A recent highly publicized ballot initiative in Maine focused on the importance of getting the utilities’ role right in the clean energy transition. The ballot initiative asked Maine voters to approve a process to transition the state’s two for-profit electric utilities, Central Maine Power and Versant, into a new consumer-owned utility to be called Pine Tree Power. The referendum proposed to have Pine Tree Power governed by a board of 13 elected members, seven of whom would be elected in statewide public elections, and the remaining six appointed by the elected members. On November 7, 2023, Maine voters overwhelmingly voted not to proceed with Pine Tree Power.
The referendum’s defeat is not an ending, but instead an opportunity for a new beginning. Maine’s utility regulators must ensure that the state’s utility policies are aligned with climate, consumer, and equity priorities—regardless of whether its utilities are publicly or privately owned. By doing so, Maine can motivate its utilities to be full partners in fighting climate change, accelerating the clean energy transition, protecting consumer interests, and promoting environmental justice.
However, it should be noted that utilities in Maine caused consumers to rebel. Legitimate complaints about customer service, reliability, and billing abound. Maine’s utilities have reacted to complaints defensively and have been slow to respond to the urgent demands of climate change and creating a clean energy future.
Second, the utility regulatory structure in Maine must change regardless of the outcome of the referendum. Maine, like most states, continues to rely on a utility monopoly structure that was developed decades ago in very different times. Utility monopolies were created to streamline bringing electric service to all. The impetus for creating monopoly utilities like Central Maine Power was to optimize the growth of electric service by connecting electric generating plants to a single distribution system of wires and poles that reached rural and urban communities alike.
But that was decades ago, and times have changed. Today, the role of electricity in our economy and lives is far different. Reliable electric service is not a luxury but essential to modern life’s functioning and safety. We need electricity to power almost all aspects of our lives, from heating systems to refrigeration and almost everything in between. Moreover, electrification is critical to today’s climate goals. New clean, electric technologies can provide greater comfort at lower costs and lower emissions. But the way Maine regulates its utilities must change to make this a reality. The return on investment for a utility shareholder should not matter more than providing utility customers with the best possible energy options at the lowest price. Under existing utility policies, investor-owned utilities are driven by one mantra: to provide the highest possible return on investment to shareholders, while customers and climate goals take a back seat. That system imposes conflicting incentives on the utility’s decision making.
There is a better way!
Acadia Center is actively engaged in efforts to advance policies that will reshape the role of Maine’s utilities as proactive players in the clean energy transition. For example, we are calling for regulators to ensure that metrics for utility success and performance are meaningfully tied to the right policy priorities and that utilities are held accountable for their performance. Acadia Center advocates for performance-based metrics and incentives for utilities that tie utility compensation to performance, including lowering bills and increasing customer satisfaction ratings. For any normal business, competitive pressure would force it to reduce costs, but in a monopolistic system, while Maine utilities receive a guaranteed high rate of return, they are not subject to similar competitive pressures.
Acadia Center is further advancing reforms to improve and modernize state utility planning oversight. Utility planning processes should eliminate barriers to clean distributed energy resources and non-wires alternatives, but today, that is not the case. Acadia Center has offered a new, updated framework for utility oversight and energy system planned called RESPECT: Reforming Energy System Planning for Equity and Climate Transformation. RESPECT recommends a modernized framework for how utilities should make long-term investment decisions to ensure energy systems are aligned with state goals to address climate pollution, further environmental justice, and lower consumer costs. For example, currently, utilities both plan and make decisions on which energy options they should invest in. Often these decisions are informed by the financial return for the company. Critically, RESPECT contains approaches to remove these competing financial and planning incentives on the utility by offering a new approach for independent system planning. Acadia Center advocates for more comprehensive utility planning efforts, such as the Maine PUC’s Integrated Grid Planning (which Acadia Center was instrumental in getting written into law). These efforts will require active participation and clear buy-in by the utilities and the Maine Public Utility Commission.
These are just several examples of the many important policy changes needed. But despite the complexity of utility reform, Maine does not have to look far for notable models of better practices. In Vermont, for example, Green Mountain Power (GMP) offers multiple programs that treat customers as partners and looks for ways to provide them relief, not just to collect their bills. For example, GMP provides direct incentives to its customers that are not mere tokens: customers can receive up to $10,500 for the installation of home batteries, free at-home EV chargers (and a lower EV charging rate) as well as generous rebates and incentives for heat pumps, induction stoves, electric yard equipment, and a host of other electric devices. The kinds of innovative programs that utilities like Green Mountain Power offer could provide a roadmap for Maine’s utilities – and greatly benefit Maine families by offering a full array of new options to control costs.
Now is a critical time for ensuring that Maine’s electrical system works for the benefit of consumers and communities in Maine, and not distant shareholders whose focus is return on investment. Look for Acadia Center to dive into these issues in more detail and offer specific recommendations in the coming months.