Pine Tree Power requires the state's largest-ever borrowing package. Will Maine voters allow it?

Question 1 asks Maine voters: “Do you want to bar some quasi-governmental entities and all consumer-owned electric utilities from taking on more than $1 billion in debt unless they get statewide voter approval?”

Voters face two questions this November related to who operates Maine’s electric grid — and how they decide on the lesser-known measure could ultimately determine the fate of the more contentious Pine Tree Power proposal.

Question 3 on the ballot is drawing the most attention and campaign spending because it aims to transform Maine’s electricity landscape by forcing Central Maine Power and Versant Power to sell their assets to a new, nonprofit utility run by an elected board. Question 1, on the other hand, deals with the finances of creating the proposed Pine Tree Power Co.

Supporters say Question 1 is a necessary “safety valve” to prevent electric customers in Maine — who are already paying some of the highest rates in the country — from being saddled with massive amounts of debt. If both Questions 1 and 3 pass, the future Pine tree Power would have to also obtain voter approval before borrowing $1 billion or more to achieve what would essentially be a hostile takeover of CMP and Versant.

But opponents of Question 1 — most notably the Our Power campaign — say it is just another attempt by CMP’s corporate owner, Avangrid, to sabotage the push toward what they contend would be more reliable, lower-cost electricity for most Maine residents.

What would Question 1 do?

This initiative is pretty straightforward: in order to borrow $1 billion or more, the utility envisioned in Question 3 would have to obtain approval from a majority of Maine voters during a statewide referendum. The full language can be found here.

On paper at least, this would be akin to the borrowing packages that Maine voters periodically see (and almost always approve) for highway maintenance, land conservation, water/sewer infrastructure and school construction. The state treasurer and secretary of state would also have to provide voters with estimated total costs over the lifetime of the borrowing, including interest.

The cost of buying Versant’s and CMP’s assets would be substantial — far more, in fact, than any bond (or state-borrowing) package ever submitted to Maine voters. And the backers of Question 1 hope that will give voters sticker shock.

Industry response

The order of the questions appearing before voters this fall was decided by drawing scraps of paper out of a fishbowl and does not reflect when they qualified for the ballot. In fact, the ballot initiative that is now Question 1 is very much an alternative, backup attempt to defeat Pine Tree Power.

The campaign committee behind Question 1, No Blank Checks, has been funded entirely by CMP’s corporate parent company, Avangrid. No Blank Checks, in turn, funneled much of that $1 million into gathering the signatures needed to get on the ballot.

The campaign turned in those signatures several weeks after Our Power, the campaign behind Pine Tree Power, qualified for the ballot.

“I think Mainers and frankly voters anywhere would say, ‘Yeah, we want a say in whether or not a government entity takes on over a billion dollars in debt,’” Willy Ritch, executive director of No Blank Checks, said after the campaign submitted its signatures.

Ritch himself is further proof of how intertwined Questions 1 and 3 are as we roll toward November. In addition to his position with No Blank Checks, Ritch also heads Maine Affordable Energy, which is leading the opposition to Question 1 and Pine Tree Power. Maine Affordable Energy has also been bankrolled almost entirely by Avangrid, to the tune of more than $18 million.

Costs disputed

A key part of the debate over Question 3 is how much it would cost Pine Tree Power to purchase all of the poles, wires, substations, buildings, lift trucks and everything else that CMP and Versant own in Maine. (As a reminder, Versant and CMP only distribute electricity; they do not generate it).

Our Power has pointed to the utilities’ own valuation estimates filed with state regulators — currently more than $5 billion for the two – as a good indication of how much it would cost to launch Pine Tree Power.

“To establish the fair and final purchase price, the Superior Court will select a qualified referee,” the group states on its website. “If either party disagrees with the findings of the referee and the court, they may appeal the decision to the Maine Supreme Judicial Court.”

The opposition has seized on a May 2021 analysis by the consulting group Concentric Energy Advisors that projected the cost could be $13.5 billion if the takeover doesn’t happen until 2030 because of years of legal wrangling.

While Our Power contends the nonprofit, quasi-governmental ownership could save ratepayers $9 billion over 30 years, the Concentric report estimates it could cost result in a net cost of $4.7 billion over that time.

Regardless of the final purchase price, however, it’s clear such a takeover will cost well in excess of $1 billion.

So if Question 3 passes and Pine Tree Power is able to survive the years of inevitable court challenges, Question 1 would guarantee that voters have at least one more say in whether to move forward with what would be a dramatic transition to a statewide, nonprofit electric utility.

What to call it

There is also a dispute over how to even refer to this proposed nonprofit.

Our Power describes it as a “consumer-owned utility,” no doubt in part to capture the populist appeal of contrasting a utility owned by the local ratepayers versus one owned by corporate investors beholden to profit-minded shareholders. No Blank Checks has dubbed it “government-controlled power” and a “government entity,” no doubt trying to capitalize on the populist distaste for anything associated with the government.

The authors of Question 1 appear to have cast a sufficiently wide net by requiring a public vote on any proposed borrowing of $1 billion or more by “a quasi-independent state entity, reporting entity, municipal electric district, consumer-owned transmission and distribution utility, cooperative or rural electrification cooperative.” And if a majority of voters don’t approve, the borrowing can’t happen.

The backers also wrote the proposal in a way to make sure voter approval wouldn’t be required for borrowing by existing entities such as the Maine Turnpike Authority, Maine State Housing Authority, the Finance Authority of Maine or the University of Maine System.

Would voters balk?

No Blank Checks is obviously hoping that even voters who supported the concept of a nonprofit electric grid might balk when they see the actual price tag — similar to how some would-be car or home buyers get cold feet when staring at the full cost, with interest, on the bank loan papers.

But it’s impossible to say because this would be unchartered territory for Maine voters.

The largest, single borrowing item ever put forward in Maine was $112,975,000 for highway, bridge and road maintenance in June 2007. Voters approved that request — along with the seven other transportation-related general obligation bond proposals over the past 20 years that were each $100 million or more.

But Maine voters have rejected much smaller state borrowing in the past, including a $9 million request from the University of Maine System for building renovations in 2005 and a $25 million request for prison improvements in 2002.

Maine's Political Pulse was written this week by State House correspondent Kevin Miller, and produced by digital editor Andrew Catalina. Read past editions or listen to the Political Pulse podcast at mainepublic.org/pulse.