A recent bill (L.D. 1646) seeks to cure several ailments currently afflicting Maine’s investor-owned utilities by taking them over and forming a state power authority. Their ailments are very real: high cost, abysmal reliability and their opposition to most renewable-energy measures. The implication is that by creating a state power authority, all these issues get resolved. This is a very bad idea.

Taking over an investor-owned utility – one designed and operated under an entirely different structure – and converting it to consumer-owned is very rare and, with one exception, involved municipalities withdrawing from the territory of their local investor-owned utility.

Takeovers are rare because the costs can way overwhelm the assumed benefits. Ask the District of Columbia or San Francisco about why they decided not to proceed.

The only time a state took over an entire investor-owned utility happened in New York, causing the creation of the Long Island Power Authority in 1998. By 2013, the Long Island Power Authority’s rates and reliability were so bad that the state contracted operation out to a New Jersey investor-owned utility, which is attempting to turn it around.

A far more efficacious remedy than creating a power authority would be to change the rules under which the investor-owned utilities operate. Maine’s current rules are nearly 100 years old and were designed for a very different purpose than what is needed now. Instead of embarking on a long and very costly attempt to take over the investor-owned utilities, one with questionable cost and benefits, the state would be far better served by comprehensive and innovative rate reform.

A reformed structure sets the context for many of the state’s initiatives and can force changes in investor-owned utility operation and costs. Working examples already exist in several other states. Want different operational outcomes? Change the rules.

Gerry Runte


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