To judge by the flood of postcards and electronic ads, you could think that a utility named Pine Tree Power lacks a business plan, is unreliable and is running up huge debt. Even worse, it is run by politicians. It’s a horror, so kill it.
Line workers from Central Maine Power Co. and arborists with Asplundh Tree Expert Co. remove an oak tree from power lines and restore power to residents on Edgemont Street in Waterville last winter. Michael G. Seamans/Morning Sentinel, File
First, let’s take a breath for one simple fact. Question 3 asks if Maine people want to have a nonprofit, publicly owned electric wires company. It does not yet exist. A positive vote will start a process involving regulators, the former utilities, legislators and the courts before this important decision is placed into operation. A decision like this takes time and requires care.
The core issue of Question 3 is not what’s wrong with a company that doesn’t yet exist, but what’s wrong with Central Maine Power and Versant Power — so wrong that they need to be replaced for the good of Maine people.
Two big things are wrong with them. Their rates are too high and their reliability is too low. And they’ve had plenty of time to fix both and haven’t.
Why are their rates high? Every time they build new lines or buy new meters, the costs run up by these monopolies are financed by investors and lenders. The investors get an elevated, regulator-authorized return. The lenders offer debt at rates that are boosted to cover their income taxes on the interest.
Contrast that with nonprofits in Maine and all across the country – from the Los Angeles municipal to a Maine cooperative. They finance their plant with lower-cost, tax-exempt debt. They don’t pay profits to anybody. Their wires rates are lower than those of their investor-owned neighbors.
And the CMP and Versant profits must be good. They are spending tens of millions of dollars for those postcards and ads. Customers don’t pay for the ads, but they do pay for the profits that make them possible.
According to the federal Energy Information Administration, CMP and Versant provide reliability that’s usually close to the worst in the country. The lights go out a lot. The utilities say it’s because Maine has more trees than any other state, and they fall on lines. A close second for tree coverage is New Hampshire, and service there is much more reliable.
Maine has always had trees. CMP was founded in 1910 but adopted a serious tree trimming program only in 2008. The problem isn’t the trees, but CMP. What it didn’t spend on trees out of its allowed rates went straight to profit.
As for a utility run by politicians, we allow politicians in the Legislature to make far more important decisions about our lives than would the elected utility board. Maine people setting the policy for electric service is likely to be an improvement over decisions by CMP’s owners in Spain and Versant’s in Canada.
But what about the high cost of buying out the two companies? That will be decided in court, not by the consultant hired by the companies to make assumptions pushing up the cost. In its recent purchase of the Versant system, the Canadian owner paid a lot less than it now wants to extract from its customers.
Also, customers are now paying a large part of the cost of the utility facilities, because their rates must cover those costs. Ownership and control will change, but the costs will simply be transferred.
Question 3 starts a process, one with many fail-safes along the way to the final transfer. CMP and Versant want to kill any hope of lower rates and better service. Pine Tree Power offers a chance of at last bringing Maine up to national standards.
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