HARPSWELL — Central Maine Power proposes a new energy project with a major environmental impact. After its initial proposal, CMP’s representatives meet with the governor and promise financial benefits to Maine. Decades later, those benefits will prove to have amounted to little.

The project sounds like New England Clean Energy Connect, a high-voltage transmission line that would run 145 miles across Maine. To reduce opposition to the project, CMP promises to pay $268 million in 40 equal annual payments as contributions to environmental protection and economic development. These will be tax-deductible outlays by CMP.

But it’s not what it may seem to be at first glance. Maine has been through this same process with CMP before. As Yogi Berra said, “It’s déjà vu all over again.”

The story is a cautionary tale in dealing with CMP.

In 1923, CMP exercised huge influence over the Maine Legislature. It induced the Legislature to adopt a veto-proof bill giving it state land to build the Long Falls Dam on the Dead River. This storage dam would control the flow of water at hydro generators downstream on the Kennebec River. The dam would impound waters, creating Flagstaff Lake and flooding out two towns.

Gov. Percival Baxter, among the most eminent leaders Maine has known, was furious at the land grab. He immediately announced he’d collect enough signatures to force a public referendum to reverse the Legislature’s action.


As signature collection began, CMP came to Baxter’s office to see if it could settle the issue. He said the utility must pay $1 million to the state. CMP agreed that, when the dam was built, it would make 40 annual payments of $25,000. It then directed the Legislature that same day to pass the new deal. The term was extended another 10 years.

While this sounded like a good deal to Baxter, it ignored three economic factors. One was the effect of inflation over 50 years. By the end of the payment term, the dollar would be worth about one-tenth of what it had been at the outset.

Another factor was what it could save the state in interest costs if the state received the full amount up front and used it to avoid borrowing. Even more important, it took no account of the value to CMP of the added hydropower resulting from the dam.

In 1940, the dam work started and the annual payments began. In 1990, the parties were to extend the agreement and, if necessary, the Maine Supreme Judicial Court would decide the amount of the CMP payments.

When renewal time came, the state hired me to determine the annual payment. The key element was the value that Maine’s sacrifice was producing for CMP at dams downstream. The price of oil had skyrocketed, making hydropower especially profitable as an option. But inflation, decreasing the value of the dollar, was also a big factor.

My calculations indicated that the annual fee should be more than $525,000, about 21 times what CMP was paying. That amount should be adjusted for inflation each year. CMP answered that it should pay nothing at all. It refused to negotiate on the fee.


Ultimately, as the original agreement required, the state supreme court had to set the fee. It adopted my proposal to the dollar and the inflation adjustment. After some resistance, CMP paid the fee, giving me the satisfaction of having fulfilled Baxter’s intent.

Maine made a great sacrifice to support the increased development of hydropower resulting from the Long Falls Dam. Despite a legislative attempt, the state could not require that all the power would have to be used within its borders.

Similarly, the new transmission line will yield most of its benefit to users outside of Maine. CMP’s owners at the time of each project have been out-of-state corporations that stood to gain significant profit, even after paying the state.

It took a half-century to bring real value to Maine for the Long Falls Dam. Its lesson is that, if New England Clean Energy Connect is approved, CMP should make its contribution to Maine up front when it may produce the benefits it seems to offer. A level amount, paid annually for 40 years, is mostly an illusion.

— Special to the Press Herald

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