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Maine Legislature Considers Creating Statewide Electricity Monopoly

July 10, 2019

Lawmakers in Maine are considering a proposal to combine the state’s two investor-owned electric utilities into a single, monopoly, nonprofit utility.

Lawmakers in Maine are considering a proposal to combine the state’s two investor-owned electric utilities into a single, monopoly, nonprofit utility.

As proposed by state Rep. Seth Berry (D-Bowdoinham), chairman of the House Committee on Energy, Utilities, and Technology, the state would purchase the assets of Central Maine Power (CMP) and Emera Maine and create a public utility responsible for distributing electricity to residential and commercial customers throughout the state.

Berry and others have complained about the utilities’ billing practices, electricity reliability in the state, and less use of renewable energy generation sources than the law’s advocates want.

Price Tag: At Least $4 Billion

Under Berry’s proposal, CMP and Emera would be forced to sell their assets to a new public utility created by the bill, with the purchase financed by low-interest, tax-exempt bonds issued by the state-backed utility. According to 2017 filings with state regulators, the utilities’ assets have a combined value of approximately $4 billion.

Berry says the Maine Power Delivery Authority (MPDA), to be created by the legislation, would be able to deliver electricity at lower cost. With tax savings and freedom from having to return profits to shareholders, MPDA could cut electricity rates by 15 percent, Berry claims.

Under Berry’s proposal, MPDA would be administered by a nine-member, bipartisan board appointed by the governor, subject to the approval of the legislature, representing different ratepayer classes, such as residential customers and large and small businesses.

‘Will Only Make Matters Worse’

Maine’s utility customers are upset about the high prices and numerous outages they have experienced, says Jake Posik, director of communications at the Maine Heritage Policy Center, but Berry’s bill would make a bad situation worse.

 “The frustration Mainers are currently experiencing with their power provider is due to lack of competition within the marketplace,” said Posik. “Forcing CMP and Emera Maine to sell their assets to the state will only make matters worse.

“If Mainers are upset about billing practices from a private power provider, just wait until this organization is run by government,” Posik said. “It will be even less efficient and responsive to people’s needs.

“The absurd amount of money this proposal would burden current and future Maine taxpayers with would likely take decades to repay, all for the purpose of establishing government ownership of public utilities,” Posik said.

Concerned About Corruption, Message

Customer service would decline, not improve, under government ownership of the utility, says Alexander Stevens, a policy analyst at the Institute for Energy Research.

“The new system would replace the profit-and-loss calculus that disciplines decision-making in a private market setting with a political board composed of [nine] members appointed by the governor of Maine,” said Stevens. “Given the opportunities the board has to facilitate rent seeking, there is little reason to believe these appointees will be selected based on their knowledge of electricity markets or their commitment to serve the public interest. Rather, it’s more likely they will be selected based on their ability to serve special interests.

“In addition, if government were to seize the assets of the investor-owned utilities, it would signal to businesses that property rights are not secure in the state, making them less likely to invest in Maine in the future,” Stevens said.

Bonner R. Cohen, Ph.D. (bcohen@nationalcenter.org) is a senior fellow at the National Center for Public Policy Research and a senior policy analyst with the Committee for a Constructive Tomorrow.

Author
Bonner R. Cohen is a senior fellow with the National Center for Public Policy Research, a position he has held since 2002.
bcohen@nationalcenter.org