As former commissioners of Maine’s Public Utilities Commission, we strongly oppose proposed legislation – L.D. 1708 – that would authorize a new government authority, overseen by politicians, to seize and run Central Maine Power and Versant Power. A government takeover would set back Maine’s work on climate change, trigger many years of costly litigation, and ultimately cost ratepayers tens of billions more.
We all know the PUC can and should hold utilities accountable – that’s the PUC’s job. If our goal is to improve Maine’s electric system and address climate change now, then breaking what we are trying to improve is hardly a solution.
• First, we are concerned about politicizing our electric grid. L.D. 1708 would create a “body politic and corporate” governed by elected officials. This structure is without question a government entity managed by politicians. From our experience, when utilities are managed by elected officials, political pressure dominates, including favoring political interests over investments needed to ensure reliability and grid modernization.
• Second, if Maine is going to meet its aggressive climate and clean energy goals, we need to invest significantly in our electric grid to integrate more renewable electricity. If L.D. 1708 passes, we are almost guaranteed a decade plus of legal battles that will halt progress toward these goals. After all, if the government threatened to seize your home and offer less than half what it was worth, wouldn’t you say no? We should expect that. And after years of fighting in state and federal courts, if a seizure is allowed, the elected leaders of this consumer-owned utility may well not authorize the significant additional borrowing necessary. In fact, limited clean energy investment has been the experience of many prominent “consumer-owned” utilities.
For example, the Tennessee Valley Authority is the largest public power entity in the U.S., yet it is one of the largest polluters in the U.S. The Los Angeles Department of Water and Power is governed by the city of Los Angeles and is one of the dirtiest utilities in California. Despite having cheap coal power, it has high rates and faces charges of poor management driven by the political control of the Los Angeles City Council. Long Island Power Authority, on which L.D. 1708 is modeled, has experienced a cascade of poor, politically driven decisions, poor service, poor reliability and some of the highest rates in the country. And then there is Nebraska, which is comprised of government-controlled power authorities that, unlike in Maine, rely predominantly on cheap coal power and rank near the bottom nationally in grid modernization.
• Third, consider the competence of political management. This “Pine Tree Power” will be governed by elected politicians, and politicians do not have the competence to run a state-wide utility. The lights are likely to go out more often. There are many consumer-owned utilities in the U.S. with poor management, including the Long Island Power Authority, Los Angeles, TVA and the Puerto Rico Electric Power Authority, suffering from underinvestment, inefficiencies, poor service and higher rates. Locally, the only consumer-owned utility comparable to CMP or Versant Power is Eastern Maine Electric Cooperative, and that utility has higher rates and lower reliability than CMP. In fact, TVA, the Puerto Rico Authority and Eastern Maine issued so much debt – without modernizing or cleaning up their grids – that they went through bankruptcy.
• Finally, L.D. 1708 will shift the risk of mismanagement and spending 100 percent onto Mainers. PUC oversight remains, but in practical terms, government power eliminates the PUC’s most effective regulatory tool to penalize bad management. When an investor-owned utility like CMP or Versant Power makes a bad decision, the PUC imposes penalties on the shareholders to change behavior. By contrast, with a “consumer-owned” utility, there are no shareholders to suffer the financial consequences of mismanagement and any penalties are paid by you, the Maine electric consumer.
Maine has a short window to address climate change, to clean up our energy system and to modernize our grid. We have three good PUC commissioners, two now appointed by Gov. Mills. We should let them do their job, give them the tools they need and not lose a precious decade trading one regulatory model for a yet worse one. We should focus on needed reforms to solve the real problems the Legislature is attempting to fix.
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