The state’s public advocate said there are too many unknowns to give a clear interpretation of the November referendum seeking to create a public-owned utility. But one thing is nearly certain: if it passes, there will be court challenges.

With just over two months remaining until Maine voters take up the referendum – a question officials are calling one of the most important utility proposals to arise in years – the state’s public advocate released an overview of the divisive issue to educate consumers on what a vote for or against will mean.

But many of the biggest questions remain unanswered, some of which could take years to settle in court.

On Nov. 7, voters will be asked: “Do you want to create a new power company governed by an elected board to acquire and operate existing for-profit electricity transmission and distribution facilities in Maine?”

If approved at the polls, this initiative would create Pine Tree Power as a privately operated, nonprofit utility run by a 13-member board made up of a mix of designated experts and residents from across the state.

Pine Tree Power would supplant the state’s two investor-owned electric utilities, Central Maine Power Co. and Versant Power, which distribute 97% of the state’s electricity and which critics have assailed for high rates, poor performance and customer complaints. The utility wouldn’t serve the 97 Maine communities that already have some form of cooperative or public power utility, such as Kennebunk Light & Power and Madison Electric Works.

The board would hire a private grid operator chosen through a competitive bidding process. The utility’s stated goal would be to provide reliable, affordable electric transmission and distribution services, and to help meet Maine’s climate, energy and connectivity goals.

There could be litigation challenging the constitutionality of using eminent domain to “take” these assets, and litigation over the acquisition price, as well as legal disputes over regulatory approvals.

“Because utility assets are infrequently bought and sold, there is likely to be a dispute over the fair market value of CMP and Versant’s assets,” said William Harwood, the state’s public advocate, whose office is responsible for researching and advocating for consumer interests in utility matters.

These factors make the transition timeline difficult to predict, but Harwood estimates it could be anywhere from five to 10 years.

His office has declined to take a position on the issue.

“We recognize that ratepayers, on whose behalf we advocate, do not all agree on whether the proposal should be adopted,” the office said in a statement. “We respect those disagreements and the important role that voters play in determining whether the proposal should be adopted.”

But ahead of the vote, the office on Tuesday released a seven-page overview that aims to address several big questions, including the impact on rates, the reliability of service and the state’s climate action goals and what happens next, but the answers – like the timeline – are murky.

UNCHARTED WATERS

There’s little precedent for the public-owned utility and in many cases, the public advocate is clear that it simply cannot predict the outcome.

There’s no clear evidence that a private third-party operator would be able to provide better customer service than the existing utilities, despite claims that Pine Tree Power would be more responsive to ratepayer concerns.

It’s also not possible to determine how reliable the utility would be, and Harwood notes that the priorities of low-cost and reliability are often in conflict.

“It is possible that (Pine Tree Power) would feel political pressure to keep rates as low as possible, which may negatively impact the reliability of its operations,” he wrote.

The same goes for whether the utility would be more or less responsive to meeting the state’s climate goals, though that is one of Pine Tree Power’s stated goals.

Political pressure to keep rates low could limit the utility’s ability to make new investments that would further the integration of renewable energy, he said.

The impact on rates also remains to be seen.

Like CMP and Versant, the proposed utility would be a distribution company that doesn’t generate power or sell electricity supply. So the possible change would have no influence on the standard offer electricity supply rates that have risen sharply in Maine.

According to the overview, the Public Utilities Commission hired a utility consultant in 2020 to evaluate a different – though similar – public utility bill.

The consultant, London Economics International, found that in the short term, the proposal would likely raise rates following the cost of the acquisition. The loss of state tax revenue from CMP and Versant also could increase taxes or reduce government services. CMP and Versant currently pay about $3.4 million in state income taxes. Pine Tree Power would still pay municipal property taxes.

However, the firm also found that future lower financing costs and tax savings were likely to lower rates over the long term.

CLAIMING SUPPORT

Both Our Power, the citizens group that launched the ballot initiative, and the Maine Affordable Energy Commission, an advocacy group opposed to the public-owned utility, were encouraged by the overview released Tuesday.

Al Cleveland, Our Power campaign manager, said the document shows that even Harwood agrees that a Yes on Question 3 will lower Mainer’s utility costs.

According to the overview, Pine Tree Power would still remain in ISO-NE, the New England power grid, and be regulated by the Federal Energy Regulatory Commission. Under FERC, it is likely, Harwood said, that for the purposes of setting New England regional transmission rates, Pine Tree Power would earn a return comparable to that of CMP or Versant. Currently, CMP and Versant’s profits are set by the Maine Public Utilities Commission.

Because the public utility would not have to share its returns with other New England states, Our Power interprets that as an additional $4 billion in savings.

Once the acquisition is complete, Pine Tree Power would be able to finance future replacements or improvements by issuing tax-exempt debt at a lower cost than CMP or Versant. Or more simply, according to Our Power, Pine Tree Power could access municipal bonds for grid improvements at a fraction of the cost, “saving Mainers $367 (per consumer) a year starting on day one.”

“For us, it was really exciting to see that,” Cleveland said.

But Willy Ritch, executive director of Maine Affordable Energy Coalition, said the document only serves to highlight many of the issues his organization has been raising – that there are no guarantees with Pine Tree Power’s proposal and that in some cases, it could achieve the opposite of what it’s trying to do.

“From our perspective, Pine Tree Power makes a lot of claims and if any of them were true, the public advocate would have said them in this report,” he said. “There are a lot of ‘We don’t knows’ in this report.”

CMP’s parent company, Avangrid, is separately funding a referendum campaign called No Blank Checks, which would require voter approval for the state to borrow more than $1 billion. The campaign is aimed at discouraging voters from endorsing Pine Tree Power.

If voters approve that question, the timeline would likely be further delayed and Pine Tree Power would need to obtain additional voter approval before issuing the debt needed to finance the acquisition of CMP and Versant’s assets, Harwood said.

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