AUGUSTA — Supporters of a bill to turn Central Maine Power and Emera Maine into one consumer-owned electric utility have focused on the broad goals of local control, lower costs and improved service.

But it’s a host of financial complexities such as calculating the value of each company’s assets, future borrowing costs, the impact of interest rates, constitutional questions of eminent domain, compensation and court appeals that could determine whether Mainers would be better or worse off over the next 30 years with a consumer-owned power company.

A legislative committee delved into those details Wednesday during a nearly four-hour presentation by experts from London Economic International, a consultant hired by the Maine Public Utilities Commission to analyze the pros and cons of a public takeover of CMP and Emera Maine’s assets. The legislative committee that handles energy and utilities issues will decide over the next month whether to forward the bill to the full Legislature.

The 92-page report was released last week to the 13 committee members, but Wednesday was the first time the report’s authors fielded questions.

LEI, as it’s known, is a British consulting firm with an office in Boston. The PUC hired the company last fall after the Legislature directed the commission to review the impact of L.D. 1646, which would create a public utility called the Maine Power Delivery Authority. That new agency would take over operation of the transmission and distribution assets of the state’s dominant investor-owned utilities, CMP and Emera Maine.

A private contractor would be hired to manage the system. It would be overseen by a board of directors appointed by the governor, although LEI suggested a board elected by customers.

The bill was sponsored last year by Rep. Seth Berry, D-Bowdoinham. Berry co-chairs the energy committee and is a vocal critic of CMP and how it has conducted business over the past few years, including its botched rollout of a billing and metering system.

On Wednesday, Berry expressed optimism that the committee would be able to refine the bill and vote on forwarding it to the full Legislature. He conceded that many questions remain, with the Legislature set to adjourn April 15. Also unknown is whether the measure will have support from Gov. Janet Mills, who has yet to take a position on the concept.

“Now is the time to move the ball forward,” Berry said.

Even before the presentation, London Economics had come under fire from supporters of the bill who were displeased by a key finding in the report – that taking over the assets of CMP and Emera Maine is expected to benefit ratepayers over the long term, but increase rates and reduce state tax revenue over the next 10 years. This expectation is based on the future financing advantage of a tax-exempt power authority.

“There is no magic wand which allows for rapid reduction in rates and improvement in service quality,” Julia Frayer, LEI’s managing director told the panel Wednesday.

The consultant also found trade-offs such as lower rates for customers, but reduced tax revenue to support public services. That’s because the authority’s tax-exempt status would allow it to minimize paying local, state and federal taxes.

Another trade-off exists between customers and the Maine-based unionized employees of CMP and Emera Maine, LEI said. Maine ratepayers would want to optimize the use of labor to help lower electric delivery rates, while unionized workers want job security and good wages.

LEI suggested further areas of study, including tax issues and future capital needs of Maine’s electricity network.

After the presentation, committee members dug into some details about how to calculate the net book value of a utility and how to select a management team to oversee the authority.

The panel is expected to hold work sessions over the next week or so to further refine the bill.

LEI’s study was strongly criticized by Gordon Weil, a longtime supporter of consumer-owned utilities and Maine’s first public advocate and director of the Office of Energy Resources.

On Monday, he released a 10-page review of the LEI report, concluding that switching to a consumer-owned power company is far more positive for ratepayers than the consultant suggests. Among other things, Weil said, the LEI study overlooks failures in reliability of the current distribution system, investments needed to meet climate change goals and potentially large savings under power authority financing.

“Much of LEI’s attention,” Weil wrote,” is focused on the impact of the acquisition cost. Acquisition will be made as difficult as possible by CMP and Emera. That is the inevitable, one-time hurdle in creating public power.”

Weil has been heavily involved in American and Canadian utility issues and served as consultant to large electric customers, including consumer-owned utilities.

In offering his review, he stressed that he’s speaking as an independent voice and isn’t affiliated with the Maine Power for Maine People or other advocacy groups. He did, however, help write and revise L.D. 1646 and  has offered advice to Berry.

“The net effect of the report,” Weil wrote, “is to underestimate the current and future financial benefits to Maine customers and the potential for greater system reliability under competent management responsive to Maine customers as opposed to foreign owners.”

Berry highlighted Weil’s findings, and said that, on balance, the report shows it’s better to return control of Maine’s electric grid to local residents, rather than foreign, for-profit corporations. Iberdrola S.A. of Spain is the lead shareholder in CMP’s parent company, Avangrid.

For its part, CMP found some comfort in the report’s conclusions.

“The independent report’s findings demonstrate that public power is not in the best interest of Maine electric customers or taxpayers,” CMP spokesman Ed Crowder said in a statement after the report was released.

LEI notes that its analysis isn’t intended to be complete and exhaustive, and suggested additional studies and further inquiries.

LEI also brushed aside charges that the company might be biased or have a conflict of interest and that it failed to disclose an unrelated, previous business dealing with Emera Maine. LEI acknowledged that it performed a 2018 study involving the economics of biomass plants in northern Maine and that the study was paid for by Emera Maine. That fact should have been disclosed in its proposal to the PUC, but was inadvertently omitted, the company said.

Responding to a question from a lawmaker, the consultant also said LEI had worked in the past for Hydro Quebec, but not involving matters in Maine or New England.

That statement won’t satisfy some lawmakers.

Four members of the energy committee, including Rep. Tina Riley, D-Jay, sent a letter last week to the PUC to say they are seeking additional information and are asking the agency to preserve the state’s ability to withhold any future payments to LEI’s $500,000 contract, until further notice.

The PUC replied that it has paid the consultant $158,923 so far, and has contacted the state’s Division of Procurement Services on how to proceed. The PUC said it won’t issue more payments without express guidance to do so.

 

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