The ads flooding the airwaves about the November referendum question on Pine Tree Power make it sound like there are two choices: Vote “yes” to take over Central Maine Power and Versant and form Pine Tree Power, or vote “no” and keep the status quo. Proponents claim that replacing CMP and Versant with Pine Tree Power 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 of the future.
Neither argument squares with reality.
The process to set up Pine Tree Power represents an existential threat to the achievement of Maine’s climate and grid modernization goals. If it is established, ratepayers will be worse off than now. But neither is a “no” vote a vote to keep the status quo. A “no” vote allows very recent utility regulatory reforms to take effect and permits the state Legislature to strengthen those reforms in the future – reforms that will correct the high costs, poor reliability and poor customer service Mainers have been enduring for years.
Mainers’ 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, where what utilities earn depends on their performance. Maine only implemented a version of performance-based ratemaking 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 Power advocates opposed implementing performance-based ratemaking. They blocked a bill I introduced to strengthen the existing law in this latest 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 be better off.
Many of our climate action goals necessarily involve our electric utilities. If the referendum passes, Maine faces years of uncertainty regarding who is in charge, putting climate and grid initiatives on hold until Pine Tree Power 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 10 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 of Pine Tree Power’s uncertainties are resolved.
And it’s not worth the wait. Claims that Pine Tree Power 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 it is a totally different set of circumstances to take over and then combine 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.
Passing the referendum might be emotionally satisfying in the short term. It would also undermine Maine’s climate and grid objectives for years. If Pine Tree Power becomes 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 better regulate our utilities.
Send questions/comments to the editors.
