The following was published in the Portland Press Herald on September 22, 2023
The ads flooding the airwaves about the November referendum on Pine Tree Power Company make it sound like there are two choices: vote “yes” to takeover CMP and Versant and form Pine Tree, or vote “no” and keep the status quo. Proponents claim that replacing CMP and Versant with Pine Tree will result in lower rates and higher reliability. Opponents of the referendum say that maintaining the status quo is the low-cost option for ratepayers in the future. Neither argument squares with reality. The process to set up Pine Tree represents an existential threat to the achievement of Maine’s climate and grid modernization goals. If it operates, ratepayers will be worse off than now. But a “no” vote is not choosing to keep the status quo. A “no” vote allows very recent utility regulatory reforms to take effect and permits the Legislature to strengthen those reforms in the future– reforms that will correct the poor cost, reliability, and customer service Mainers have been enduring for years.
Mainer’s dissatisfaction with utility performance is warranted. What Mainers don’t realize is that poor performance is primarily the result of inadequate and anachronistic regulation. Thirteen other states use performance-based ratemaking (PBR), where what utilities earn depends on their performance. Maine only implemented a version of PBR last year – it is a critical first step that the Legislature should further strengthen over time. But it will take time to see the results. Unfortunately, Pine Tree advocates opposed implementing PBR. They blocked a bill I introduced to strengthen the existing law in this session. Frankly, had some members of the Legislature worked on regulatory reforms rather than a utility takeover over the last five years, we’d all have been better off.
Many of our climate action goals necessarily involve our electric utilities. If the referendum passes, the State faces years of uncertainty regarding who is in charge, putting climate and grid initiatives on hold until Pine Tree is fully operational or fails to be established, which could take years, if not a decade, to determine. The takeover of an entire private utility to form a public one only happened once: Long Island Power Authority took 13 years to complete. Many small municipalities have tried to carve themselves out of their current utility- the latest example, Boulder, Colorado, gave up after ten years.
Uncertainty would also delay grid modernization. Last session, we passed a bill to change how our electricity grid is planned and controlled, optimizing its operation for the least cost and highest efficiency. This future grid will encourage local power generation, offering enhanced control over electricity consumption and flow. However, designing this integrated system is complex. It cannot be done until all the uncertainties of Pine Tree are resolved.
And it’s not worth the wait. Claims that Pine Tree would reduce costs and reliability are pure conjecture. If one were to create an electric utility from scratch, the data on public utility costs and performance clearly suggest that a public ownership model would be ideal. But the takeover and then combination of two different utilities with three different service territories, one of which is not even connected to the New England grid, keep the union intact, continue to pay property taxes, pay an outside company – likely a utility – to run the company and pay an enormous sum to acquire them is a totally different set of circumstances. As an example, Long Island Power Authority, now in its 24th year of operation, was rated just behind CMP in the most recent JD Powers customer satisfaction survey. Pine Tree would begin its operation with a mortgage costing tens of millions. This mortgage will need to be recovered from ratepayers in addition to its operational costs. The reality is that any reasonable analysis of the cost impact of a takeover – one that considers the uncertainties in a 30 or 40-year future look – is additional ratepayer costs that range in the billions.
Passing the referendum might be emotionally satisfying in the short term; however, it would also undermine Maine’s climate and grid objectives for years. And if Pine Tree Power became operational, we would be worse off than we are now. I urge voters to reject the referendum, give regulation time to work, and let your legislators know you are counting on them to continue to modernize our grid and reform the ways utilities are regulated.