The Maine Public Utilities Commission (Maine PUC) is scheduled to hold two public witness hearings this month concerning Central Maine Power’s (CMP’s) alleged overspending on storm cleanup efforts in 2022.
According to testimony filed earlier this year by the Office of the Public Advocate, CMP has been accused of overspending on staffing for twelve of the twenty-three storms that took place last year.
By failing to follow the staffing guidelines in its Emergency Response Plan when managing storm costs in 2022, CMP “imprudently incurred” excessive costs that should not need to be reimbursed by ratepayers, Jesse Houck — an economic analyst with the Maine Office of Public Advocate (Maine OPA) — argued.
“CMP failed to follow the guidelines set forth in its Emergency Response Plan when managing storm costs for storms in 2022,” Houck said. “Due to this failure, CMP imprudently incurred excessive storm costs that should not be recovered from ratepayers.”
“I do not lightly reach these conclusions, as I assume that the motivation for this excessive spending was to more quickly restore service,” Houck said in the written testimony. “However, that is no excuse for excessive spending. Regardless of the motive, ratepayers should not have to pay for imprudently incurred utility expenditures.”
CMP spent approximately $125 million on restoration efforts in 2022, which is well above the $10 million that had initially been budgeted for these expenses.
Over the summer, the Maine PUC approved a two-year rate increase amounting to roughly $1 to $1.50 per month for customers in order to cover the additional expenses incurred by CMP — amounting to a total requested amount of $117 million.
Despite having signed off on this rate hike, the Maine PUC retained the authority to further investigate whether these excess expenses were “prudently incurred.”
Based on the findings of their investigation, the Maine OPA is now trying to block the utility’s efforts to recover more than $53 million worth of these costs.
Houck contends that CMP failed to adhere to the staffing guidelines set forth in its recently updated Emergency Response Plan. The Maine OPA also argues that CMP hired an “excessive number” of external pole digger crews for many of last year’s storms.
For instance, Houck testified that CMP replaced 18 poles in response to a January 17 storm after hiring 39 external pole differ crews.
The Maine OPA’s analysis also revealed that a large portion of these disputed costs came from CMP’s response to Winter Storm Elliott, which took place on December 23 and 24 of last year and knocked out power for roughly 300,000 Mainers.
“I recognize that for affected customers, any delay in restoration of service can be a burden. However, storm restoration is a balance between restoring power quickly on the one hand and cost on the other,” Houck testified. “By hiring excessive external contractors to restore power to customers as fast as possible, CMP has incurred much greater storm costs than it otherwise would have had [CMP] used the staffing levels and restoration timelines in its [Emergency Response Plan].”
Although Houck states in his testimony that “calculating an imprudence disallowance can sometimes be difficult, the evidence here is clear.”
“The above percentage reductions to CMP’s storm costs,” Houck said, “are a reasonably accurate estimate of the imprudently incurred costs that should not be recovered in rates.”
In response to this controversy, CMP has called claims “outrageous and irresponsible,” arguing that the spending was necessary in order to restore power in a timely fashion.
“Nothing wrong has been done here,” Jon Breed — a spokesperson for CMP — told the media. “This is one person’s opinion and frankly, we are of the opinion that the majority of our customers would prefer to not sit in the dark for ten, 12, 14 days because we did not plan appropriately.”
“In the case of the Christmas storm, we did everything we could to get our customers the lights on so they could enjoy the holiday with their family, and I think that would have been the priority of any of our customers if asked,” Breed said.
“Whether it takes 400 crews two days to restore power, 200 crews four days, or 100 crews eight days, there would have been virtually no cost difference,” Breed told the press. “The only difference is that our customers must suffer the economic and cost consequences of being without power for longer.”
The first public witness hearing on this issue is to be held online on December 5 at 5pm. The second is scheduled to take place at 6pm on December 12 in-person at the Hilton Garden Inn Freeport Downtown, located at 5 Park Street.
Note — This article has been corrected to reflect that Jesse Houck is an economic analyst for the Maine Office of Public Advocate, not the Maine Public Utilities Commission as it originally stated.