Sam May is a former Wall St analyst with significant experience in both Silicon Valley and Hong Kong. He lives in Portland and is co-founder of Maine Harvest Federal Credit Union. This piece was originally published as a Letter to the Editor in the Portland Press Herald on March 7, 2021.
Tux Turkel’s Feb. 28 article succinctly captures Maine’s dilemma in reducing our dependence on fossil fuels. To meet our goals, electrons carried on Maine’s power poles will increase three to four times from today’s capacity. This will cost big bucks. New renewables and end uses will require massive investment in our distribution system. As Turkel’s article suggests, we are talking billions of dollars.
Notwithstanding the complexities of how developers, utilities and ratepayers will shoulder this burden, one thing is certain – ratepayers will bear the brunt. Our current setup allows two monopolies, Central Maine Power and Versant, to charge rates based on what they spend on the network, plus a built-in profit, or “return on equity.” These two monopolies, both investor-owned, generate a return on equity north of 10 percent. Under this arrangement, we will pay a lot of money.
There is a much cheaper alternative: the Pine Tree Power Co. now being proposed by Our Power Maine. As a consumer-owned utility, Pine Tree Power will not use equity, so will not require a built-in profit. That is a savings of enormous magnitude. A consumer-owned utility meets all its financing obligations by tapping a vast, established market for bonds not issued by the state that are tied to services provided. These bonds are exempt from federal taxes. There are no shareholders to pay dividends to. More than one-fourth of America gets its power this way already.
Maine cannot afford to modernize its grid by paying investor-owned utilities. The answer is Pine Tree Power.