HARPSWELL — When an electric utility loses the confidence of its customers as the result of unreliable service and a bumbling administration that overcharges customers and can’t figure out why, it’s time for a change.
“We’re probably the most mistrusted company now,” Doug Herling, president and CEO of Central Maine Power, recently told the Maine Sunday Telegram.
Despite a finding by the Public Utilities Commission that CMP responded “reasonably” to the October 2017 storm, customers without power for as long as 10 days could witness the company’s gross inefficiency on the ground. The PUC took CMP’s word. As the newspaper reported, its customers no longer do.
The basic function of an electric utility is to provide reliable service at the lowest possible price. A company like CMP or Emera, Maine’s second largest utility, owes its first obligation to its investors. It does what the law requires to serve its customers, but it does not give top priority to them.
We can see that at work right now. CMP wants to build a major new transmission line, because federal regulators will allow it an excellent profit on a major project and its revenues will be guaranteed.
Compare that with the retail task of keeping hundreds of thousands of individual customers well served. The profit allowance is less, and there are no guaranteed sales. Of course, CMP would choose transmission over retail service.
As foreign-owned entities, both CMP and Emera report to owners outside of Maine, giving them even less incentive to protect the interests of their customers. The fact that local utility officials are Mainers makes almost no difference.
An alternative exists to deal effectively with the crisis of confidence in the major electric utilities and achieve that goal with lower rates. The two investor-owned utilities could be replaced by public power. The utilities would be owned by their customers, and they could cut rates, having no need to collect from their customers a profit or coverage of their tax bills.
Does public power work? It now serves Los Angeles and Long Island, New York, both with larger populations than Maine. It exists in almost every state.
Could it cover the whole state? Even now, there’s a customer-owned, cooperative utility in Maine that serves an area larger than a couple of New England states.
Won’t a public power agency have to buy the facilities of CMP and Emera? Yes, and it can raise the money at tax-exempt rates well below the cost of capital and debt the two utilities must pay. Paying off the capital cost would have been reduced in the process.
If the focus were on customer service as opposed to investor gain, the public power authority would build only what was needed without an incentive to build big projects, threatening to the environment, as a way of boosting profit.
Even better than these comparisons is what is happening now in Maine. Several small, consumer-owned utilities exist, run by Maine people. None of their wires charges is as high as those of CMP and Emera. To take one example, Kennebunk’s rate shown on the PUC website is 4.4 cents per kilowatt-hour. It is completely surrounded by CMP, whose comparable rate is reported at 7.8 cents.
Incidentally, under Maine law, the consumer-owned utilities can use a form of self-regulation to set rates. The record speaks for itself.
When there’s a major storm, news reports cover outages affecting customers of the two biggest systems. But you virtually never hear announcements about the consumer-owned systems, mainly because their well-maintained lines are not suffering outages.
How do we get from here to public power? The Maine Legislature ought to consider the creation of the Maine Electric Transmission and Distribution Agency – “Maine Wires.” It would become the owner of lines and would hire through competitive bidding an experienced system operator. Current utility employees could work for the new entity.
Maine Wires would borrow funds at low, tax-exempt rates to pay the current owner. It would not change the current competitive market for power supply. Little of Maine utility law would be modified. It would be governed by a board representing its customers.
The Legislature should put the proposal before the public, just as it did in creating the Maine State Lottery. After a political campaign, the voters could decide if the customers should own their electric service provider.
Maine Wires is the obvious answer to questionable reliability, billing out of control, unnecessary spending, high costs and lost consumer confidence. Now is the time to act.
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