Maine voters in November could approve a ballot initiative that is a hostile takeover of the Pine Tree State’s two investor-owned transmission and distribution utilities – Central Maine Power and Versant Power. Question 3 on the off-year initiative ballot, written by the Pine Tree Power coalition, is simple: “An Act to Create the Pine Tree Power Company, a Nonprofit, Customer-owned Utility. Do you want to create a new power company governed by an elected board to acquire and operate existing for-profit electricity transmission and distribution facilities in Maine?”
The details of the proposal are lengthy and complex, reflecting considerable sophistication behind the takeover of the state’s two highly unpopular electric companies. Some of the key elements of the 15-page proposal:
- Pine Tree Power “shall purchase or acquire by the exercise of the right of eminent domain all utility facilities in the State owned or operated or held for future use by any investor-owned transmission and distribution utility.”
- The new utility “shall use its access to low-cost capital and its ability to manage the electric transmission and distribution system in a manner that is not focused on ensuring shareholder profits…”
- The company’s board would be “composed of 13 voting members, 7 of whom are elected members and 6 of whom are designated members chosen by the elected members. All members must be residents of the State.” All would serve six-year terms.
- The seven elected board members would each represent five of the 35 state election districts. Each of the six appointed members would possess expertise in a discrete discipline such as utility law, labor relations, generation and transmission expertise, customer service, environmental issues, and social justice, “including the needs of low-income and moderate-income persons.”
- The company would bid out day-to-day operations to “at least one qualified nongovernmental entity…to provide cost-effective, private sector operations, maintenance, customer accounts management and customer service and information and to assist as necessary in regulatory affairs, capital planning and administrative services.”
- The purchase of the two utilities’ assets would be financed by issuing state revenue bonds.
The unpopularity of the two incumbent for-profit utilities (Maine also has five small non-profit municipal utilities and four rural electric cooperatives) is fueling support for the Pine Tree Power initiative. In last December’s J.D. Power electric utility residential customer satisfaction survey, Central Maine Power (CMP), with about 650,000 customers, ranked last in the “east region, large segment” category, with a 607 rating, compared to the best rating of 767 for Public Service Electric & Gas in New Jersey. The next to the last rating was New York State Electric and Gas at 685. Versant, with about 165,000 customers, in the east, mid-sized category, ranked last with a 617 rating, compared to the top rating for Delmarva Power of 751.
Rate hikes have driven the utilities’ unpopularity. Standard rates in 2023 have risen between 34% and 49%, driven by higher natural gas prices, the dominant fuel, according to the governor’s energy office. Yet Maine has the lowest rates in the ISO-New England region, according to the Department of Energy’s Energy Information Administration. Opponents of the companies also note that profits flow to foreigners, not to domestic shareholders. Spain’s Iberdrola (largest shareholder is Qatar) owns CMP, while Versant is owned by Enmax of Calgary, Canada.
Another major irritant to its customers is a flurry of recent disconnect notices. According to the Bangor Daily News, last May CMP sent out 62,000 disconnect notices in April (the utilities are prohibited from sending out the notices during the winter), and Versant delivered nearly 32,000. That’s over 11% of their total customers.
The two utilities are fighting the initiative with big money. According to The Guardian, CMP and Versant’s owners by June had put some $16 million into three allegedly grassroots groups, using well-paid, traditionally Democratic Party affiliated, lobbying firms, to fight Pine Tree Power. The largest, Maine Affordable Energy in Portland, nowhere identifies its funding source. The Guardian reports that the group gave “$5m to a Democratic media and political strategy firm called Left Hook that regularly works with the Democratic Congressional Campaign Committee and is staffed with Obama administration alumni.”
The main argument of the initiative opponents is that a takeover would cost $13.5 billion, implying that the state’s taxpayers would pay for that amount. But their claim is conditional, “Mainers would be on the hook for billions in debt, and it could lead to higher taxes or cuts in critical services we rely on.” The initiative specifies that no tax dollars will be used in the acquisition. Nor is there evidence for the asserted value of $13.5 billion. CMP’s total asset value as of June 2022, according to the company’s financial reports, was slightly over $4.1 billion.
A May op-ed in the Portland Press Herald cited that estimate in opposing the takeover. One of the authors was former state Democratic Rep. Charlotte Warren. While in office, she signed a consulting agreement with a marketing firm that Maine Affordable Energy had paid $266,000 to represent its interests.
The Maine legislature approved a similar ballot initiative in 2021 but Democratic Gov. Janet Mills vetoed it and it never went to the voters.
“This is very much a winnable race, a contest, because of how bad Versant and CMP are,” Pine Tree Power’s Lucy Hochschartner
No public polling is available on the prospects for this takeover initiative, although the initiative opponents have hired several polling firms. Pine Tree Power gotten outside support, including Vermont Sen. Bernie Sanders and the national Sierra Club. The campaign is also getting support from conservatives who are upset with the utilities. Lucy Hochschartner, Pine Tree’s deputy campaign manager, told The Quad Report, “This is very much a winnable race, a contest, because of how bad Versant and CMP are.”
Should the initiative pass, litigation is likely from the two incumbent utilities, according to the Portland Press Herald, citing the state’s public advocate, who takes no position on the issue. The advocate, William Harwood, said, “Because utility assets are infrequently bought and sold, there is likely to be a dispute over the fair market value of CMP and Versant’s assets.” His office estimates untangling the legal and technical issues could take up to a decade to resolve. The office of public advocate, a state agency, represents Maine consumers in proceedings at the Maine Public Utilities Commission.
The advocate’s office also says that Pine Tree Power would, like CMP and Versant, be a distribution company, not a generator. It would have no influence on the standard offer that sets power prices to customers, which are approved by the Maine PUC.
–Kennedy Maize
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