Line workers from Central Maine Power Co. and arborists with Asplundh Tree Expert Co. remove an oak tree from power lines in Waterville in December 2022. Michael G. Seamans/Morning Sentinel

When Central Maine Power Co. agreed this year to shave $850,000 off what electricity customers must pay for power restoration after storms in 2022, the utility pledged to improve administrative procedures supporting its spending decisions.

The cost reduction was just a fraction of the $53 million that state Public Advocate William Harwood asked the Public Utilities Commission to claw back. He accused CMP of overspending and failing to prove some expenses were justified, opening the door to a broader look at how the utility accounts for expenses related to storm restoration and numerous other operations.

CMP, which sought to recover $127 million it says it spent on restoring power after nearly a dozen storms in 2022, said the public advocate had no basis to accuse it of overspending.

Still, as part of a settlement with state regulators, the subsidiary of Connecticut-based Avangrid Inc. asked the state to approve so-called affiliate service agreements with six other Avangrid utilities in Massachusetts and New York – as well as Maine Natural Gas – that detail scores of services such as HR, use of equipment and vehicles, legal expenses, staff recruitment, building security and other functions.

Tens of millions of dollars could be at stake for CMP ratepayers as state officials examine how Avangrid apportions costs among its subsidiaries, said Brian Marshall, senior counsel at the Office of the Public Advocate.

“If some affiliate company of CMP has really inflated costs – HR, for example – does that cost make sense?” he said. “Those are questions we’re struggling with right now. Tracking costs through this chain can be quite tricky.”

Specific dollar amounts are not being discussed, but a “big piece” is determining how costs are allocated, Marshall said. “It’s pretty thorny and complicated.”

CMP says the contracts are a framework for determining costs. The PUC ultimately approves or denies requests for storm restoration expenses and is expected to decide whether to approve the agreements.

Jon Breed, the utility’s spokesman, said in an email that affiliate service contracts are a “common tool” used by utilities to reduce the cost of service of key business functions such as cybersecurity and IT, emergency preparedness and equipment in the supply chain. CMP agrees that a “review of the framework” of the contracts by the PUC is a “valuable exercise.”

CMP told regulators the services provided to one company are billed directly to it and services to more companies are allocated according to “drivers” such as the number of cars, employees or users of equipment.

At a recent PUC meeting between the public advocate and CMP, the utility cited as an example an employee of  an Avangrid subsidiary such as New York State Electric and Gas who works on a CMP project and will bill the time worked to CMP.

CMP says Maine’s utility regulators approved agreements with a predecessor, Energy East Management Co. that was acquired by Iberdrola, the Spanish energy giant and parent company of Avangrid. CMP has updated its service agreements and provided them to state regulators, it said.

In filings submitted to regulators, CMP said the agreements benefit customers with economies of scale that provide cost efficiencies and specialized services by CMP’s utility affiliates. The utility’s affiliates restore power following storms at a lower cost than what’s available in the market, it said.

Harwood said the agreements are “not really for services of affiliates restoring power. We think that’s a real problem.”

The contracts among Avangrid utilities are generally “legitimate and above-board,” though the “potential for mischief is quite high,” he said.

As an example, Harwood said a proper function for corporate executives is to scout opportunities for mergers and acquisitions. Those expenses should be shouldered by shareholders, he said.

“I want ratepayers to pay no part of that cost,” Harwood said. “There’s no value to the Maine ratepayer.”

Sorting out costs apportioned among out-of-state corporate subsidiaries raises a familiar issue of ownership of local electricity transmission. Avangrid, with its subsidiaries in Connecticut, Maine and New York, is itself a unit of Iberdrola, which has drawn criticism for its distant control over Maine’s electricity.

“This is a whole new world,” Harwood said. “We have to peel this apart.”