Mainers Poised to Vote on Unprecedented Plan to Replace Electric Utilities
Mainers are gearing up to vote on a groundbreaking plan that aims to remove the state’s two largest electric utilities and start afresh. If successful, this would be the first time in U.S. history that a state has forcibly removed its utilities simultaneously. The proposed referendum seeks to dismantle Central Maine Power and Versant Power, which together distribute 97% of electricity in the state, and replace them with a nonprofit utility called Pine Tree Power. Pine Tree Power would operate 28,000 miles of transmission lines.
The outcome of the vote, scheduled for November 7th, will be followed closely by ratepayers across the country who are dissatisfied with their own utilities. “What we say about state policy and trends is that it could become contagious,” remarked Timothy Cox from Washington-based Clear View Energy Partners.
The referendum proposes the creation of a nonprofit utility with a board predominantly composed of elected members. One of the main advantages highlighted by supporters is that the new utility would be accountable solely to ratepayers, rather than corporate shareholders. This would result in lower costs, increased investments in the grid, and improved performance. Additionally, Pine Tree Power would benefit from lower interest rates for long-term borrowing.
Advocates of the plan argue that there is little to lose given the low customer satisfaction ratings of both investor-owned utilities, which have longer response times to power outages and higher electricity rates compared to the national average.
However, critics, including Democratic Gov. Janet Mills, have expressed concerns about the possibility of politicizing the power grid. They also question the projected savings, considering the substantial cost of buying out the utilities, as well as the potential for protracted legal battles. Maine Public Advocate William Harwood estimates that legal disputes alone could delay the implementation of the new utility by five to ten years.
The enormous amount of money spent on the campaign reflects the high stakes for the existing utilities. The owners of Central Maine Power and Versant have donated nearly $40 million to fight the takeover, far exceeding the $1.2 million raised by supporters of the proposed utility takeover. Seth Berry, a former state senator and critic of Central Maine Power, described the situation as a “David vs. Goliath matchup.”
While the Maine Public Advocate’s office does not take a position on the proposal, it points out uncertainties, particularly regarding the valuation of utility assets, which are rarely bought and sold.
Across the country, investor-owned utilities serve about 66% of electric customers, with smaller co-ops and municipal utilities making up the rest. Cities such as San Francisco, San Diego, Ann Arbor, and Rochester are currently considering the possibility of transitioning away from investor-owned utilities.
In terms of scale, the proposed plan in Maine stands out as it involves taking over the entire service territory of the state. Nebraska comes closest to this model, as it is the only state where all ratepayers are served by municipal utilities, although this did not happen all at once.
Mike Jacobs, a senior energy analyst at the Union of Concerned Scientists, warned that changing ownership does not guarantee solutions and suggested focusing on addressing problems rather than demanding new ownership.
The frustration felt by electric ratepayers in Maine is a stark contrast to the optimism surrounding Central Maine Power’s purchase by Iberdrola in 2008. At the time, the company’s focus on renewable energy seemed to align well with Maine’s goals, and Central Maine Power initiated a $1.4 billion power grid upgrade to accommodate more renewable energy.
However, the relationship soured quickly. Central Maine Power faced backlash for a botched billing system rollout in 2017, which led to incorrect cutoff notices, investigations, and lawsuits. This billing debacle coincided with frustration over slow responses to storm-related power outages, rising electricity costs, and opposition to a $1 billion hydropower corridor project. Additionally, green energy advocates accused Central Maine Power of dragging its feet when it came to connecting local renewable energy projects to the grid.
While some ratepayers are eager for change, others remain cautious. Christie Decker, a resident of Wilton, expressed her concerns about Pine Tree Power, stating that while she understands the supporters’ intentions, there are still too many details left unresolved after the election. Decker, who is undecided on her vote, said, “I know what their hopes are. But I haven’t seen any concrete plans. I’d like to see some concrete plans.”
If approved, the proposal would initiate the establishment of a 13-member board. The privately operated, nonprofit Pine Tree Power utility would then contract a private grid operator through a competitive bidding process. The board would approve an operation plan, and employees of Central Maine Power and Versant would receive bonuses for joining the new contractor.
Freed from shareholders, the utility’s board could invest in a more resilient system to prepare for increasingly frequent extreme weather events due to climate change.
However, Pine Tree Power would face similar challenges to Central Maine Power and Versant Power. Maintaining power lines, substations, and other equipment across a vast rural state is expensive. Furthermore, like the existing utilities, Pine Tree Power would have no control over the actual cost of electricity, which accounts for about half of consumers’ monthly bills.
Even if the proposal is successful, it may encounter another obstacle. A second ballot question would require voter approval for borrowing exceeding $1 billion, potentially limiting access to the bonds necessary for the utilities’ buyout.
Willy Ritch, executive director for the Maine Affordable Energy Coalition, which opposes the referendum, argued that supporters of Pine Tree Power “want us to take on debt, go through years of bureaucratic and legal fights, and hope that the elected politicians they put in charge of the grid someday figure out how to save us money or improve reliability.”
Al Cleveland, campaign manager for the effort to remove the utilities, responded to skeptics by stating, “We truly could not get any worse than what we have right now. We have the worst quality service. We have to be able to improve that.”
