What is Pine Tree Power?

The Pine Tree Power Company will be a not-for-profit electric utility for those parts of Maine now served by Central Maine Power and Versant. It will be governed by a board we choose, accountable only to us, and focused on meeting our goals for clean energy independence, lower costs, better reliability, and improved internet.

What are the advantages of a Consumer-Owned Utility (COU)?

While investor-owned utilities (IOUs), including CMP and Versant (formerly Emera, formerly Bangor-Hydro), are managed to provide profits for shareholders. A consumer-owned utility (COU) is consumer owned and controlled and it is managed for the benefit of its customers, not for profit, dividends, or stockholders.

Where are there Consumer-Owned Utilities?

Across the nation, approximately 2,000 consumer-owned utilities provide electricity to 49 million people. These COUs serve 49 states — all except Hawaii — and the territories of American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands.

Have investor-owned utilities been converted to consumer-owned utilities before?

Yes, and we can learn a great deal from the successes and challenges of others. For instance, Winter Park, Florida converted from an investor-owned to a consumer-owned utility. They repaid their acquisition cost in ten years and dramatically increased reliability, even with bigger storm events in Florida.

An act of the New York Legislature created the Long Island Power Authority. When the Authority took over the Long Island Lighting Company systems in 1998, rates for customer-owners dropped by 20 percent. Today, rates remain lower than those of neighboring Con Edison.

Are there any consumer-owned utilities in Maine?

Yes. Maine has a history of locally-owned electric, water and telephone utilities. Currently part or all of 97 of Maine’s 488 communities are served by consumer-owned electric utilities, or COUs:

How do the rates of these COUs compare to investor-owned utilities in Maine?

Ratepayers pay less, on average, to consumer-owned utilities than to CMP or Versant (formerly Emera, formerly Bangor-Hydro). In fact, investor-owned utility delivery charges are 58% higher for residential users than consumer-owned utility delivery charges in Maine for 2021.

How will Pine Tree Power Company be governed?

PTP will be governed by an independent Board of Directors made-up of Mainers elected to staggered terms by the people of Maine. It will be managed for the benefit of its customers, not for profit, dividends, or stockholders. The board’s only obligation will be to Maine ratepayers, not to distant owners like foreign governments (both CMP and Versant), or global banks (CMP). Here’s a chart showing how Pine Tree Power will be organized.

What is the timeline and process for the transition to a consumer-owned utility?

The proposal that establishes the nonprofit COU lays out a specific timeline for acquiring the assets and transitioning to a consumer-owned utility. Although hard to predict exactly, it is expected that the process will be complete in 3 to 4 years.

Will creating Pine Tree Power impact our state budget?

No. Pine Tree Power will not use our tax dollars. Utilities use revenue from rates, not taxes, to pay for investments and operations. If anything, by reducing our electric rates over time, it will help to attract and retain business investment in Maine, boosting incomes and easing tax burdens.

How will this affect municipalities?

Pine Tree Power Company will pay fees to towns, in lieu of taxes. Towns will remain whole and there will be no impact on town budgets — except lower electric rates over time.

What about the free market?

There is no free market for the electricity delivery system now. The electric grid has to be a monopoly because setting multiple poles and wires on each street would be inefficient and unsafe. Pine Tree Power will own the poles and lines that deliver electricity to its Maine customers. Once Maine has a consumer-owned utility, CMP and Versant will no longer be able to give unfair preference to their affiliates, delay connections to new renewable energy projects, or work to block cheaper, cleaner, more efficient energy choices such as solar and efficiency.

What about renewable energy?

While Maine’s investor-owned utilities have fought against cost-effective energy programs and renewable energy policies, a consumer-owned utility will embrace these energy policies and invest in the things that its customers most need. These would include connecting local and regional renewable energy to the grid, energy storage, and time-of-use rates that allow more efficient use of our electric system (such as charging electric vehicles and heating water at night to help balance demands on the system).

What would Pine Tree Power cost ratepayers?

Not more in the short term, and far less than we’ll otherwise pay in the long term. When Pine Tree Power purchases the systems of CMP/Avangrid/Iberdrola (owned by Spanish banks and the governments of Norway and Qatar) and Versant/ENMAX (owned by the government of the City of Calgary, Canada) like a home mortgage, the cost will be amortized. Pine Tree Power will qualify to borrow funds at lower interest rates than investor-owned utilities, which will reduce the cost of future capital expenditures, saving $9 billion over 30 years. It will also save us all money by not shipping profits to investors and owners out of the State and out of the country.

Are CMP and Versant really owned by foreign governments?

Yes. CMP has three foreign government owners. Versant has one. CMP is wholly owned by Avangrid, which in turn is 81.5% owned and wholly controlled by Iberdrola.  Based in Spain, Iberdrola has at least three foreign government owners: the government-owned banks of Qatar, Norway, and Spain. The government of Qatar is the largest of these investors, with direct investments in Avangrid’s U.S. shares as well. Versant, is owned by ENMAX, US, which is owned by ENMAX, which is owned by the government of the City of Calgary, Canada

We have nothing against these foreign governments who own our grid. At present, all four are U.S. allies. But it does take the cake that their executives and lobbyists, of all people, are warning against government ownership — which in any event is not what LD 1708 proposes.

Are there any constitutional issues that would prevent establishing a COU in Maine?

No. A recent study from the London Economics Group (LEI) researched this question and found no constitutional issues in a transition to a consumer-owned utility.

What is the timeline and process for the transition to a consumer-owned utility?

The proposal that establishes the nonprofit COU lays out a specific timeline for acquiring the assets and transitioning to a consumer-owned utility. Although hard to predict exactly, it is expected that the process will be complete in 3 to 4 years.

How would a fair price for the assets of the investor-owned utilities be determined?

A key starting point for the cost of acquisition is the net book value of each utility, which is self-reported by the utility and verified by regulators. To establish the fair and final purchase price, the Superior Court will select a qualified referee. If either party disagrees with the findings of the referee and the court, they may appeal the decision to the Maine Supreme Judicial Court.

How will Pine Tree Power be regulated?

Pine Tree Power will be overseen by its democratically elected Board, and by the Maine Public Utilities Commission as an additional check. PTP would also report annually on its operations and performance to the legislative committee with authority over energy and utilities and to the public.

Who will run Pine Tree Power?

PTP will be run by private sector experts and current workers. It will not be run by the state, as CMP falsely claims. Specifically, the elected Pine Tree Power board and management staff will solicit competitive bids for one or more qualified, private-sector operating companies to oversee day-to-day operations, such as billing, metering, and customer service. The board will set the terms of contracts, such as duration and pay, and will choose the best operations company for the job. The operations company will replace CMP and Versant’s top executives, but all other CMP and Versant workers will stay on — keeping their jobs, their contracts and their pensions.

How would improved reliability and customer service be achieved?

Specific metrics and performance standards for reliability and customer service would be part of the contract with the operating company. The Pine Tree Power Board is responsible for seeing that contract requirements are met. Maine currently has the worst reliability in the United States. Historically, consumer-owned utilities have far better reliability and better customer service than investor-owned utilities.

Are there other advantages of a consumer-owned utility — beyond lower cost financing, better reliability and investments that are aligned with state policy and consumer needs?

Yes! Unlike investor-owned utilities, consumer-owned utilities are eligible for federal disaster assistance funding, which is more important as severe weather events increase. Maine’s newest consumer-owned utility could also help to extend high-speed, broadband internet across the state by providing access to its poles and rights of way at a more reasonable cost. And, of course, Mainers will be able to determine our own energy future, instead of relying on distant utility owners working for profit on behalf of others. Local control is of great value to Maine ratepayers.

Fewer rate hikes and better reliability? This sounds too good to be true!

Fortunately, it’s just math. Pine Tree Power would finance its infrastructure at 2 to 3% interest using tax-exempt revenue bonds, and use any profits to reinvest in infrastructure. CMP’s and Versant’s equity investments and profits cost us — their captive customers — between 8% and 14%. Even with debt financing to reduce the impact, IOUs cost far more than COUs.

Substantial new investment will be needed to strengthen Maine’s grid and achieve our state’s climate goals. Financing these investments at lower interest rates and keeping profits in Maine will keep rates low while improving reliability, something only a consumer-owned utility can do.

Where can I find out more?

If you have more detailed and technical questions, visit our FAQs, Part Two.

How can I read the bill?

An annotated bill with very basic explainers in the margin is here.  You may also read it at legislature.maine.gov by typing “1708” into the bill search box.

What is different about LD 1708 in 2021 and LD 1646 in 2019?

LD 1708, “An Act to Create the Pine Tree Power Company,” has stronger and more active bipartisan cosponsorship. Key policy differences are that LD 1708:

  1. Contains a clarified, climate-and-jobs-focused mission statement,
  2. Shifts to an elected board with ample resources and staff to contract a highly qualified, private-sector operations team, 
  3. Streamlines the acquisition as LEI recommended, 
  4. Adds protections for workers and municipalities, 
  5. Requires strict PUC oversight, and 
  6. Sends the proposal to voters for final ratification in November 2021.