(Text of op-ed published 11/20/2023 Portland Press Herald by me; Kay Aiken, CEO Of Dynamic Grid; and Rebecca Schultz of Natural Resources Council of Maine https://www.pressherald.com/2023/11/20/commentary-maine-can-incentivize-cmp-versant-to-do-the-right-thing/)
Now that voters have spoken on the Pine Tree Power referendum, it is time for us to come together, roll up our sleeves, and get to work making Maine a leader in clean energy and innovation in the power sector.
We deserve a 21st-century grid to meet our goals outlined in Maine’s ambitious climate action plan “Maine Won’t Wait” and a future of a decarbonized, decentralized, and democratized electrical grid that works for everyone.
The keystone of this plan is the electrification of building heating and transportation. In a recent address, Gov. Mills accelerated the urgency of achieving this vision by setting a goal of 100% clean electricity in the state by 2040.
Adding clean energy sources from large scale down to residential and electrifying heating and transportation demands a radical transformation of our electricity delivery system in both its engineering and regulation. Our electricity grid must evolve from a one-way delivery system to a multi-directional network optimized for efficiency, balancing supply and demand, and, most important, providing value to consumers.
The investor-owned utilities, Central Maine Power and Versant, will continue to own and maintain Maine’s electric grid, but there are crucial regulatory reforms that can help create the right incentive structures to motivate the investments, planning and operations that we need from these companies.
The challenge of redesigning such an advanced electrical system is considerable. Still, the urgency of climate change and the economic benefits of a clean energy economy necessitate swift and decisive action.
A full expression of how that redesign might look goes beyond what can be covered in this op-ed; what we discuss here is the regulatory framework in which it should operate. The campaign to take over the utilities happened for a reason: Customers were and continue to be deeply unhappy with the cost and performance of their utilities. But we sometimes forget that our regulatory structure is our means of local control; our immediate priority is to underscore the need to fully exercise that control through regulatory reforms that address these ratepayer concerns.
Over the last 100 years, utility regulation was designed to ensure monopoly providers, regardless of ownership, achieve established goals. These rules successfully encouraged the buildout of electric utility infrastructure. The past is not a template for our future.
Deregulation, which began in the late 1980s, introduced competition in the retail and wholesale electricity markets, leading to customer service and reliability declines. In response, states started implementing performance-based ratemaking (PBR) to address these issues. Early PBR efforts sometimes missed the mark due to utility exploitation of weak incentives. However, lessons learned have led to more effective PBR adoption. At least 18 states have already implemented PBR.
Maine took an initial step toward PBR in 2022, creating a utility scorecard to enforce standards in reliability, customer service and billing accuracy, with penalties for non-compliance. The Maine Public Utilities Commission has spent a year developing a system to measure performance which only recently has begun influencing rate cases. An upcoming legislative session will consider bills to enhance the scorecard by requiring the commission to assess performance annually and issue incentives or penalties based on performance relative to established goals. New standards should include metrics related to:
• Effectiveness of infrastructure investments and regulation supporting new local power sources and electrification
• State of grid resiliency against extreme weather events
• Customer accessibility to affordable electricity
• Speed and efficiency in connecting new local power sources
• Measures taken to encourage shifting the use of electricity to times when it is most abundant and at the lowest cost
• Quality of utility strategic long-range planning
As Maine forges ahead in the design of its future electricity grid, regulatory reform is a critical tool to address ratepayer dissatisfaction. Enhanced PBR can help us shape a utility sector that actively drives our climate goals forward while keeping costs as low as possible. PBR isn’t just regulatory reform; it’s a new commitment to our environment, our economy and the well-being of every Mainer.