Put the Brakes on CMP’s Proposed Rate Hike
When Central Maine Power asked the Maine Public Utilities Commission (PUC) for a massive rate hike the other week—just 3 months after their previous rate increase kicked in–Mainers responded with disbelief and anger. Many struggle to pay surging utility bills amid a flood tide of rising living expenses. Now CMP wants everyone to cough up another $420 per year on average.
CMP says it wants to make the grid more resilient in order to “provide greater financial stability and predictability for our customers.” They argue that by increasing rates and investing in grid improvements they’ll boost reliability and reduce the amount of money they collect from ratepayers for “storm cost recovery” (the company wanted $228 million for 2024 storms alone).
But it’s not clear that raising rates will benefit CMP customers. As Maine’s Public Advocate Heather Sanborn put it, “while CMP claims that its plan is designed to provide ‘price stability,’ it is actually asking for greater profits and large, automatic rate increases over the next five years.” Even if CMP’s investments make the grid less prone to storm damage and reduce storm cost recovery costs, the net result for customers will be bigger bills that grow larger with each passing year.
The PUC should reject CMP’s rate hike request for two reasons. First, CMP is asking for too much profit—they want almost 10% off the top which is excessive for a low-risk investment in a protected monopoly. Regulated utilities are entitled to a “fair and reasonable” return but no more.
As former utility executive turned consumer advocate Mark Ellis argues, a reasonable rate of return for regulated utilities should align with the market-based cost of capital for similar low-risk investment, which is more on the order of 6%. For CMP to pocket over 60% more to further enrich shareholders and executives when many customers are struggling to pay for basic necessities is unacceptable. Why should Mainers be squeezed harder while CMP rakes in bigger profits (up 61% since 2014)?
Second, CMP hasn’t done their homework—two summers ago the MPUC asked them to submit a 10-year “Integrated Grid Plan” mapping out a detailed roadmap for how they’ll improve Maine’s grid. The plan is due in January but as of late August CMP was still in the “needs assessment” phase. Meanwhile, they released their own 5-year “Investing in Maine’s Future” plan to justify the big rate hike. This plan is much more limited in scope than what the PUC asked for, mainly focused on investments like hiring line workers, replacing poles and wires, and tree work—all worthwhile improvements but hardly a comprehensive plan to modernize Maine’s grid for the 21st century.
Before the PUC considers burdening Mainers with such an enormous rate increase, they should insist that CMP submit the Integrated Grid Plan that was requested almost a year and a half ago. CMP needs to show they have a detailed roadmap for overhauling the grid infrastructure and just as importantly they need to show they’re capable of successfully undertaking the project.
We all agree that we need to invest in Maine’s grid to make it more resilient, to support greater demand as Maine transitions from petroleum fuels to electricity, to accommodate more clean renewable generation sources, and to take advantage of more “smart grid” technology like distributed energy resources. This will require serious investment, expertise, and careful planning. There’s too much at stake here to simply allow CMP to jack rates up now before we have a clear comprehensive plan in place.
The Maine Public Utilities Commission should deny CMP’s rate increase request and tell the company to submit its Integrated Grid Plan first. And they should make it very clear they won’t allow CMP to profit excessively off the backs of Maine’s beleaguered ratepayers. Contact the PUC and tell them to say “no” to the rate hike.