Maine’s binary choice: achieve climate action goals or try to create “Consumer Owned Utility” (Update)

If you vote in person in Maine this year, you will likely be asked to sign a petition to put a referendum on the ballot to replace CMP and Emera with a “consumer owned utility.” Don’t be tempted.

Unable to make their case in the Legislature (twice), the proponents want to tap well-deserved outrage over the abysmal reliability and customer service of these utilities to get signatures on a petition to endrun the legislative process. They are making their argument using misrepresentations, half-truths and false promises, such as these five claims:

Claim 1: There will be $9 billion in savings

This assertion came from an “analysis” where a financial model (created by London Economics International (LEI) as part of their analysis for the Maine Legislature) was manipulated with incredulous assumptions. LEI’s original analysis came to no such conclusion. LEI pointed out numerous and substantial errors in his changes. For example, nearly half of the savings comes from his unique interpretation – referred to as “gaming” by LEI – of Federal Energy Regulatory Commission (FERC) rules, whereby other utilities in New England would effectively subsidize Pine Tree Power.

The fact is that the advocates have never provided their own analysis or business case, and have no idea what this will cost to implement. They rely, instead on the simplistic claim that Pine Tree will have lower interest rates and that makes all the difference. It doesn’t.

Claim 2: Pine Tree Power would lower rates and increase reliability

This claim comes from a comparison of average rates and reliability of publicly owned utilities (excludes rural cooperatives) compared with investor owned utilities. Only 5 of the 2,100 utilities they used for comparison are as large as or larger than what Pine Tree Power would be: Salt River Project, Long Island Power Authority, Los Angeles Department of Water and Power, City of San Antonio, and the Sacramento Municipal Utility District. CMP and Emera are so bad, all of these have better reliability. The average rates of these 5 are more or less the same as the average of CMP and Emera. There are plenty of publicly owned utilities with much worse reliability and higher costs than CMP.

Claim 3: When Long Island Power Authority was created rates dropped 20%

Consumer rates did drop when New York took over Long Island Lighting Company and formed LIPA, but only because debt payments were postponed far enough into the future to lower rates artificially. LIPA is the only comparable takeover of an electric utility by a state — it took 13 years to finish, and after 23 years has not resulted in improved reliability or cheaper rates. Recently, out of desperation, LIPA hired a New Jersey investor-owned utility to run things.

Claim 4: COUs were first to reach 100% renewables

Customers do not have choice of supplier in any of the 6 utilities identified, whereas Pine Tree would be required to offer choice. Two of the utilities generate their own power which their customers must take. Pine Tree is not allowed by law to generate any electricity. But here’s the clincher. Four of them simply chose to buy renewables for their systems, and since their customers have no choice, they are “100% renewables.” That’s just contracting for power, and any utility can do it.

Claim 5: It can be done in a year or two.

Since 2000, more than 60 such utility takeovers have been attempted; 51 did not complete, and of the nine that did, two sold their systems back to the IOU. (CEA)

Bottom Line

What seems lost on the legislature is that CMP’s poor performance exists primarily because the regulatory structure and especially the Maine Public Utilities Commission have failed to do their job. Proper, modern, performance-based rate regulation, as practiced in other states, could solve this problem and do it expeditiously. In fact, here’s how: https://worthingtonsawtelle.com/maines-self-inflicted-wound-central-maine-power-company/

Attempting to take over CMP and Emera could last five to 10 years, slowing or halting the regulatory changes needed to bring the Maine distribution grid into the 21st Century and threatening the timely implementation of Maine’s decarbonization goals. And in the end, an attempted takeover could fail anyway. Maine does not have the time.


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