State regulators are taking a new look at just how much money Central Maine Power's (CMP) shareholders earn from the company's customers and whether the amount may be excessive — or too low.
In a notice published this week, the Public Utilities Commission (PUC) says that it will investigate whether CMP's profits from delivering electricity are "just and reasonable." The inquiry was prompted by a request from a group of ratepayers who noted that in 2016 CMP shareholders earned a return-on-equity of more than 11 percent — and earned 13 percent last year.
"Not to put too fine a point on it, they may be gouging us," says former Portland Representative Herb Adams, who led the push for a new examination of CMP profits.
But the petition was joined by other political figures, including former Portland Mayor Michael Brennan and former Democratic Portland Senator Anne Haskell.
Adams says that in 2014, the PUC approved a rate plan for CMP based partly on an expectation that the utility's overall return-on-equity would not rise so high.
"What we're trying to say is that CMP and its ownership companies in Spain and in America are perhaps not doing anything illegal, but they're doing something excessive,” says Adams. “And since it's your pocketbook and mine that we're taking about, and we are captive customers of a legal monopoly, then we should be fighting every step of the way and not just accepting a large bill in the mail with no explanation."
David Littell is a former PUC Commissioner who sat on the panel in 2014 when it approved the rate structure for CMP that is in effect today. He says the Commission expected it would result in returns for CMP shareholders of less than 10 percent going forward.
"They are significant numbers,” says Littell. “Those were higher than we anticipated in the rate case, so I think the Commission is right to look at those."
Littell says the Commission's task is to ensure shareholder returns that are sufficient to keep CMP investing in the poles and wires that deliver electricity in Maine, without excessive profits.
In its notice, the Commission directs CMP to file an entirely new rate proposal, setting in motion a full-blown, adjudicated rate case that will set the parameters for CMP's revenue needs and allowed profits going forward.
Littell and other observers warn that the outcome won't necessarily be to consumers' advantage.
"It's a big deal, it means rates could go up or down,” Littell says. “And even though the complaint asks for them to go down, we'd have to wait and see what the Commission actually does. This could be an opportunity for a favorable Commission to further increase CMP's distribution rates."
CMP spokesperson Gail Rice says that the two years of high returns were in keeping with standards set by the existing rate plan, and she notes that in the previous two years, CMP shareholders actually earned less than what regulators had expected.
"Any one of a number of factors can contribute to the rate of return,” Rice says. “But we're perfectly willing and have every intention to comply with the Commission's order.”
Rice says that monthly bills for electricity delivery, since the year 2000, have risen only $3 for typical residential customers. The new rate case won't get under way until the fall.