Facing consumer unhappiness with the reliability and cost of electric service, Gov. Janet Mills has proposed a bill which, if adopted, would be intended to make the wires companies publicly accountable. It might expose seriously deficient companies to takeover.
The bill comes as an effort has been launched to replace the two largest electric utilities in Maine with a consumer-owned utility (COU) — public power. Mills has opposed a referendum on a new COU and her bill could be expected to derail the effort to put it on the ballot or ensure its defeat.
The proposal contains two key parts: a performance report card for electric utilities and methods for changing the ownership of utilities that perform poorly. It also has provisions improving protection for utility whistleblowers and reviewing the impact of climate change on the utilities.
The Public Utilities Commission would adopt rules to measure performance as reported every three months by all electric utilities. These rules would be considered routine, not subject to legislative review. They would be adopted by mid-2023.
While the main focus of public concern these days are Central Maine Power and Versant, the bill would also target all Maine COUs, which generally have lower rates and greater reliability than the two foreign-owned, major investor-owned utilities (IOUs).
The bill calls for the commission rules to measure performance against “standard utility practices.” For IOUs, the standards are set by the Edison Electric Institute, their trade organization. It would be reasonable to expect it to set standards to go easy on Maine’s members.
For example, CMP has claimed its reliability problems result from so many trees in Maine. Trees can harm power lines. EEI could provide a standard utility practice relating to vegetation management that improved CMP’s performance. From Maine’s perspective, the trees were there when CMP was formed in the early 20th century, and by now it could have learned to deal with them.
The federal government’s Energy Information Administration rates the reliability of state electric utilities. Maine IOU areas have been coming in last nationally. Is a newly contrived measure of reliability needed? Will the PUC discover something new?
The basic requirement of electric service has always been reliability at the lowest reasonable cost. That places reliability ahead of the five other utility report card factors in the bill.
As for costs, the PUC could look at whether CMP and Versant were over-collecting from customers — but only once every five years. If rates looked too high, it could order an audit or lower rates in a future rate case, whenever that might take place. These two utilities could derive unjustified profits for many years. Costs, a focal point of customer concern, would not be part of the performance report card.
More power to the PUC
When the PUC receives the quarterly reports, presumably from all seven electric distribution companies, it is to calculate and publish a score for each standard for each utility. It would have to make sure the information was accurate and complete, possibly requiring interaction with utilities. It is even given authority to conduct evidentiary hearings to consider sanctions for utility failure to report timely, correctly and completely.
Where is the staff to perform these important tasks? Unless the PUC is now significantly overstaffed, it is difficult to see how those responsibilities can simply be added.
If a utility “consistently fails” to perform well, or if the PUC believes it may be “financially impaired” from operating as a public utility, it may hold a hearing to determine if the current ownership should be divested of the utility. There is no time limit on this entire process, which would likely take years.
If it decided on divestiture, the PUC would accept proposals from “qualified buyers” for the utilities. It would be required also to consider a proposal from a COU. But consumers themselves would be excluded from making a proposal. It would come from a five-member committee, with the governor appointing three members and the Public Advocate two members. The PUC would provide the committee with financial support, though the bill does not indicate the source of the funds.
In short, a governor’s appointees would be able to define the COU proposal. A governor hostile to public power could make sure no viable alternative was offered.
Worth noting is the bill would allow an existing COU to be taken over by an IOU against the will of its consumer-owners.
The PUC would select the new owner, determining the long-term benefits of each proposal and if the offer is for “a fair and reasonable price.” It could determine that CMP and Versant provided greater benefit or the offer prices were too low. Such findings could completely undermine the entire process, all the way back to the first performance report card.
Much has been said about Mills’ proposal as a method to hold utilities accountable. In fact, it may do nothing.
To summarize, here are major issues with the bill:
- It gives enormous power to the PUC without adding to its staff or expertise.
- It provides for performance testing and eventual divestiture of Maine’s COUs, which have presented none of the problems the bill addresses.
- It strips the Legislature of all powers over the process.
- It complicates and delays the consideration of a new statewide COU.
- It is a lengthy procedure, possibly endless.
- It would ignore existing performance failures and ratings, and start with a blank slate.
- It would do nothing about rates.
- It would make divestiture a distant and unlikely possibility.
- It allows a governor to kill a statewide COU.
- It lacks funding, which could be considerable.
If the bill so obviously might produce no change in utility ownership and control, why is it before the Legislature? The proposal does serve a political purpose.
Consumers are more unhappy than usual about the performance of CMP and Versant. The bill gives the impression that government has heard these concerns and would take action. Media coverage has promoted it favorably, thus aiding in this effort.
A decision on replacing CMP and Versant with a COU by means of a referendum would be difficult. The governor’s proposal compounds the problems, prevents consumer choice and circumvents the Legislature.
During the campaign for governor this year, Mills is likely to be asked about her thoughts on the Pine Tree Power COU that continues to gather signatures for a 2023 referendum. This bill gives her the opportunity to continue her opposition while offering the bill as her own effort to be responsive to consumer concerns.
Writer’s disclosure: I was the first Maine Public Advocate, and for many years assisted COUs and customers in the U.S. and Canada. I have contributed financially to the effort to get a statewide COU on the ballot for a decision by the people of Maine.