Maine Voters Have a Chance to Oust Their Profit-Driven Utilities

Seth Berry, left, an author of the Pine Tree Power proposal and a former Democratic state representative, chats with voters at a gathering of climate activists in Winslow, Maine, in August 2023. Annie Ropeik/Inside Climate News

This story was originally published by Inside Climate News and is reproduced here as part of the Climate Desk collaboration.

Maine will vote on a plan to replace the state’s two investor-owned electric companies with a statewide nonprofit utility, a proposal supporters describe as an unprecedented potential climate solution. 

If it passes, Question 3 on the Nov. 7 Maine ballot will tee up the sale of the current utilities’ electric transmission and distribution systems to a new company called Pine Tree Power. It would have an explicit mandate to help Maine meet its climate goals and would be partly governed by a publicly elected board. How an electric utility is owned—whether it’s by shareholders or the public—may not be the single most important factor in the energy transition, experts say, but it can have a big effect on public trust and regulatory accountability. Both are seen as key to a speedy, equitable transition to cleaner energy. 

These issues have been at the heart of Maine’s fiery debate over the creation of Pine Tree Power. The proposed company would be the country’s first statewide consumer-owned utility created by a public vote. It would be similar to municipal power companies or cooperatives that serve about a quarter of Americans.

Proponents describe Pine Tree Power as a locally-led alternative to the high rates, poor reliability and customer service issues that have plagued the state’s incumbent utilities in recent years. Central Maine Power, or CMP, the larger of the two, is owned by Connecticut-based Avangrid and, in turn, energy giant Iberdrola of Spain. The smaller Versant Power is owned by Enmax and the Canadian city of Calgary. 

National environmental groups like 350 and the Sierra Club have endorsed Maine’s Question 3 as a big but necessary leap away from these for-profit corporations and into a new way of creating a climate-ready power grid—a model they hope other states will follow if it succeeds in Maine.

Campaign groups solely funded by CMP and Versant’s parent companies have poured more than $24 million into political ads and mailers opposing Question 3, outspending supporters nearly 30 to 1. They claim that years of litigation could follow Pine Tree Power’s approval, delaying climate progress. 

“When we should be investing in the grid, and we should be integrating renewables… we’re going to be fighting in court,” said David Littell, an attorney representing Versant Power. “If the bank shows up and says they’re going to take your house… you’re not going to put solar panels on your house.” 

The utilities have also stressed uncertainty on the costs of the buyout, including on their own potential sale price and the ensuing public debt the new utility would take on at its outset. Economic analyses suggest that the utilities’ sale price may determine whether rates will rise in the early years of Pine Tree Power.

Even then, these analyses say rates would be expected to fall in the long term—largely because the new utility would be required to charge customers only for the “cost of service,” collecting a far lower rate of return on its investments as compared to an investor-owned utility.

Seth Berry, a former Democratic state representative, authored the original Pine Tree Power proposal that passed the Maine legislature in 2021 before it was vetoed by Gov. Janet Mills, a Democrat. At a gathering of climate activists in Winslow, Maine, in August, Berry said grid upgrades needed to meet the challenges of climate change will be inherently cheaper and easier under a utility that isn’t entitled to make a profit. 

“The menu of options doesn’t include ‘let’s write a bigger check to our overseas shareholders.’ You take that off the table, and you can really focus on what counts here in Maine,” Berry said. “Where we do all depend on the grid, those bread-and-butter things like rates and reliability really matter.” 

Maine’s Office of the Public Advocate, which acts as an ombudsman for residential utility customers, has not taken a position on the Pine Tree Power proposal. In a recent fact sheet, they said it’s possible the new utility could be more aggressive on climate change, or could be “constrained” by political pressure to avoid climate-friendly investments that could increase costs for customers. 

Rachel Gold leads work on business model reform in the carbon-free electricity program at RMI, formerly known as the Rocky Mountain Institute, a clean energy think tank. She said public trust in more “basic” parts of electricity service, such as costs, outages and billing, can create more “social license” for utilities and states to forge ahead on climate solutions. 

“We need to do decarbonization in a way that is equitable and affordable and maintains reliability,” Gold said. “In the case of Maine, that’s a place where poor performance on some of those metrics may have implications for the speed of decarbonization.” 

Maine’s fraught relationship with its current utilities has already had ramifications for that effort. In recent years, CMP faced investigation and a $10 million fine for mismanaging customer bills, and strong public pushback to a transmission line it proposed to bring Canadian hydropower onto the New England grid. 

About 60 percent of Mainers voted to try to block the project in 2021. The state Supreme Court ultimately ruled that construction could proceed—but the broader law that the voter initiative enacted will create new hurdles for future, similar power line projects. 

On the whole, Maine has made strong progress on building renewable energy. Wind, solar and hydropower make up more than half the generation in the state, which has a goal of 80 percent renewable electricity by 2030. Maine is pursuing offshore wind and pushing hard to switch homes and businesses from oil to heat pumps. 

As in many states, Maine’s electric system was restructured more than 20 years ago to prevent the utilities that own transmission and distribution infrastructure, like poles and wires, from also owning power plants and other generation assets. But Gold said any transmission utility, regardless of its ownership structure, still must invest and innovate to encourage more renewables and create a transformed power grid. 

“If a utility defaults to how it’s been doing business forever, it may not select the cheapest option,” she said. “If you don’t … do that planning well, you’re probably going to undervalue many of the best options for decarbonization.” 

Maine’s incumbent electricity providers have seen these challenges firsthand in recent years. 

The state legislature passed generous incentives for solar projects in 2019, leading to a glut of solar proposals that continue to clog the queue to get connected to the grid. Developers have complained of long delays, poor communication and unpredictable, often prohibitively high prices charged by CMP and Versant as the utilities have assessed the infrastructure upgrades required to get projects online. 

CMP has acknowledged in regulatory filings that it was not prepared to implement the new solar program, which was scaled back by the legislature earlier this year in an effort to curb the development backlog and reduce costs passed on to customers. The utility had previously lobbied against other, similar incentives. 

Maine environmental groups working on these issues have been split on the Pine Tree Power plan. Some have agreed that the status quo is problematic but questioned whether a shift to public power will help. 

The Natural Resources Council of Maine came out in favor of the initiative earlier this month. “Weighing the pros and cons of shifting to public power in Maine is an exercise in comparing two unknown futures,” it stated. “But business as usual will probably be… business as usual.”    

Johannah Blackman is executive director of the nonprofit A Climate To Thrive on Mount Desert Island, Maine, the home of Acadia National Park. She said her group chose to support Pine Tree Power after struggling to work with Versant Power on a planned community solar array that ultimately fell through. 

“What we’re seeing from Versant is a lot of explaining as to, or justification of why, they can’t really get solar well interconnected,” Blackman said, “but not any kind of foresight or planning into how they’re going to solve that.”  

Versant spokeswoman Judy Long said the utility has successfully hooked up many other solar projects on Mount Desert Island and across their territory, and that the one project Blackman referenced was stalled by factors like changing regulations and an increasingly crowded interconnection queue. 

“The distribution system was not originally built to accommodate limitless exports of energy,” Long said. “Nonetheless, we know that the grid of the future will look much different and we’re working to ensure it’s built in a way that is cost-effective, efficient and reliable.”

Richard Sedano leads the Regulatory Assistance Project, a global consulting firm that advises public agencies on energy issues. He said states like Maine have seen an erosion of trust and collaboration in their energy regulatory systems, and he argued that Pine Tree Power alone won’t solve that.

“The notion of a silver bullet is a fantasy in just about every regulatory matter,” Sedano said. “What does matter is good governance… that has the public interest squarely in the center of the picture.” That requires more time and resources, better utility data transparency and strong stakeholder engagement at a state’s Public Utilities Commission, he said. 

Sedano and RMI’s Gold also suggested a politically easier alternative to a change like Pine Tree Power: performance-based regulation, which seeks “to reduce perverse incentives and reward utilities for reaching the performance targets you care about,” said Gold.

Mills, Maine’s Democratic governor, spearheaded a state law last year that Gold said has some elements of this approach. The law sets new performance standards for electric utilities and will require 10-year plans for addressing climate impacts on the grid every three years beginning this December. The law also included a path to potentially replacing the companies if they consistently fall short. 

In a recent radio address urging Mainers to vote against Pine Tree Power, Mills pointed to this law as a sign of progress. But for the proposed utility’s supporters, like Blackman of A Climate to Thrive, a public power model is the best way to align utilities’ motivations with customers’ needs and create the grid of the future. 

“I don’t think the accountability measures are anywhere near enough if the utilities are still going to, first and foremost, be accountable to their investors,” said Blackman. “It’s not a framework that’s set up for climate goals. And if there were a way to make it work, I think we would have gotten there by now.”