It’s very easy to dislike utility companies, but I’m always skeptical of anyone making sweeping promises with little in the way of detail on how those promises will be achieved. This cautious approach served me well as chair of the Maine Public Utilities Commission and in the Maine Legislature. That’s why I’m wary of Pine Tree Power and all its promises for Maine’s electric customers.
Contrary to a recent op-ed published in the Times Record, if Question 3 were to pass in November, it would force the state to set up a new agency to take over Maine’s two largest private utilities and buy up all their assets. The Maine Supreme Judicial Court was very clear that this new utility would not be consumer-owned and in fact enumerated 16 ways the new entity would be “governmental in nature.”
Since neither of the private utilities wants to sell, the only thing we can be certain of is a long, drawn-out legal battle to determine the fair market value of the assets – a requirement of the U.S. Constitution when eminent domain is invoked, as it is in this bill. So before this new utility is even set up, we’ll be stuck paying these legal fees.
Although we don’t know the final acquisition cost, estimates put it north of $10 billion. If you’re wondering where Maine goes to borrow that kind of cash, the answer is Wall Street. It’s the only place the state will find banks capable of loaning taxable bonds of that magnitude. And, yes, the bonds will charge interest for this kind of forced takeover (see Gov. Mills’ veto letter for a similar bill in 2021).
Acquisition costs would only be the beginning of Pine Tree Power’s spending and borrowing, however. The legislation behind Pine Tree Power’s ballot initiative specifies that a private contractor will be hired to actually operate the grid. Only a handful of utility companies do this type of work, and only if they can turn a profit. A recent Maine PUC study estimates the private company would be paid more than $80 million a year.
It will then take millions of dollars more to continue shoring up Maine’s electric grid, investments that are critical to ensure we have a strong, resilient and adaptable grid now and into the future.
Each payment Pine Tree Power makes to Wall Street banks, the private, for-profit grid operator and lawyers will be wrapped into our monthly bills. Maybe it’s my years of analyzing commercial real estate deals in the private sector, but I do not see how it’s possible for all this spending and borrowing to add up to any customer savings.
There’s also the whole political aspect of Pine Tree Power that concerns me. In politics, nothing is ever cast in stone. Laws are rewritten and regulations are changed all the time depending on who’s in power or which way the political winds are blowing. We can expect the same for Pine Tree Power. Its priorities and policies will shift constantly based on the politics of the people elected to its governing board and who’s controlling the State House.
Look at what happened with Statoil and its attempt to work with the state to build an offshore wind project. A partnership was forged with the University of Maine, the federal government awarded $4 million, and the PUC finalized a deal with Statoil for a takeoff contract. But everything was quashed when a new administration with a much different political agenda came into office and Statoil, a Fortune 500 company, was unceremoniously sent packing. Today, Maine is still scrambling to develop offshore wind.
It strikes me that Pine Tree Power’s big promises are filled with wishful thinking, built on shaky math and topped off with unpredictable electoral politics. If something sounds too good to be true, look a little deeper; it usually is.
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