be eligible to receive election funding through the Maine Clean Election Act. Members of the governing board would receive $110 per day in compensation, plus expenses.

Per the bill, the purpose of the company would be to “use its access to low-cost capital and its ability to manage the electric transmission and distribution system in a manner that is not focused on ensuring shareholder profits.”

It is charged with delivering electricity to customers in a safe, affordable and reliable manner; ensuring excellence, timeliness and accuracy in metering and billing customers; providing an open, supportive and competitive platform to develop renewable generation, storage, efficiency and electrification technologies; assisting the state in meeting and exceeding its climate action plan goals; improving Internet connectivity by providing affordable access to utility poles and other infrastructure in underdeveloped and underserved parts of Maine; advancing economic, environment and social justice and benefiting all company workers and Maine communities; providing transparent and accountable governance; and supporting, securing and sustaining economic growth and benefits for Maine.

Pine Tree Power Company would have the powers and duties of a transmission and distribution utility and would be required to acquire the facilities of existing investor-owned utilities, namely Central Maine Power and Versant Power.

The bill prohibits the company from owning or operating a generating source of electricity, or purchasing electric capacity or energy from a generating source, unless the commission approves such a move to maintain or improve system reliability.

Beginning January 24, the bill requires that the Maine Public Utilities Commission (PUC) find a transmission and distribution utility with at least 50,000 customers unfit to serve and require the sale of the utility if, in the fast five years, it has met at least two criteria for unfitness. Those criteria include a utility that has repeatedly been in the lowest decile of utilities of similar sizes for customer satisfaction on a national survey of utility business or retail customers, a utility that has reported reliability in the lowest decile for utilities of a similar size across the country, and a utility that has repeatedly charged customers residential delivery rates in the highest decile of utilities of a similar size across the country.

The bill also requires that Pine Tree Power use eminent domain to acquire all utility facilities owned, operated, or held for future use by any investor-owned transmission and distribution company in the state, or any other similar property the board determines is in the interest of its customer-owners.

From 12 months following the date the law goes into effect, or 6 months after the first meeting of the company’s governing board, whichever is later, the company is prohibited from using eminent domain to purchase or acquire land.

Following that, the board is required to determine a purchase price offer to be made to the utility it is acquiring. This offer must include compensation for the cost of preparing and submitting necessary regulatory filings. The board must deliver notice of the offer, including what it is purchasing, to the investor-owned transmission and distribution utility. The utility then has 30 days to submit a counteroffer. If the board of the Pine Tree Power Company rejects the counteroffer, the utility can petition the Superior Court of Kennebec County to bring in a neutral-third party arbiter to recommend a purchase price. The utility can appeal this decision. But once appeals are resolved, if a purchase is not made, Pine Tree Power Company can use eminent domain to take the utility’s facilities at the final price determined by the court.

The PUC would be required to impose conditions on the investor-owned transmission and distribution facilities being acquired that ensure the owners cooperate fully and cost-effectively during the transition in ownership and control.

The bill requires that Pine Tree Power Company’s activities and expenditures made prior to acquiring these utilities be financed by short-term debt. That debt is guaranteed by the retail customers of CMP and Versant Power and is recoverable in rates. The state cannot guarantee any debt or liability.

Pine Tree Power Company would be tax exempt but is required to make timely payments to the municipalities or counties in which their acquired utilities are located, and at the same rates. The rates charged by the company would have to be sufficient to pay the full cost of service, including the cost of payment and all payments made in lieu of taxation. The company would also be responsible for any existing agreements and obligations of the utilities it acquires. The PUC would have the authority to investigate proposed rate changes made by the Pine Tree Power Company.

The bill requires that Pine Tree Power Company use a process of competitive solicitation to contract an operator or operations team to provide system operations and maintenance, customer accounts management, customer service and information for its facilities, as well as to assist in regulatory affairs, capital planning and administrative services. An amendment offered and approved by Rep. Berry, who is also the bill’s sponsor, allows the board to contract with different companies for each of its acquired properties. Employees of the operations team would be private employees.

The company hired to operate the acquired facilities would also be required to hire anyone who was a qualified, nonexempt employee subject to the collective bargaining agreement of that facility at the time it was acquired. Additionally, they would be required to pay acquired utility employees a retention bonus worth 6% of their gross annual pay for the first year of work and 4% for the second year of work. 

Additional amendments offered by Rep. Nicole Grohoski during the June 1 work session specified that a state elected official cannot be elected to the Pine Tree Power Company board and directed the attorney general’s office to submit a report recommending a code of ethics for the board to the State and Local Government Committee next session. Additionally, Rep. Grohoski offered an amendment requiring that, should the Pine Tree Power Company be dissolved in the future, any remaining equity that existed be returned to the taxpayers.

Opposition and Support for LD 1708

Rep. Berry, who introduced the bill, has argued the legislation would allow Mainers to control their own money and energy destiny and advance towards a future of clean energy and connectivity. He has also argued that, because Pine Tree Power would finance its acquisitions through revenue bonds, no state money would be spent on generating power and future investments in the electric grid would be cut by as much as half. In testimony introducing the bill to the legislature, Berry said, “With Pine Tree Power, we will pay a lower monthly bill. Equally important, it will no longer be a rental payment, but a mortgage payment. We will save money, invest in and improve the grid, and build our own equity.”

But opponents of the bill disagree that passing the legislation would have the effects Berry claims.

Marc Brown of the Consumer Energy Alliance doubted that some of the favorable economic analyses offered in support of the bill accurately reflected variables such as “unreasonable timeline estimates which, based on history, ignore what is likely-to-be an expensive and protracted legal battle.”

The International Brotherhood of Electrical Workers (IBEW) opposes the bill over the potential uncertainty and harm for its workers. Among the union’s concerns are that the bill would remove employees’ right to strike. Even though utility workers would be classified as private employees by the law, Michael P. Monaam, international vice-president of the IBEW, expressed concern that the Pine Tree Power Company would be “controlled by the proposed new government entity controlled by a board of elected officials and under Maine law the employees of a public employer are denied the right to strike.”

Others believe that modifications to the existing utility grid would provide better solutions to the shortcomings that motivate supporters of the bill. 

Kay Aikin, CEO of Introspective Systems in Portland, which provides grid modernization for utilities and renewable energy developers, said in testimony against the bill, “I want to submit that we can better spend our limited time on modernizing the grid, using current, although stronger, Public Utility Commission authorities to make the utilities function better to public benefit.”

The belief that modifications to the existing grid are a better solution than those offered in LD 1708 are also reflected in testimony offered neither for nor against the bill.

Many of the claims made by the bill’s supporters are the result of analysis done by London Economics International (LEI), which was retained by the PUC to evaluate the financial and legal risks and benefits associated with the creation of the Maine Power Delivery Authority, part of a previous bill aimed at reforming the energy grid that died at the conclusion of the 129th Legislature.

Rep. Berry claims the LEI report, as well as additional analysis provided by economist Dr. Richard Silkman, supports the economic and legal aims of LD 1708. Additionally, he claims the LEI study shows implementing the bill would save Maine hundreds of millions of dollars, and the review by Silkman shows the bill would save $9 billion over 30 years.

But testimony offered neither for nor against the bill points to outstanding issues not addressed by either analysis. Toby Bishop of Concentric Energy Advisors, a group retained by the company that owns CMP to perform an independent financial analysis of the effects of LD 1708, pointed to assumptions in the LEI model that Dr. Silkman’s analysis changes, which overstate the benefits of forming the Pine Tree Power Company. Bishop estimates that the assumptions made by Dr. Silkman potentially have a “$4.7 billion net cost to Maine electric customers associated with government-controlled power over the 30-year forecast period commencing in 2030.”

Testimony from Dan Burgess, director of the Governor’s Energy Office, which was presented neither for nor against the bill, also highlighted unanswered questions in the LEI analysis. Burgess wrote, “The LEI report recommends several additional studies of important topics that were not within the scope of their analysis.” These topics include tax issues, future capital expenditure needs for the transmission and distribution network, and the process for procuring competitive and optimal contractual agreements with the third parties that would operate and maintain the energy grid.

Burgess also pointed to several ongoing investigations by the PUC that may address some of the shortcomings supporters of LD 1708 point to in the electric grid.

“Earlier this year, Governor Mills requested that the Public Utilities Commission (PUC) open a review to ensure Maine’s electric utilities have the systems and planning in place to accommodate the growth of renewable and distributed energy resources. In response to this request, the PUC has open an investigation into Central Maine Power’s interconnection practices (Docket 2021-00035) as well as a docket to investigate future design and operation of the electric system and how best to accommodate increasing amounts of renewable energy and substantial load growth (Docket 2021-00039),” said Burgess.

When asked about her support of LD 1708 in a recent interview with Maine Calling, Governor Mills also brought up the PUC’s ongoing investigations into current practices by energy companies. She also expressed concern that the bill did not adequately address some of the questions that have been posed.

“I think the legislature needs to understand what they’re voting on and answer these questions that I’ve posed, that we’ve posed in my testimony, in my energy office testimony, and a lot of other people posed in their testimony, before they pass it on sight-unseen to the voters of Maine as a rosy solution to a very complicated series of problems.” Mills said.

If Mills vetoes the bill, it may put her in opposition with members of her own party who have expressed support for LD 1708 and who have voted to advance it for consideration by the full legislature.

About Katherine Revello

Katherine Revello is a reporter for The Maine Wire. She has degrees in journalism and political science from the University of Maine. Her writing has appeared in Reason, The Washington Examiner, and various other publications. Got news tips? Contact Katherine at krevello@mainepolicy.org.

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