Regulators Impose $10M Penalty, New Standards On CMP For Poor Customer Service

Jan 31, 2020

State regulators Thursday rebuked Central Maine Power (CMP) for its poor customer service, reducing its shareholder profits by almost $10 million over the next 18 months and requiring a comprehensive management audit. The action caps a long investigation of the company's botched rollout of a new billing system.

Public Utilities Commission (PUC) chair Philip Bartlett calls it the most serious penalty ever imposed on an electric utility in Maine — one that will likely result in the lowest return on equity earned by any electric utility company in the country.

"Our decisions today is to hold CMP accountable and require CMP to dramatically change how it treats its customers. CMP must demonstrate that service and reliability are its top priorities."

CMP has been under fire since its rollout of a new billing system in 2017, which led to numerous billing errors, some $5 million in overcharges and widespread unhappiness among customers who faced an uphill battle just to get through to CMP representatives.

The panel says CMP cut corners in the runup to and launch of its new "Smartcare" billing system which coincided with the October 2017 windstorm.

CMP's shareholders, the Commission says, will have their return on equity reduced to 8.25 percent for 18 months, beginning in March — close to a $10 million hit on company profits. And after 18 months, CMP will have to prove it is meeting a host of service quality benchmarks or continue with the reduced rate of return. And CMP will have to compensate customers for billing errors — even if they never filed a complaint.

"It is CMP's responsibility to ensure the accuracy of the bills it issues, to communicate effectively with customers, to be responsiveness to customer concerns and to restore customer confidence in the company,” Bartlett says. “To be sure, if CMP fails to do these things we will continue to hold them accountable. But to right this ship, CMP must take responsibility for past failings and commit to earning the respect and trust of its customers."

Valerie Harris is a CMP customer from Brunswick, and an intervenor in the case that led to the PUC's actions. "I am pretty well satisfied,” she says. “I would just like to see a little bit more given to the consumer." Harris says the Commission should still require a forensic audit of the apparent billing errors and get to their root cause.

But while the Commission did find that there was not a systemic problem with CMP's billing and meter systems, it did order that remaining overbilling complaints be considered on a case-by-case basis, and that the PUC itself adjudicate cases where customers and CMP still do not agree.

Barry Hobbins, the state's public advocate, says the Commission is also requiring a top-to-bottom audit of the company's management structure. And he credits grassroots efforts by consumers to bring the issues to light.

"That kept this issue in the forefront in people's minds,” Hobbins says. “And Central Maine Power Company will never, ever be able to do what they did. Because Maine ratepayers will not forgive them, and they have to rebuild the trust. And I think they should have an opportunity to do that, but they must strictly adhere to the order of the Commission."

While CMP had argued against many of the actions the regulators chose, company spokesperson Catharine Hartnett says it wants to see the full written order, but has no immediate plans to appeal the decision.

"We certainly had a faulty implementation of this system,” Hartnett says. “The way the customer service was offered following that put us into this situation. We lost their trust and we have a long way to go to regain it, but the people on the ground here in Maine are committing to improving that."

The Commission did allow a $17 million hike in annual revenues that CMP can collect from consumers, saying the increase would cover legitimate operating expenses that have grown since the last rate hike several years ago. That amount is far less than the $45 million CMP requested. It will add about 2 percent to monthly bills — but that will be more than offset by a recent drop in the cost of electricity supply.

Originally published Jan. 30, 2020 at 12:28 p.m. ET.