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Maine legislators announce plan to convert state’s IOUs to consumer ownership

April 26, 2021

by Peter Maloney
April 26, 2021

A bipartisan group of legislators in Maine last week announced plans to introduce legislation that would create a consumer owned utility that would take over the electric service now provided by Central Maine Power (CMP) and Versant Power.

Together, the two investor-owned utilities serve 96.2 percent of the state’s residential load and have 963,187 residential customers, according to state regulators. The remaining residential load is served by public power utilities – or consumer-owned utilities, as they are known in Maine – and electric cooperatives.

“Our new bill, ‘An Act to Create the Pine Tree Power Company,’ will allow us to control our own money and our own energy destiny — to advance fast and fairly toward our own clean energy and connectivity future,” Democratic Rep. Seth Berry, sponsor of the bill and House Chair of the Energy, Utilities and Technology Committee, said in a statement.

The bill will likely be printed in late April and have its first legislative hearing in May, Berry said via email. If the bill is passed later this year, the conversion would likely take three or four years. Unlike many successful conversions Pine Tree Power would face few legal hurdles and would bear no separation cost, Berry said.

The effort to convert Maine’s electric service to consumer ownership is supported by Our Power, a coalition of ratepayers, business leaders, energy experts, and conservationists. Proponents cite high electric rates, high outage rates, and the foreign ownership of CMP and Versant.

“Maine’s for-profit, investor-owned utilities — CMP and Versant — are charging Maine households 58% more than our consumer-owned utilities,” Democratic Rep. Nicole Grohoski, a member of the legislature’s utilities committee, said in a statement. If CMP and Versant charged the same average rate as consumer-owned utilities, Mainers would save $155 million/year, she said.

“Right now, foreign governments and foreign corporations own Maine’s major utility monopolies,” Republican Senator Rick Bennett, said in a statement. “This ownership model has been a disaster, leaving Maine with the most outages, the longest outages, the worst customer service, and among the highest rates in the country.”

Central Maine Power is a subsidiary of Avangrid, which owns eight electric and gas utilities in New York and New England. Avangrid is part of Spanish energy company Iberdrola Group.

Versant Power, formerly Emera Maine, was formed when Bangor Hydro Electric and Maine Public Service merged in 2014. Versant is owned by Enmax, based in Calgary, Alberta.

The conversion proposal, as it now stands, calls for Pine Tree Power to be governed by an elected board of directors, as well as four expert advisory members chosen by the elected officials, Berry said.

The board and management staff would solicit bids for executives to replace CMP’s and Versant’s current executive leadership and to oversee the utility’s day-to-day operations. All other CMP and Versant workers would retain their jobs and pensions. The new utility would also be subject to regulation by Maine’s regulatory commission, Berry said.

The current plan calls for Pine Tree Power to pay between net book value and 1.5 times net book value for CMP’s and Versant’s assets, “far less than the IOUs suggest,” Berry said.

Looking ahead, future costs would be lower because Pine Tree Power could use tax-exempt revenue bonds to finance its infrastructure at interest rates of 2 to 3 percent, compared with 8 to 14 percent for the IOUs, reducing future capital expenditures and saving $9 billion over 30 years, according to Our Power’s website.

The current proposal is not the first time a conversion proposal has been floated in Maine. In early 2019, Berry sponsored a bill that would have created Maine Power Delivery Authority that would have bought CMP and Versant. That bill died at the conclusion of the legislative session in November 2020.

In explaining the previous bill’s failure, Berry said, “due diligence takes time,” noting that the legislative session was adjourned early because of the COVID-19 pandemic. He also noted the differences introduced in the new proposal, namely, a directly elected board of directors, added benefits to workers and communities, and a clarified mission.