The proposed referendum to create a consumer-owned electric utility is a bad deal for Maine consumers.

There is nothing “wrong” about the public power model. There are well-run and not-so-well-run publicly owned utilities. And the investor-owned utility model certainly has its defects, namely, that capital investments carry a rate of return that may stimulate overinvestment for the potential profits earned by shareholders.

The creation of our public utility regulatory model is intended to prevent the potential defects of the for-profit model by creating a comprehensive oversight system to ensure that rates are “just and reasonable.” Neither system is perfect, and both depend on political goodwill and close regulatory scrutiny to ensure benefits for ratepayers.  

However, the proposal to “take” the private property owned and operated by Versant Power and Central Maine Power has no precedent because of the scope and scale of what is contemplated. No state has approved the public takeover of private property and associated employees and infrastructure equal to a distribution system that serves almost 690,000 customers and encompasses 11,000 square miles (CMP) and 10,400 square miles (Versant). The risks to ratepayers with the estimated costs and benefits circulated by the proponents of this scheme far outweigh the promised benefits.

Here are the reasons to oppose this proposal: 

• The state will spend years and millions to litigate the constitutionality of the taking of private property and the determination of the valuation of the poles, wires, substations, billing system, call center, reliability operations and all equipment owned by these utilities for maintenance of the system.

• The billions in acquisition costs, once determined, will be paid by ratepayers through a revenue bond over a period of years. There is no free lunch. 

• Rates will go up once the bond is included in rates. This cost will be in addition to the normal costs that are included in your distribution service rates. 

• Rates will also go up to meet the promises for increased customer service, reliability of service, and the grid investments advocates claim are needed but not yet included in our rates to ensure more renewable resources to fight climate change. Those promised investments will increase rates since they will seek to add more debt and operational obligations to the current system.  

Neither CMP nor Versant owns any generation. They only operate the distribution system. The challenge to eliminate carbon emissions from our generation system is one that is going to require regional solutions since the grid is operated as a regional system. The notion that this publicly owned utility will somehow be able to achieve more or cheaper distributed generation rooftop and community solar and offshore wind power that is years away from competitive pricing a fantasy.  

The new utility will have to hire a private management company to operate the system. The cost of this contract is unknown (and would certainly include incentives and profits to the management company) and the notion that there are qualified entities “out there” who could take over this job and operate a huge statewide distribution system is questionable. For example, Long Island Public Power had to hire a public utility affiliate, PSE&G, to run their public power system after a disastrous attempt at self-governance. 

The promise that ratepayers will see savings is based entirely on the assumption that the newly formed utility will eliminate the “return” included in our current rates. Anyone can calculate scenarios of potential savings in the long run but there is no promise of savings or lower rates in this bill. Everyone acknowledges that rates will increase in the short run. Ratepayers will bear this risk, not the proponents of this legislation. 

The legislation establishes a politically elected Board.  The potential candidates will likely include those with a special interest in ensuring investments to fit their agenda and will not necessarily have a public interest motivation. 

Maine needs to focus on the tasks before us and not spend millions debating a proposal that will divert our attention from needed investments in reliability of service, ensuring affordable electricity for vulnerable households, and upgrading the grid to handle renewable energy investments. We can achieve all these goals without taking private property and setting in motion years of litigation and delay.