AUGUSTA — Critics said Wednesday that a bill that could cost the city of Augusta about $200,000 a year but bring other municipalities a share of that revenue amounted to an act of retribution by a utility against the city.
The emergency bill backed by Augusta-headquartered Central Maine Power Co., which under current law registers and pays about $300,000 a year in excise tax to Augusta on nearly 500 company vehicles, instead would have utilities pay excise taxes to the communities where their vehicles are located.
A CMP lobbyist told the Taxation Committee the company backs the change, which it opposed in identical legislation in 2011, because it would more fairly distribute CMP’s excise tax payments to municipalities where the vehicles spend the most time on local roads.
But Augusta city officials and local legislators said CMP is backing the bill to punish the city for its dealings with Maine Natural Gas when the city sought to procure natural gas service for city facilities. Maine Natural Gas withdrew its bid after the city allowed Summit Natural Gas to change its prices after bids had been submitted. The city then selected Summit to provide the fuel.
Maine Natural Gas and CMP are both owned by Iberdrola USA. Local officials allege the parent company has been co-mingling business between the two companies improperly by using CMP’s clout to punish the city for its perceived mistreatment of Maine Natural Gas.
“It’s important for the committee to realize what’s really going on here. The only reason this bill is before you is CMP is mad it didn’t get its way on various natural gas contracts,” said Rep. Matthew Pouliot, R-Augusta. “Conversations between CMP and municipal officials made it clear CMP would take punitive action. This is it.”
Leaders from Fairfield and Farmington testified in favor of the bill, saying it would stop Augusta from unfairly collecting all the excise taxes from CMP vehicles.
“Excise is meant to be paid locally, to help offset the cost of road maintenance,” said Robert Sezak, Town Council chairman in Fairfield, where CMP keeps 38 vehicles, including bucket trucks. “I recognize the change would benefit some municipalities but also translate into a loss to the city of Augusta. But as a matter of fairness, I can see no rationale for having utilities register vehicles in a community other than where they are located.”
Sponsor Rep. Lance Harvell, R-Farmington, sponsored an essentially identical bill in 2011, which CMP opposed and the Legislature rejected.
Harvell said he ran into now-former CMP lobbyist David Allen this year and Allen suggested Harvell’s 2011 proposal should be resubmitted, and that the company would support it. Because Allen had spoken personally against the same bill in 2011, saying it was bad for Maine businesses and increased administrative costs that might be passed on to CMP ratepayers, Harvell said he at first thought Allen was joking. He said Allen explained the company backs the change now because paying excise taxes where company vehicles are kept conforms with how the company pays excise taxes in other states.
Joel Harrington, manager of government and community relations for CMP, said the proposed change would bring tax equity to more than a dozen communities where CMP keeps vehicles.
“The way it is now, communities fortunate to have (a utility’s headquarters within their borders) receive millions each year for property taxes on the utility’s property and buildings and receive 100 percent of the excise tax revenue for vehicles not necessarily located in that municipality,” Harrington said. “That prevents companies like CMP from investing ratepayer dollars back into the communities where our employees live and work.”
Taxation Committee member Rep. L. Gary Knight, R-Livermore Falls, told Harrington all the arguments he gave in favor of the bill Wednesday “were just the opposite of what was given (by CMP officials) three years ago. So I find your testimony somewhat confusing. Maybe you’ve seen the light?”
Harrington, who has worked for CMP for four months, said businesses, and legislators, change their minds sometimes. He said when CMP opposed the bill, the company didn’t know what financial effect it would have on the company. He said the company has studied it since then and thinks the effect will be minor and offset by improved community relations.
Stephen Langsdorf, Augusta’s city attorney, filed a 10-customer complaint Tuesday with the PUC, alleging CMP improperly used its resources, potentially at ratepayer expense, to wage a battle of retribution against the city on behalf of Maine Natural Gas.
Langsdorf said CMP President Sara Burns personally called both City Manager William Bridgeo and Mayor William Stokes to urge the city not to procure natural gas through a public bid process and instead give the contract to Maine Natural Gas.
Langsdorf said later, after Maine Natural Gas withdrew its bid last year, “The next thing we heard was a phone call, in November, from CMP, saying, ‘We don’t want to register our vehicles in Augusta anymore, for political reasons,’ ” Langsdorf said, citing a conversation between Ralph St. Pierre, assistant city manager and finance manager, and a CMP employee responsible for its vehicle fleet. “The next follow-up to that was this bill. CMP requested the bill be put in again.”
St. Pierre testified the bill would cost the city $200,000 in excise taxes from CMP, a big hit to Augusta, while providing comparatively little in new revenue for the other municipalities, each of which would get only a portion of that $200,000.
Augusta City Councilor Dale McCormick said the city would have to raise property taxes by 1 percent to make up for the lost revenue if the bill passes.
John Carroll, a spokesman for Iberdrola, USA, has said CMP still would register 114 vehicles in Augusta if the law passes. The list of municipalities that would get new revenue includes Portland, where CMP has almost 100 vehicles; Fairfield, where it has 35; Skowhegan, where it has 19; and Farmington, where it has 21.
RoJean Tulk, director of government affairs at Fairpoint Communications, said the company opposed the bill as presented but could support it with an amendment allowing utilities to choose whether to pay excise taxes where their headquarters are or where the vehicles are located. Fairpoint’s Maine headquarters are in Portland, and the company pays that city about $270,000 annually to register 400 vehicles.
A work session on the bill is scheduled for 1 p.m. Monday.
Keith Edwards can be contacted at 621-5647 or at: