Electric power – how it’s generated, what it’s used for – is going to play a more important role in the lives of Maine people as the world responds to the climate crisis.
So Maine voters should have a chance to say on what that future will look like. That’s why we support L.D. 1708, An Act to Create the Pine Tree Power Company.
The bill now before the Legislature would ask the voters in the next election whether they support replacing two investor-owned, regional monopolies, Central Maine Power and Versant Power, with a single consumer-owned, nonprofit utility overseen by a democratically elected board of directors.
The new ownership model would save ratepayers money on their electric bills over the long term, according to a Public Utilities Commission study released last year by the firm London Economics.
It would also remove the inherent conflict of interest between consumers and ownership on issues like reliability and customer service because the customers would be the owners.
And, maybe most importantly, this structure would bring into a public forum debates over the once-in-a-century investments that will be needed in order to pull off the twin transitions of climate response: electrifying the economy while generating power from renewable sources instead of fossil fuels.
We recognize that there are also risks involved in a change this sweeping.
The utilities have made it clear that they will fight in court if necessary to prevent their forced sale. They say that the bill’s backers have underestimated the real value of their assets, and the actual price that consumers would have to pay to acquire them would eliminate any projected savings.
A long and expensive legal battle, combined with uncertainty about who will provide an essential service, could drive investment away from Maine.
But recognizing that there are risks doesn’t mean we buy the scare tactics pushed by the companies and their allies, who are stoking exaggerated fear of a “government takeover.”
What’s proposed here is not a new state agency, and the new company would not be state run. According to the bill, Pine Tree Power would contract with a professional management company to run the grid. But unlike the existing utilities, the management company would not have perpetual rights to operate in Maine, and it could lose its contract if it fails to perform.
There are a number of well-run independent entities created by the government that most Mainers know and feel comfortable with, including the Maine Turnpike Authority, local electric and water companies and the Maine Employment Mutual Insurance Co., which was formed to stop a workers compensation crisis in the 1990s.
The new utility would be governed independently, use no state funds and the taxpayers would not be on the hook for any of its debt. We don’t need to be scared about a different business model, especially when the one we have now is not working.
As monopolies in their regions, CMP and Versant are regulated by the PUC, which sets rates and guarantees investors a return. Part of their cost of doing business is hiring lawyers and experts to make the regulatory process as favorable to companies’ interests as possible. Meanwhile, any regulatory demands that increase the company’s costs are passed onto the rate payers.
It’s a question of incentives. The companies are doing what companies are supposed to do; represent the interests of their owners. But the agencies representing the interests of consumers, the PUC and the Public Advocate’s office, are outgunned. That’s a problem at a time when we are about to revolutionize the way we generate and use electricity, a process that has been estimated to cost $60 billion over the next three decades.
The question for lawmakers this week is whether voters should have a say in the decision-making process that will be used to make those investments.
Should they be represented by an elected board that does not have to answer to stockholders? Or should they stick with the status quo and hope that the consumers’ interests fall in line with the companies’ bottom line?
We think voters should get the opportunity to choose. Lawmakers should pass L.D. 1708 and put this question on the ballot.
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