AUGUSTA — Creating a public power authority in Maine could lower rates and improve the reliability of electric service, or it could plunge the state into an unknown and risky undertaking and costly litigation, a legislative committee was told Tuesday.
The idea of Maine buying the state’s two investor-owned utilities – Central Maine Power and Emera Maine – and creating a consumer-owned power authority surfaces periodically, but it has failed to gain traction in the past. CMP’s fumbling of a recent billing system changeover, however, as well as lingering frustration from widespread power outages following a 2017 storm, have breathed new life into the concept.
CMP’s political adversaries now see their best chance in years to tap into the public’s unrest, to realize their goal of a consumer-owned electric company serving most of Maine. That is the intent of L.D. 1646, which was the subject of a long, contentious hearing Tuesday afternoon before the committee that handles energy matters.
The bill’s lead sponsor, Rep. Seth Berry, D-Bowdoinham, laid out a simple premise. CMP and Emera customers are paying high rates, but get relatively poor service. Contrast that to a state such as Nebraska, which has a statewide, consumer-owned utility ranked high for reliable service at reasonable rates, and the decision to make a similar transformation in Maine is an easy one.
Berry has worked to build support in part by highlighting CMP’s foreign ownership and loss of local control. Run for a century out of Maine, CMP today is in the networks division of Avangrid, which itself is largely owned by Iberdrola, based in Bilbao, Spain.
“It’s time to control our power from Maine, not Spain,” Berry said.
But officials from the power companies made it clear that they would fight what they consider to be a government takeover of their businesses, in court as well as in the Legislature.
Rep. Seth Berry, sponsor of the bill to create a public power utility, said, “It’s time to control our power from Maine, not Spain.”
Doug Herling, CMP’s president and chief executive, said the proposal raises serious constitutional questions.
“The Maine Power Delivery Authority bill proposes to seize private company assets that are not for sale and put them into the public domain,” Herling said in testimony.
Herling also rebutted the contention of public power supporters that CMP’s parent company ships earnings overseas and doesn’t reinvest in Maine.
For nearly a decade, according to Herling, Maine has benefited from annual CMP investment of over $300 million in assets and infrastructure – a six-fold increase since CMP became part of the Iberdrola group.
“In fact,” he said, “over 100 percent of CMP’s earnings during this period have been reinvested in the Maine electric grid.”
Emera Maine’s parent company is headquartered in Nova Scotia. But pending regulatory approval, it’s about to be sold to another Canadian utility company, Enmax Corp. The company’s website says Enmax is a wholly owned subsidiary of the city of Calgary.
Doug Herling, president and CEO of Central Maine Power, said Berry’s bill “proposes to seize private company assets that are not for sale and put them into the public domain.”
An Emera Maine representative said the company understands that many Mainers are angry with their local utilities, “but that doesn’t justify imposing the ‘death penalty’ on CMP and Emera Maine,” said Jim Cohen.
Calling the proposal one of the most significant and ill-advised acts of the Legislature in the past 50 years, Cohen said it would lead to years of multimillion dollar litigation.
And while much of the testimony was predictable, the hearing was perhaps most notable for the key players who chose not to take sides – at least not at this time.
They included Gov. Janet Mills, who could at some point have to decide whether to veto a public power bill, if it moves ahead. The governor’s energy office testified neither for nor against the bill, but urged caution and the need to fully understand potential risks, costs and opportunities. The office said it would seek to participate in a “full and robust review” before any final decisions are made.
Barry Hobbins, Maine’s public advocate, said the bill could be a vehicle to “get the conversation started” about how to address the poor customer service and high rates that have raised the ire of residents.
The Industrial Energy Consumer Group, which represents large manufacturers in Maine, said the current structure of electricity delivery is broken, but the first step the Legislature should take is a study of the strengths and weaknesses of alternatives. Report back to the next session of the Legislature in 2020, and include any climate change studies, the group suggested.
The bill’s chief architect is Gordon Weil, Maine’s first public advocate and a longtime energy consultant and promoter of consumer-owned power. He also made the simple point that what customers want is the most reliable service at the lowest cost, and that today, Maine ranks near the bottom on both measures.
In its latest incarnation, the Maine Power Delivery Authority would buy CMP and Emera Maine’s poles, wires and substations using low-interest revenue bonds. Together, the two utilities are valued at roughly $4.5 billion.
Berry estimates the proposal would save customers 15 percent or so on their electric bills, or about $325 million a year. That’s because the 10 percent-plus that the private companies now earn would be replaced with bonds costing about 3 percent. The money also would stay in Maine, he noted, rather than partly going overseas.
Public power isn’t a new concept in the United States. Roughly 900 not-for-profit cooperatives serve half the country. In Maine, small consumer-owned power companies include Kennebunk Light & Power, Madison Electric Works and Houlton Water.
But while Berry and public power supporters hold up Nebraska as a model, they don’t mention that most of the power there is generated by low-cost coal and nuclear plants.
Long Island Power Authority in New York, created in 1986, is also considered an example. Electric bills there were reduced by 20 percent, according to Berry. Not discussed is that Long Island utility has been operated since 2014 by New Jersey-based Public Service Enterprise Group and now has some of the highest rates in the region.
The bill will get more scrutiny at an upcoming work session before the committee, which is co-chaired by Berry.
Send questions/comments to the editors.
