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Maine Tries to Take Back Its Utilities

A ballot measure would convert two investor-owned power companies into a
public nonprofit. Unionized utility workers aren't sold.

Investor-owned utilities (IOUs) are hardly known for being adored by the
public. Even so, Maine has two of the least popular in the Northeast.

For the past two years, Maine's two privately owned utilities, Versant
Power and Central Maine Power (CMP), have ranked last
<[link removed]>
in a customer satisfaction survey that evaluated the performance of
utilities in the Eastern United States.

This spring, CMP sent out at least 62,000 disconnection notices
<[link removed]>
to households that had fallen behind on their electric bills. At the
same time, Spectrum News reported, Versant was in the process of sending
out nearly 32,000 disconnection notices. While only a small share of
customers who receive the notices ultimately see their energy shut off,
the spike-impacting 13 percent of Maine's residential utility
customers-shows how many people are struggling to pay electricity
bills.

CMP has also consistently scored low marks in surveys of business
customers'
<[link removed]>
satisfaction. Small-business owners complain that frequent outages and
billing challenges are not only a headache-they make Maine a less
attractive place to run a company.

A ballot initiative <[link removed]> up
in November, backed by Mainers who are fed up with that status quo, aims
to take back the monopoly privileges granted to those private utilities
and convert them into Pine Tree Power, a nonprofit authority that would
be run by an independent board.

Backers say it would improve reliability and bring down rates. And, they
argue, this is a critical time to take back public control of utilities,
as Maine embarks on a mass electrification drive that will transform its
energy system.

The Pine Tree Power campaign has won the support of Sen. Bernie Sanders
(I-VT) and environmental groups like the Sierra Club. But despite
progressive backing, fault lines have emerged over the proposal that do
not split neatly by political affiliation.

Opponents, including some Democrats and utility workers, are skeptical
that the authority can deliver the savings it promises, and worry about
the risks involved in overthrowing incumbent utilities.

Meanwhile, Pine Tree Power's supporters include right-wing residents
who are tired of high rates and outages, and a diverse coalition aiming
to wrest back control of electric transmission from foreign-owned
corporations.

"They have been granted a monopoly franchise," said Jill Linzee, a
supporter of the ballot initiative who lives in Bristol. "The people of
Maine have the right to say, you guys are not living up to what we need
in our utilities, and we're ready to replace you."

MAINE HAS NINE CONSUMER-OWNED UTILITIES (COUs), most of which currently
offer lower rates
<[link removed]>
than the two investor-owned utilities. The largest, Eastern Maine
Electric Co-op (EMEC), was created with funding from the Rural
Electrification Act in 1936. COUs tend to have better reputations for
service, several Mainers told the

**Prospect**, although they serve just a fraction of the state's
customer base.

Asked why consumer-owned utilities tend to provide lower rates than
investor-owned utilities, Willy Ritch, executive director of Maine
Affordable Energy, an opposition campaign funded by CMP's parent
company, said the comparison was unreasonable.

"It is an apples and oranges thing," Ritch told the

**Prospect**. "I think it's unfair to compare, you know, Kennebunk
Light and Power-you can go on their website and read the names of all
three of their linemen, or something like that-it's hard to compare
the rates of those tiny little utilities with something that's more
grid-scale."

CMP and Versant pay for additional costs, Ritch added over email, such
as regional transmission capacity, which smaller co-ops like EMEC do not
have to subsidize.

CMP is a subsidiary of Avangrid, which is owned by the Spanish utility
giant Iberdrola. Iberdrola's largest shareholders
<[link removed]>
include Qatar Investment Authority and BlackRock, the giant asset
manager.

Versant is owned by Enmax, a public electric utility owned by the city
of Calgary, in Canada. ("Maine would like to do what Calgary did years
ago-have a publicly owned utility," a public utility advocate told a
Calgary news outlet
<[link removed]>,
adding that Enmax should "butt out.")

Both Enmax and Avangrid have poured millions
<[link removed]>
into a campaign to fight Pine Tree Power's proposed takeover.

The Pine Tree Power initiative would aim to buy out the assets of CMP
and Versant, and transition them to ownership by the Pine Tree Power
Company.

There's precedent for the move. Winter Park, Florida, formed a public
power utility in 2005, after 69 percent of residents voted in favor of
the plan. Since then, it has laid the majority of its electric lines
underground
<[link removed]>,
strengthening storm resiliency.

But other cities have struggled to pull off similar de-privatizations
<[link removed]>.
Boulder, Colorado, recently gave up on its decade-long struggle to take
over its private utility.

Gov. Janet Mills, a Democrat, vetoed a similar utility buyout plan in
2021, after the legislature approved a bill that would have taken the
proposal to Maine voters.

Buying out a private electric utility is a complex business. If the
initiative succeeds at forcing a sale by eminent domain, a court would
likely set a sale price, which would add an "acquisition value" on top
of the "net book value" of the utilities. Estimates of that price have
varied widely, from $5 billion to $10 billion.

Pine Tree Power's advocates are fiercely committed to the fight.
Jonathan Fulford, a carpenter who ran a contracting business, has been
advocating for public ownership for years. Fulford has six
grandchildren, whose future, he said, convinced him to support Pine Tree
Power. "There won't be a future for them that I want them to live
through, if we don't more dramatically, head-on address the problems
leading to climate change," he said.

While Pine Tree Power would be a transmission and distribution
utility-it would not own power generation facilities-supporters say
it could still help make the grid cleaner. For example, they argue, it
would cooperate with solar energy providers who say CMP has snubbed them
<[link removed]>,
making it hard to plug into the grid.

Tina Riley, a master electrician who served in Maine's House of
Representatives from 2016 to 2020, also started off as a supporter of
Pine Tree Power, helping to design an early version of the bill while
serving on the House Committee on Energy, Utilities and Technology.

But the more she studied the legislation, the more her doubts grew. "The
things that we were trying to claim it would do were either wrong, or
uncertain," Riley told the

**Prospect**. In a blog post
<[link removed]>
published last week, she questioned whether Pine Tree Power can deliver
the savings it hopes to capture.

[link removed]

A nonprofit utility like PTP can likely access a lower cost of capital,
through bond financing, than an investor-owned utility, and would not
need to pay profits to shareholders-giving it the ability to charge
lower rates, all else being equal.

But the rates a nonprofit utility can charge on transmission are
typically lower than the rates investor-owned utilities can charge,
Riley wrote
<[link removed]>,
potentially cutting into the savings created by switching to a nonprofit
structure. She cited an independent analysis
<[link removed]> commissioned by the Maine
Public Utilities Commission.

"One of the core tenets of rate design is that rates must be based on
the actual cost of providing service, so the rate for a COU will reflect
its lower cost of capital (as well as its tax-exempt status) as compared
to IOUs," Riley explained.

Lucy Hochschartner, spokesperson for the PTP campaign, disputed that
argument. She said that Riley is echoing the playbook of the
investor-owned utilities, and argued that the nonprofit utility would be
able to charge rates equivalent to those of investor-owned utilities.

Hochschartner cited a paper
<[link removed]>
by utility economist Richard Silkman, and an overview
<[link removed]>
by Maine's Public Advocate, which found it "likely" that "for purposes
of setting New England regional transmission rates, PTP would earn a
return comparable to that of CMP or Versant."

As the Pine Tree Power campaign has gained momentum, investor-owned
utilities have adopted populist talking points to beat back the
proposal.

"Pine Tree Power will actually be owned by Wall Street Banks like
Goldman Sachs," said BJ McCollister, campaign manager of Maine Energy
Progress, in an apparent reference to the buyers of municipal bonds used
to finance public entities. Maine Energy Progress is a political action
committee funded by Enmax. (Incidentally, as recently as last year,
Goldman was Iberdrola's second-largest shareholder.)

WINNING THE SUPPORT OF UNIONS has also proved challenging. Utility
workers at CMP and Versant, represented by IBEW 1837, part of the Maine
AFL-CIO, are opposing the campaign.

Cynthia Phinney, president of the Maine AFL-CIO, previously worked in
the meter department at CMP. She told the

**Prospect** that workers are worried about the company changing hands,
including potential litigation arising from a forced sale. "When an
employer's involved in that kind of uncertainty, it never makes
anything at the bargaining table easy," she said.

Workers' biggest concern is that the PTP initiative would cause them
to be classified as public employees, potentially weakening the union.
Since the 2018 Supreme Court ruling in Janus
<[link removed]>,
public employees have not been required to pay dues to unions
representing them, even when the union bargains on their behalf.

"We know the framers of the bill worked hard to avoid that outcome. They
weren't blind or indifferent to that possibility," Phinney
acknowledged. Indeed, the Pine Tree Power initiative specifies that the
nonprofit utility would hire a private operator. Linemen and other
utility workers would be hired by that private company, in order to
ensure that they remain private-sector employees.

Still, Phinney said, the IBEW has received legal opinions that say they
could be classified as public employees.

If the union is right, they have identified a major political obstacle
to campaigns seeking to convert private utilities to public ownership.
But one labor lawyer's legal opinion, provided to the

**Prospect**by the Pine Tree Power campaign, argues that the utility
workers are wrong to be worried.

Until 1995, the memo explains, when deciding whether it had jurisdiction
over an employer contracted with a government entity, the National Labor
Relations Board (NLRB) studied the relationship to determine whether
"the employer has sufficient control over the employment conditions of
its employees to enable it to bargain with a labor organization as their
representative."

But in 1995, the NLRB abandoned that decision with

**Management Training Corp.**, announcing that it would still exercise
jurisdiction over employees of private companies working under contracts
with federal, state, or local governments.

And just this past summer, the NLRB upheld that doctrine in a case
involving a private employer, Bannum, staffing a halfway house for the
Federal Bureau of Prisons. Bannum argued that the Federal Bureau of
Prisons was liable for back pay
<[link removed]>
that Bannum owed to its employees. The NLRB disagreed, citing

**Management Training Corp.**, and explaining that the private employer
was subject to the National Labor Relations Act. The NLRB, in short, has
continued to treat workers contracted by public entities as private
employees.

Taking a step back from the legal fight, it's worth weighing whether
becoming a public employee is as devastating as some workers feared,
said Nelson Lichtenstein, a historian who directs the Center for the
Study of Work, Labor, and Democracy at UC Santa Barbara.

"

**Janus** did not have as devastating impact as people thought,"
Lichtenstein told the

**Prospect**. "You can fight

**Janus** by just having more effective unions. You don't have to have
an ineffective, passive union."

Utility workers remain unpersuaded.

"The work that was not done, that needed to be done, was building even
better relationships with IBEW," Fulford said. "There was outreach and
connections, but you can't underestimate the value of having a good,
trusting, back-and-forth type of relationship with an important ally."

"You know, hopefully that won't be the few thousand votes that we lose
by," he added.

~ LEE HARRIS, STAFF WRITER

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