Robert F. Bukaty/AP Photo
A worker inspects a Central Maine Power electricity corridor that has been widened to make way for new utility poles, April 26, 2021, near Bingham, Maine.
Investor-owned utilities (IOUs) are hardly known for being adored by the public. Even so, Maine has two of the least popular in the Northeast.
For the past two years, Maine’s two privately owned utilities, Versant Power and Central Maine Power (CMP), have ranked last in a customer satisfaction survey that evaluated the performance of utilities in the Eastern United States.
This spring, CMP sent out at least 62,000 disconnection notices to households that had fallen behind on their electric bills. At the same time, Spectrum News reported, Versant was in the process of sending out nearly 32,000 disconnection notices. While only a small share of customers who receive the notices ultimately see their energy shut off, the spike—impacting 13 percent of Maine’s residential utility customers—shows how many people are struggling to pay electricity bills.
CMP has also consistently scored low marks in surveys of business customers’ satisfaction. Small-business owners complain that frequent outages and billing challenges are not only a headache—they make Maine a less attractive place to run a company.
A ballot initiative up in November, backed by Mainers who are fed up with that status quo, aims to take back the monopoly privileges granted to those private utilities and convert them into Pine Tree Power, a nonprofit authority that would be run by an independent board.
Backers say it would improve reliability and bring down rates. And, they argue, this is a critical time to take back public control of utilities, as Maine embarks on a mass electrification drive that will transform its energy system.
The Pine Tree Power campaign has won the support of Sen. Bernie Sanders (I-VT) and environmental groups like the Sierra Club. But despite progressive backing, fault lines have emerged over the proposal that do not split neatly by political affiliation.
Opponents, including some Democrats and utility workers, are skeptical that the authority can deliver the savings it promises, and worry about the risks involved in overthrowing incumbent utilities.
Meanwhile, Pine Tree Power’s supporters include right-wing residents who are tired of high rates and outages, and a diverse coalition aiming to wrest back control of electric transmission from foreign-owned corporations.
“They have been granted a monopoly franchise,” said Jill Linzee, a supporter of the ballot initiative who lives in Bristol. “The people of Maine have the right to say, you guys are not living up to what we need in our utilities, and we’re ready to replace you.”
MAINE HAS NINE CONSUMER-OWNED UTILITIES (COUs), most of which currently offer lower rates than the two investor-owned utilities. The largest, Eastern Maine Electric Co-op (EMEC), was created with funding from the Rural Electrification Act in 1936. COUs tend to have better reputations for service, several Mainers told the Prospect, although they serve just a fraction of the state’s customer base.
Asked why consumer-owned utilities tend to provide lower rates than investor-owned utilities, Willy Ritch, executive director of Maine Affordable Energy, an opposition campaign funded by CMP’s parent company, said the comparison was unreasonable.
“It is an apples and oranges thing,” Ritch told the Prospect. “I think it’s unfair to compare, you know, Kennebunk Light and Power—you can go on their website and read the names of all three of their linemen, or something like that—it’s hard to compare the rates of those tiny little utilities with something that’s more grid-scale.”
CMP and Versant pay for additional costs, Ritch added over email, such as regional transmission capacity, which smaller co-ops like EMEC do not have to subsidize.
CMP is a subsidiary of Avangrid, which is owned by the Spanish utility giant Iberdrola. Iberdrola’s largest shareholders include Qatar Investment Authority and BlackRock, the giant asset manager.
Versant is owned by Enmax, a public electric utility owned by the city of Calgary, in Canada. (“Maine would like to do what Calgary did years ago—have a publicly owned utility,” a public utility advocate told a Calgary news outlet, adding that Enmax should “butt out.”)
Both Enmax and Avangrid have poured millions into a campaign to fight Pine Tree Power’s proposed takeover.
The Pine Tree Power initiative would aim to buy out the assets of CMP and Versant, and transition them to ownership by the Pine Tree Power Company.
There’s precedent for the move. Winter Park, Florida, formed a public power utility in 2005, after 69 percent of residents voted in favor of the plan. Since then, it has laid the majority of its electric lines underground, strengthening storm resiliency.
But other cities have struggled to pull off similar de-privatizations. Boulder, Colorado, recently gave up on its decade-long struggle to take over its private utility.
Gov. Janet Mills, a Democrat, vetoed a similar utility buyout plan in 2021, after the legislature approved a bill that would have taken the proposal to Maine voters.
Buying out a private electric utility is a complex business. If the initiative succeeds at forcing a sale by eminent domain, a court would likely set a sale price, which would add an “acquisition value” on top of the “net book value” of the utilities. Estimates of that price have varied widely, from $5 billion to $10 billion.
Pine Tree Power’s advocates are fiercely committed to the fight. Jonathan Fulford, a carpenter who ran a contracting business, has been advocating for public ownership for years. Fulford has six grandchildren, whose future, he said, convinced him to support Pine Tree Power. “There won’t be a future for them that I want them to live through, if we don’t more dramatically, head-on address the problems leading to climate change,” he said.
While Pine Tree Power would be a transmission and distribution utility—it would not own power generation facilities—supporters say it could still help make the grid cleaner. For example, they argue, it would cooperate with solar energy providers who say CMP has snubbed them, making it hard to plug into the grid.
Tina Riley, a master electrician who served in Maine’s House of Representatives from 2016 to 2020, also started off as a supporter of Pine Tree Power, helping to design an early version of the bill while serving on the House Committee on Energy, Utilities and Technology.
But the more she studied the legislation, the more her doubts grew. “The things that we were trying to claim it would do were either wrong, or uncertain,” Riley told the Prospect. In a blog post published last week, she questioned whether Pine Tree Power can deliver the savings it hopes to capture.
A nonprofit utility like PTP can likely access a lower cost of capital, through bond financing, than an investor-owned utility, and would not need to pay profits to shareholders—giving it the ability to charge lower rates, all else being equal.
But the rates a nonprofit utility can charge on transmission are typically lower than the rates investor-owned utilities can charge, Riley wrote, potentially cutting into the savings created by switching to a nonprofit structure. She cited an independent analysis commissioned by the Maine Public Utilities Commission.
“One of the core tenets of rate design is that rates must be based on the actual cost of providing service, so the rate for a COU will reflect its lower cost of capital (as well as its tax-exempt status) as compared to IOUs,” Riley explained.
Lucy Hochschartner, spokesperson for the PTP campaign, disputed that argument. She said that Riley is echoing the playbook of the investor-owned utilities, and argued that the nonprofit utility would be able to charge rates equivalent to those of investor-owned utilities.
Hochschartner cited a paper by utility economist Richard Silkman, and an overview by Maine’s Public Advocate, which found it “likely” that “for purposes of setting New England regional transmission rates, PTP would earn a return comparable to that of CMP or Versant.”
As the Pine Tree Power campaign has gained momentum, investor-owned utilities have adopted populist talking points to beat back the proposal.
“Pine Tree Power will actually be owned by Wall Street Banks like Goldman Sachs,” said BJ McCollister, campaign manager of Maine Energy Progress, in an apparent reference to the buyers of municipal bonds used to finance public entities. Maine Energy Progress is a political action committee funded by Enmax. (Incidentally, as recently as last year, Goldman was Iberdrola’s second-largest shareholder.)
WINNING THE SUPPORT OF UNIONS has also proved challenging. Utility workers at CMP and Versant, represented by IBEW 1837, part of the Maine AFL-CIO, are opposing the campaign.
Cynthia Phinney, president of the Maine AFL-CIO, previously worked in the meter department at CMP. She told the Prospect that workers are worried about the company changing hands, including potential litigation arising from a forced sale. “When an employer’s involved in that kind of uncertainty, it never makes anything at the bargaining table easy,” she said.
Workers’ biggest concern is that the PTP initiative would cause them to be classified as public employees, potentially weakening the union. Since the 2018 Supreme Court ruling in Janus, public employees have not been required to pay dues to unions representing them, even when the union bargains on their behalf.
“We know the framers of the bill worked hard to avoid that outcome. They weren’t blind or indifferent to that possibility,” Phinney acknowledged. Indeed, the Pine Tree Power initiative specifies that the nonprofit utility would hire a private operator. Linemen and other utility workers would be hired by that private company, in order to ensure that they remain private-sector employees.
Still, Phinney said, the IBEW has received legal opinions that say they could be classified as public employees.
If the union is right, they have identified a major political obstacle to campaigns seeking to convert private utilities to public ownership. But one labor lawyer’s legal opinion, provided to the Prospect by the Pine Tree Power campaign, argues that the utility workers are wrong to be worried.
Until 1995, the memo explains, when deciding whether it had jurisdiction over an employer contracted with a government entity, the National Labor Relations Board (NLRB) studied the relationship to determine whether “the employer has sufficient control over the employment conditions of its employees to enable it to bargain with a labor organization as their representative.”
But in 1995, the NLRB abandoned that decision with Management Training Corp., announcing that it would still exercise jurisdiction over employees of private companies working under contracts with federal, state, or local governments.
And just this past summer, the NLRB upheld that doctrine in a case involving a private employer, Bannum, staffing a halfway house for the Federal Bureau of Prisons. Bannum argued that the Federal Bureau of Prisons was liable for back pay that Bannum owed to its employees. The NLRB disagreed, citing Management Training Corp., and explaining that the private employer was subject to the National Labor Relations Act. The NLRB, in short, has continued to treat workers contracted by public entities as private employees.
Taking a step back from the legal fight, it’s worth weighing whether becoming a public employee is as devastating as some workers feared, said Nelson Lichtenstein, a historian who directs the Center for the Study of Work, Labor, and Democracy at UC Santa Barbara.
“Janus did not have as devastating impact as people thought,” Lichtenstein told the Prospect. “You can fight Janus by just having more effective unions. You don’t have to have an ineffective, passive union.”
Utility workers remain unpersuaded.
“The work that was not done, that needed to be done, was building even better relationships with IBEW,” Fulford said. “There was outreach and connections, but you can’t underestimate the value of having a good, trusting, back-and-forth type of relationship with an important ally.”
“You know, hopefully that won’t be the few thousand votes that we lose by,” he added.
