Maine PUC Has the Tools for Real Utility Reform But Needs Time and Will To Use Them!

Few state agencies have more impact on Mainers’ daily lives than the Public Utilities Commission (Commission). The Commission regulates electric, gas, and water utilities’ rates and services and provides oversight to the state’s utility monopolies, Central Maine Power and Versant Power, who collectively serve more than 795,000 electricity customers over 22,000 square miles from Fort Kent to Kittery. For most of its existence, the Commission was charged with keeping rates low, ensuring reliable supply of electricity, and allowing utilities to earn a profit on their businesses. Recent action authorizes Commissioners to do more.

The 130th Maine Legislature, which wrapped up its two-year session in May 2022, enacted reforms that strengthen the Commission’s regulatory hand when it comes to electric utilities. First LD 1682 – An Act To Require Consideration of Climate Impacts by the Public Utilities Commission and To Incorporate Equity Considerations in Decision Making by State Agencies empowers the agency to make decisions that prioritize greenhouse gas emission reductions as part of its primary mission, in addition to affordability, reliability, and utility profit. Second, LD 1959 – An Act Regarding Utility Accountability and Grid Planning for Maine’s Clean Energy Future, strengthens the agency’s ability to hold utilities accountable for their performance and impacts on ratepayers. LD 1959 also requires the Commission to initiate comprehensive, integrated grid planning with robust stakeholder input, review, and transparency. A third law, LD 2018  An Act to Implement Recommendations Regarding the Incorporation of Equity Considerations in Regulatory Decision Making, opens the door for more inclusive and accessible Commission proceedings for environmental justice and frontline communities. These new laws will hopefully lead Maine to a more reliable, clean, and affordable electricity grid that benefits all Mainers.

Regulatory reforms of this magnitude take time; CMP, however, is wasting no time at all. Before the ink was dry on Governor Janet Mills’ signature on LD 1959, Maine’s largest utility-owned investor announced its intent to file a three-year plan that hikes electricity delivery rates before the Commission can flex its new regulatory muscles around utility reliability and affordability performance metrics, grid planning, and climate and equity considerations. The utility also seeks a 10-10.5 percent return on equity, which determines its expected profitability while passing expenses through to ratepayers. CMP’s preemptive move comes at a time of sky-high electricity rates driven by the Northeast’s dependence on natural gas, volatility in global energy markets, and continuing supply chain issues from the pandemic and war in Ukraine. Governor Mills also wasted no time in criticizing CMP’s move, describing it as “outrageous” and adding “insult to injury” to Maine people, while declaring she will “fight this” by directing her Energy Office to oppose it and urging the Commission to reject it. Acadia Center also condemned the announcement in the Portland Press Herald:

Approving a rate increase before the PUC adopts those new standards for the state’s utilities and starts the grid planning process would be putting the cart before the horse, said Jeff Marks, Maine director and senior policy advocate for the Acadia Center, an organization pushing for policies to protect the environment and transition to clean energy sources. Marks said the new law will require the utilities to meet new standards to ensure they are using customer revenue wisely, and it also calls for a wide-ranging plan to enhance the state’s power grid. Deciding on a rate increase before either measure is in place doesn’t make sense, he said. “These rate hikes show we can’t start too soon,” Marks said. “With this type of rate hike at this point, we need to start the accountability process.” Marks also said that a comprehensive plan to modernize Maine’s electric grid could help keep rates low, and that giving CMP a rate hike to make some changes before the overall plan is even underway would be premature. The new grid plan, along with new accountability measures, “will shine a spotlight” on how well the utilities are providing electric service to Mainers, Marks said, adding that analysis should be done before CMP seeks a rate hike, not after.

Because of the reforms enacted by the Maine Legislature and signed by the Governor, Maine has the opportunity to design a clean, affordable, reliable grid in a cost-effective manner that considers the state’s goals and targets to decarbonize the grid and electrify buildings and transportation and do so in a way that supports equity and minimizes impacts on underserved, overburdened, and vulnerable communities. The Commission will launch the grid planning process later this year with significant stakeholder engagement and outreach. Utilities will have eighteen months to develop and submit plans. Stakeholders again will have the opportunity to weigh in. This integrated grid planning process, along with requirements to consider climate pollution strategies and reductions, could provide hundreds of millions of dollars in ratepayer benefits and savings while appropriately assessing environmental, climate, and equity impacts of electric policies, programs, and projects. This, in turn, will help Maine lead the way in reducing dependence on out-of-state natural gas, fighting climate change, and enabling the grid to make way for cost-effective heat pumps in our living rooms, efficiency improvements in our attics and basements, electric vehicles in our garages and driveways, and the capacity to store excess energy for when we need it most.

Acadia Center is pleased to see that CMP wants to invest in smarter technology, more robust infrastructure, better rate design, and renewable energy interconnection. However, Acadia Center urges restraint on increased utility rates and profits until the Commission, in partnership with utilities and Maine people, evaluates the investments truly needed to benefit Maine people with lower, less volatile long-term rates, cleaner air, a stronger, more reliable grid, and better access to clean energy resources.

Jeff Marks
Maine Director

Oliver Tully
Director, Utility Innovation and Reform