Supporters Outnumber Foes At Hearing On Consumer Buyout of CMP And Versant, But Its Fate Is Uncertain
Supporters of a bipartisan measure that would ask state voters to create a consumer-owned utility in Maine turned out in force for a legislative hearing today.
Run by an elected board, the new company would take over the transmission systems now owned by Central Maine Power and Versant.
The bill was introduced by Representative Seth Berry, a Bowdoinham Democrat who co-chairs the joint committee on Energy, Utilities and Technology. He's become CMP's most prominent legislative critic, and now he's looking to create a new, non-profit utility to take over its poles and wires, and Versant's too.
The new, non-profit company would be called "Pine Tree Power."
"LD 1708 will let us control our own money, and our own energy destiny, It will let us advance both fast and fairly toward our own clean energy and connectivity future. The Pine Tree Power company will restore the power and the independence of the people and businesses of our great state," Berry says.
Berry says that at a time when the state is looking to "decarbonize" its economy by increasing the use of electricity made from renewable sources, CMP and Versant's track records show they aren't the right stewards for that transformation.
Plus, he says, a consumer-owned utility can get the job done at a better price.
"Every month right now, the 800,000 captive, combined customers of CMP and Versant pay monopoly debt for use of the monopoly grid. With Pine Tree power, we will pay a lower monthly bill, and equally important it will no longer be a rental payment, but rather it will be a mortgage payment," Berry says.
The purchase of what would be most of Maine's electricity delivery system, Berry says, would be financed by so-called "revenue bonds" — that is, floating debt to be paid off over time via ratepayer bills.
Berry says the new company could expect to pay interest of 2 to 3% for that, compared to profit margins of as much as 8% that investor-owned utilities glean from ratepayers.
And while Berry provided a broad review of the proposal's mechanics, many of the state's residents who testified to support it were more focused on something else — their anger at CMP and, to a lesser extent, Versant.
"I speak for many Mainers when I say I am fed up with high electricity costs, power outages, internet loss, incompetence and lack of accountability," says Faith Woodman, a Bath resident who was representing the Maine Unitarian Universalist churches of Maine.
She took aim at CMP's ultimate ownership, a Spanish energy giant called Iberdrola, and Versant's ownership — the Canadian city of Calgary.
"I fear that Maine will not convert to an all-electric economy and reach our critical climate goals, because we rely on two costly, inept, foreign-owned companies to provide electricity to the majority of Mainers. CMP and Versant's loyalties and profits are designed by law to benefit their investors and not the welfare of Maine people," she says.
Woodman was one of more than 80 people signed up to testify in favor of the measure. That was a contrast to the number of opponents who signed up to speak — 13 — almost all of them with financial or other ties to the utilities.
"I concluded that for all of its shortcomings, keeping an organization in the private sector, subject to public-spirited regulation, was the fastest, lowest-cost and most potentially productive option," says CMP CEO David Flanagan.
He says the company has been steadily improving its reliability and customer service records since he decided to return to the company's helm a year-and-a-half ago. He asserted that it is meeting standards set by regulators when they docked the company $10 million in profits over its botched billing system.
He and other utility officials say that shareholder profits are lower than Berry asserted, and that their corporate deep pockets enable major investments that benefit Maine. They promised to bring written evidence of those assertions to the committee's work session on the bill.
And Flanagan says a company run by an elected board would be under pressure to lower rates even when investments are needed, or to float new debt rather than incur ratepayer wrath.
"This was the most troubling to me. The new entity would be politically controlled, with a board dependent on campaign contributions, at risk of cronyism and bloated bureaucracy, and immune to accountability of fines and penalties by the PUC," he says.
Several other opponents argued that as the state tries to transform its energy systems, it can't afford to be distracted by the uncertainties — and lawsuits — that would follow enactment of the bill.
"It is clear, this is a government taking," says David Littell, who was hired by Versant to present his views, although he says the company did not guide or review his testimony.
Littell is a former state regulator who now advises governments and private clients on energy issues.
"This is going to be an extensive legal fight in state and federal courts, in front of the PUC, and in front of FERC if this happens. Someone can't show up and tell you they are going to pay half the value of your house and say, 'yes, that's fine, I'm going to take it,'" says Littell.
Littell also says that in his experience, private enterprise coupled with rigorous public regulation provides the best model for providing successful utility services.
Some stakeholders are holding off on making final judgments on the proposal.
Neal Goldberg of the Maine Municipal Association, for instance, told the committee that if everything goes just right, and litigation costs don't get out of control, consumers and municipalities should benefit from the ownership transfer.
If, that is, lawmakers can find a way to ensure that the new entity would make "payments in lieu of taxes" to replace the $90 million-plus the utilities now pay in local property taxes in Maine.
Goldberg credited Berry for trying to write language that would lock the new entity into adequate municipal support — but it did not appear to be strong enough yet to move the MMA into the "ought-to-pass" column.
Governor Mills' administration, meanwhile, testified "neither for nor against" the measure.
Dan Burgess, director of the Governor's Energy Office, told the committee though, that the bill, which was only printed a few days ago, raises issues that require more examination than can be completed in the remaining weeks of the legislative session.
Supporters are hoping lawmakers will go ahead and pass the measure, and that Mills will sign it and send it to a statewide vote in November.