Central Maine Power can temporarily raise rates to recover more than $34 million it spent restoring electric service following two powerful nor’easters last year, state utility regulators decided Tuesday.

The higher rates would be charged over a yet-to-be-determined period starting in July 2022.

The Maine Public Utilities Commission ruled that CMP had spent money prudently during the restoration, which included hiring, lodging and feeding hundreds of private contractors, a process made more challenging last year by COVID-19 protocols.

Central Maine Power Co. lineman Sam Pottle restores power to a home in Farmingdale after an overnight snowstorm dropped limbs on the lines in December 2020. Andy Molloy/Kennebec Journal

During brief deliberations Tuesday, both commission Chair Philip Bartlett and Commissioner Patrick Scully agreed with the overall recommendations of the PUC’s hearing examiner, who analyzed data in the case. They granted the company’s request for an accounting order, a method by which CMP can defer costs on its books for future recovery, rather than writing them off and having shareholders take a hit.

But they put off deciding the recovery time period until a proceeding next year, making it hard to specify the financial impact on customers until then. Based on a PUC estimate, however, if the $34 million is recovered through rates over three years, home customers would pay an average of roughly an additional $1 per month.

Outside of the case, CMP has said its shareholders have assumed more than $40 million in storm costs since 2017. The company noted its annual investments in system reliability, including $225 million in 2020 for measures including sturdier poles and insulated wire. It also spends $25 million a year to trim trees that threaten distribution lines, the largest cause of storm outages in Maine.

The decision came over objections from the Office of Public Advocate, which questioned the prudence of several expenditures. The consumer agency also noted that in a separate report done for the PUC, company management acknowledged that aging infrastructure and lack of resiliency to storm damage required high levels of overtime and hiring of private contractors.

The public advocate added that, in a broader context, Tuesday’s narrow decision ignores the chance to “take a step back and review the larger strategic decisions that have been made that contribute to the utility’s preparedness for such storms, particularly as such storms appear to be becoming more frequent and intense with climate change.”

With climate-fueled threats in the background, the case offers fresh insight into how utilities prepare for storm-caused power outages. It comes as public and political discontent has led critics to collect signatures for a referendum aimed at replacing the state’s investor-owned distribution companies with a consumer-owned utility.

ANATOMY OF STORM REPAIR

The PUC uses a complex, multilevel mechanism to account for how money is spent to restore electric service and how costs are shared between customers and investors. This approach breaks out storms into three tiers, depending on how severe they are and how much the response costs.

Two harsh nor’easters in 2020, one in April and the other in December, qualified as among the costliest “Tier 3” storms.

Storms that cost more than $15 million are deferred for future recovery. The goal is to spread out the cost over time on ratepayers. But since new storms can pile up additional costs, there’s also an awareness that too many deferred expenses can trigger large, future rate shocks.

More frequent damaging storms have regulators and utilities looking for ways to reduce the burden of restoration. More tree-trimming and stronger wires and poles can reduce outages, but those measures cost money and must be balanced against higher rates. Seeking that balance, the PUC rejected a larger resiliency plan sought in 2019 by CMP, but approved an aggressive tree-trimming pilot program in the outage-prone Jackman area.

Information filed in the case helps show the steps CMP took to prepare for and respond to the storms, and the associated costs.

The April 9, 2020, storm was expected to bring snow only to western Maine – rain was forecast for the coast. But areas north of Portland got 6 to 18 inches of snow and gusty winds. System damage occurred both during the initial storm and again when the snow-laden trees snapped back and hit wires.

Based on forecasts and experience, CMP prepared for a storm with the potential for 20,000 to 62,400 outages at the peak. It contracted with 200 line crews from Maine and across New England and 108 in-state tree crews to supplement CMP’s 200 line workers. They were joined by more than 500 CMP employees performing support duties.

As the storm intensified, CMP sought more crews. But with a second storm brewing in southern New England on April 11, utilities there recalled 419 workers and CMP had to hire replacement crews from Canada.

The storm affected 280,000 customers. A total of 203,977 were without power early on April 10. But service was restored to 90 percent of customers by the end of April 12.

Damage was substantial: It affected 281 distribution circuits and a dozen high-voltage transmission sections. More than 240 poles were broken and 200 transformers needed to be replaced. Restoration costs exceeded $24 million.

COVID-19 complications added to the costs. Many motels and restaurants were closed and CMP had to scramble to find lodging and food. Pandemic safety protocols required social distancing, personal protective equipment, crews staying in single rooms and driving alone. The company had to rent hundreds of pick-up trucks to accommodate this arrangement.

ADVOCATE QUESTIONS COSTS

Pandemic protocols also complicated response to the Dec. 5 nor’easter. An uncertain forecast and unavailability of crews from southern New England compelled CMP to again seek help from Canada, as well as New York. It gathered 200 private tree workers and 700 contract line workers. Heavy, wet snow caused 194,714 outages by the morning of Dec. 6. It affected 300 distribution circuits and 11 transmission sections. More than 300 poles were broken and 80 transformers required replacement. Restoration costs exceeded $24 million.

Nearly all customers had power restored by the evening of Dec. 8.

Information filed by CMP shows that paying private contractors is by far the single largest cost of restoration – $21.3 million for the April storm and $18.8 million for the one in December.

The Public Advocate’s office took issue with those expenses. Citing conclusions from a July report to the PUC from Liberty Consulting Group, the agency said CMP was on the wrong path in terms of managing staffing and spending during outages.

It highlighted a sentence from the report: “External costs for storm recovery remain a consistent source of cost overruns for at least the last four years.”

In one example, the Public Advocate’s office took issue with costs for travel, lodging and meals. It expressed concern over meal bills amounting to tens of thousands of dollars. But the PUC staff examined those bills and sided with CMP’s explanation that when “large numbers of crews, both internal and external, are fed three meals per day over a multiple-day event, meal costs will invariably be high.”

CMP also has learned through experience that extra costs associated with delivery of bag lunches, for example, reduce crew travel time to and from restaurants. That maximizes productive daytime work.

“It is not unusual to see meal invoices for storms reach well into the tens of thousands of dollars when meals are purchased in enormous quantities to serve hundreds of line workers and then are paid for on a single bill,” the PUC staff noted.

The PUC staff also reviewed the public advocate’s concerns about large differences in hourly rates for contractors, notably those from Quebec. The province, it turned out, had mandatory quarantine requirements that added to the hourly cost.

On Tuesday, CMP said such resource-sharing arrangements allow the company to ramp up responses quickly and move workers to where they are needed as restoration progresses.

If CMP relied only on its own line workers, it would have taken weeks to restore power to all customers following those 2020 storms, according to Catharine Hartnett, a company spokeswoman.

“It makes no sense to employ more than this on any other day of the year,” she said. “That would be an expense that customers could not bear in rates, and it is why we maintain productive relationships with both in-state and out-of-state contractors.”


Only subscribers are eligible to post comments. Please subscribe or to participate in the conversation. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.