LePage Administration Moves to Reverse 15 Years of Electricity Deregulation Policy

Apr 20, 2015

AUGUSTA, Maine - Fifteen years ago, Maine restructured its electricity business. The state required power companies to sell off their generating facilities and become only transmission and distribution companies.

Gov. Paul LePage says that policy has failed and he wants a major restructuring of the electricity business.

Starting in March of 2000, Mainers were supposed to gain an advantage by creating competition in the electricity business. That would be done by separating the generation of electricity from its transmission and distribution.

For more than a century, electric companies distributed the electricity they generated or purchased, and were regulated by the state through the Public Utilities Commission. Power companies enjoyed a monopoly in the areas they served, with rates subject to PUC oversight.

Restructuring was supposed to lower overall bills because the generation market was open to competition, while distribution remained a regulated monopoly. Gov. LePage says it clearly hasn't worked as planned.

"You have an electricity bill at the end of the month?" LePage asks. "You tell me - I mean, I know that my bill is three times as much as someone living in Montreal." LePage says neither homeowners nor businesses have benefited from the restructuring.

The governor is proposing that transmission and distribution companies, including Central Maine Power and Emera Maine, be allowed to build or acquire generating facilities, with the approval of the PUC, reversing the policy change of more than 15 years ago.

"It's the worst thing we could have done," LePage says. "I look at what's happened to our costs: They go up rapidly; they go up by huge amounts every year."

In 2014, Maine residential customers paid, on average, 12.66 cents per kilowatt hour. The national average was 10.45 cents per kilowatt hour. But Mainers were still paying the lowest rates in New England - nearly 3 cents less than neighboring New Hampshire and almost 5 cents less than Connecticut, which paid nearly 17 cents a kilowatt hour.

Portland Rep. Mark Dion, a Democrat, co-chairs the Legislature's Energy, Utilities and Technology Committee. He says he will need to be convinced that LePage's proposal to go back to the world of pre-2000 is the right one.

"Our predecessors had determined that returned the greatest benefit for our ratepayers," Dion says, "so that is where I will begin my line of questioning on this policy. What advantage to the rate players? Or are we asking them to take a risk on an old idea?"

Dion says the governor has several bills pending that would change Maine's electricity policies, and they should be looked at in their totality. Another measure would do away with technology-specific goals for state energy sources.

Pat Woodcock is the director of the Governor's Energy Office. "We have a goal for wind - the amount of wind to be installed in the state," Woodcock says. "We have goals for solar, we have goals for hydro. Actually, I look at energy policy as: technology is a means to carry out policy. The actual policy that we should be looking for in our state is lower pollution, lower cost."

Woodcock says there are other bills coming from Gov. LePage this session to change Maine's energy policy, ranging from encouraging development of new sources to improving energy efficiency So far, none of those measures has had a public hearing.