Maine proposal to switch to state-run power delivery authority tabled for now

A proposal to purchase Maine’s two investor-owned electric utilities and replace them with a state-owned power delivery authority has stalled due to lack of support.

In July, Maine State Rep. Seth Berry (D-Bowdoinham) introduced a bill in the legislature to allow for the state to transition to a consumer-owned utility, but ultimately the bill was amended to instead create a task force to study the issue. The legislation, LD 1646, was approved 8-1 by the committee, but the bill died upon the conclusion of the 129th Legislature on Nov. 16.

A request was also filed in September with Maine’s Secretary of State by local residents hoping to create a consumer-owned utility through a referendum on the 2021 or 2022 ballot. The application was similar to Rep. Berry’s bill.

Purchasing the electric infrastructure of investor-owned utilities Versant Power and Central Maine Power would involve a consumer-owned power authority issuing as much as $9 billion in bonds.

“There is no consensus on the acquisition price of utility assets – leading Maine into a costly and expensive process and litigation that could take many years,” said Catharine Hartnett, manager of Corporate Communications at Central Maine Power (CMP), a subsidiary of AVANGRID Inc.

Nearly every state has some form of consumer-owned utility, and many stakeholders have offered testimony on the successes and failures of those utilities.

Carlisle Tuggey, general counsel with CMP, testified before the legislature and gave the example of PSEG Long Island, an investor-owned utility that was formed to take over operations of the Long Island Power Authority, a consumer-owned utility, in 2014, “after New York State regulators determined that LIPA should be reprivatized due to repeated management and reliability failures.”

Tuggey explained that simply changing owners will not create an operating utility, but the “services and support systems it currently receives will also have to be completely reconstituted and replaced” and the process will likely cost millions of dollars. He added that the lost knowledge of utility executives and other employees is something that is added value and not included within estimates.

Hartnett said the bill enables the newly created Task Force to be the sole authority with pre-ordained conclusions favoring the adoption of a government-run utility, which is why it contains no public funding mechanism. “It calls for a group of political appointees to prepare a business plan to take over and run a multibillion-dollar asset system that serves over one million Maine people in a few short months with no experts to support the work,” she said.

The Sierra Club Maine was one of the numerous organizations that commented on the bill, and in its testimony brought up examples of other states and municipalities that are run by consumer-owned utilities.

“Nationally, one in seven electricity customers in the U.S. get their power from publicly-owned utilities. Most of these public power companies serve small areas, but the city of Los Angeles and Long Island, New York, are also served by publicly owned companies, as is the entire state of Nebraska,” the Sierra Club’s testimony said.

Nebraska shifted to consumer-owned utilities in the early-mid 20th century, and currently operates 162 public utilities throughout the state. Nebraska and Maine have been compared because they have similar populations and geography.

Tim Texel, executive director and general counsel for the Nebraska Power Review Board, believes that consumer-owned utilities work well in Nebraska, but the state has had a lot of time to work out kinks in the system.

Customers have to pay contributions if their energy needs are outside a local utility’s scope. “Each utility is allowed to set up their own requirements for what they’ll do free. The first 500 feet or first thousand feet of a distribution line is free, and then the customer has to pay the costs above that,” he explained.

Nebraska and Maine differ in that Nebraska still relies heavily on coal for its energy needs. According to the U.S. Energy Information Association (EIA), Nebraska obtained 55 percent of its in-state electricity net generation from coal, 20 percent from wind, and 19 percent from nuclear power in 2019. In the same year, 80 percent of Maine’s electricity net generation came from renewable energy resources, with hydroelectric power accounting for 31 percent and wind power accounting for 24 percent.

In Nebraska, the difference between a public and private utility is that the private companies may receive tax breaks for purchasing renewable energy, but public utilities do not.

“We still have a lot of coal plants. I don’t think there are any plans for those to go away,” Texel said. “They’re very reliable baseload generation, and most of the debt is paid off or maybe all of it on those. So I don’t think that’s going to go away, but I don’t foresee anything new being built with coal. It’s pretty much renewables and gas that’s backing it up.”

Texel said consumer-owned utilities have a lot of support in rural areas of Nebraska that need service that may not be cost-effective for an investor-owned utility company to serve.

The Maine Chamber of Commerce, along with Maine utilities, recently worked with Public Policy Polling to conduct a poll to see how Mainers are responding to the possibility of a government takeover of the Maine power grid.

The results of the poll of 865 registered voters conducted on Oct. 16-17 found that 58 percent of Maine residents think Maine’s electric power companies should remain privately-owned companies regulated by the Public Utilities Commission, 19 percent prefer borrowing up to $13 billion to take control of Maine’s electric power companies and transferring management of our electricity to a government-controlled agency run by a board of elected politicians, and 23 percent of voters are unsure about the proposal.

“Shifting one of Maine’s most vital services from private ownership to a government-controlled model will cost Mainers billions of dollars, result in years of costly litigation, and create uncertainty in our electric grid at a time when stability is needed to meet key investments, like meeting Maine’s renewable energy goals,” said Dana Connors, president of the Maine State Chamber of Commerce. “It is clear that a majority of Mainers think a government takeover of our power grid is not in the best interest of our state.”