On Tuesday, Voters in Maine Get a Chance to Replace For-Profit Utilities With Public Power
Organizers of the ballot initiative hope to improve service and speed up the shift to clean energy by taking profits out of the utility sector
This article was originally published by Canary Media.
Many people, and not just climate advocates, have wished they could make their utility company disappear. On November 7, the people of Maine may actually do that.
A ballot initiative, Question 3, will offer voters an unprecedented chance to revoke the license to operate held by the state’s two for-profit, investor-owned utilities. If this happens, the assets would transfer to Pine Tree Power, a new nonprofit utility that would be owned by all Mainers.
Advocates of the change say enough is enough: Maine’s monopoly utilities are among the least popular in the nation, and changing the system could improve now-unreliable service and lower costs by stripping the profit motive away from electricity provision. In the last few years, a shockingly high percentage of Mainers have received erroneous utility bills, sometimes with devastating consequences for families. Now’s their chance to flip the power dynamic.
This isn’t just about customer service. Initiative organizers say breaking free from utility profit incentives is necessary to reshape Maine’s electricity grid for rapid decarbonization, as required to limit global warming below wildly catastrophic levels. It’s an argument that climate hawks around the country have made: The century-old utility business model stands in the way of real climate progress.
“They just aren’t set up to meet our current moment, that’s not what they were made for,” said Lucy Hochschartner, deputy manager for the Pine Tree Power campaign, in an interview. Improving reliability and costs for customers is “intertwined” with speeding up action to decarbonize Maine’s energy system, she added.
The Sierra Club’s Maine Chapter is among the organizations in favor of the Pine Tree Power Company Initiative.
Central Maine Power and much-smaller Versant together supply electricity to 97 percent of the state’s homes and businesses. They are “wires utilities,” meaning they run grid infrastructure but don’t generate power themselves. But their actions determine how hard or easy it is to install solar projects large and small, or electrify home heating and vehicles—and their current unreliability is a barrier to convincing lots of people to electrify their homes and transportation.
The initiative poses an existential threat to Central Maine Power and Versant, each of which are subsidiaries of a foreign energy holding company: respectively, Avangrid, which itself is owned by Spain’s Iberdrola, and Canada’s Enmax. Their rich parent corporations have supplied roughly $35 million to fight the ballot measure, and thus protect the profits they make from the people of Maine.
The other side’s grassroots operation had only raised about $1 million through September. But recent history suggests the utilities might have reason to worry: The last time voters had a chance to affect utility policy at the ballot box, in a 2021 referendum on a $1 billion clean energy transmission line CMP wanted to build, voters rebuked the utility in a 60–40 split.
In a recent poll by the University of New Hampshire Survey Center, 56 percent of respondents said they plan to reject the ballot initiative, and 31 percent said they would support it. A different poll commissioned by the Climate and Community Project found those camps tied at 37 percent, with 25 percent undecided.
Given the stakes and the money sloshing around, the Portland Press Herald calls the Pine Tree measure “the most-watched issue on the ballot” this year. (It’s an off-cycle election, but that’s still a lot of focus on grid ownership!)
Even if the measure succeeds, it’s far from clear how long it would take to affect the conversion to community-owned power, or whether costs and service really would improve in the end. But in a country where even most utilities that have promised to zero out their carbon emissions aren’t moving fast enough, Maine is considering the most sweeping effort yet to shake up the utility sector’s status quo.
Can Maine actually take over its utilities?
The United States, bastion of capitalism, has found itself awash in entities that defy market competition: utility monopolies. A series of century-old backroom bargains gave them a foothold, but these utilities persist today thanks to franchise rights granted by the state. The Pine Tree Power folks simply want to revoke the rights by which Maine grants monopoly control of the power grid to two deeply unpopular for-profit companies.
But state seizures of for-profit businesses don’t just happen every day in the US, so it’s worth explaining exactly what the initiative proposes and whether it’s even legal to do it.
The utility camp, for its part, is already crying foul about the government taking its assets through eminent domain. But utilities aren’t born with an innate right to monopoly ownership of a particular region: that has to be conferred by the state, which means it can be un-conferred.
Many governments in the US have compelled utilities to sell assets: Late-20th-century deregulation enacted this on a massive scale, forcing utilities to divest from power plants so that competitive market participants could generate electricity instead. Individual utilities have transitioned from for-profit to nonprofit before. And the state of Nebraska even succeeded in converting the entirety of its utility sector to public, nonprofit utilities back in the 1940s.
“We’re really confident in the referendum text and the protections in it and protections in Maine law,” Hochschartner said. “This is constitutional—the process for how this happens is very clearly laid out in the referendum.”
The text specifies an arbitrated process for negotiating a sale price, stipulating a timeframe for that and the likely appeals. If the utilities refuse to sell, though, the state would invoke eminent domain to force a sale.
Would this be good for climate action?
Pine Tree Power represents a bold, even radical strategy to hasten Maine’s progress on its climate goals, which hinge on a smart, well-functioning electrical grid that people broadly trust.
As noted above, CMP and Versant do not build and operate power plants—independent generators do that and bid into the power markets run by the New England independent system operator. The utilities’ job is to deliver electricity to customers. In that capacity, they still control the pace of decarbonization, because they dictate how long it takes to connect new clean power production to the grid and how hard it is to install electric-vehicle chargers or electric appliances like heat pumps. And the current reliability ratings serve as a disincentive to electrify buildings: Nobody wants to rely on the grid for heat in winter if they’re used to the power going out.
“We need a grid that can handle all that new load, and it needs to be reliable,” Hochschartner said.
Pine Tree Power would accelerate the energy transition in a couple of big ways. First, CMP has been known to lobby against solar policy in Maine’s legislature, Hochschartner said; kicking it out could clear the way for passing more assertive clean energy policy.
Second, Pine Tree Power would prioritize preparing the grid to deal with climate change instead of prioritizing the kinds of investments that make the most money for shareholders. CMP has been investigated by state regulators for taking too long and charging too much to connect small-scale solar projects to the grid; last year, it agreed to pay $700,000 to speed things up. In contrast, Pine Tree Power would have a founding mandate to facilitate clean and distributed energy. The initiative text specifically orders it to administer things like net-energy billing (to compensate decentralized solar generation) and non-wires alternatives, a type of modern grid project that saves money by using small-scale energy devices instead of large capital investments in wires and substations.
Changing ownership won’t alter the fact that it’s hard to deliver reliable electricity across thousands of miles of wires through rural, forested terrain prone to intense storms. But non-wires alternatives are particularly notable here because they offer a way to help customers avoid blackouts without plowing tons of money into fortifying long stretches of remote wires.
In fact, not far away, Vermont utility Green Mountain Power has proven just how attractive this strategy can be. GMP, an unusually creative investor-owned utility, subsidizes customers who want batteries in their homes. The household gets backup power when extreme weather knocks out the local grid, and the utility then uses the network of batteries to lower its cost to serve the highest-demand hours in the year. It benefits particular households but also saves money for the customer population collectively.
Most every other for-profit utility has continued to ignore such solutions, which would reduce the amount of profitable grid construction they might otherwise be allowed to do. But if Maine gets a community-owned utility with an explicit mandate to support distributed energy, it has a New England–specific model it could follow as soon as it launches.
Community ownership certainly does not guarantee that a utility prioritizes clean energy. But in places where the customer-owners are engaged and push for ambitious climate action, the structure can move quickly in ways that for-profit utilities almost never do.
Over in Hawaii, the population of Kauai bought out its for-profit utility (a willing seller, in that case) and turned it into a co-op in 2002; it now produces 60 percent renewable electricity, nearly double the rate of its investor-owned peer Hawaiian Electric. Nebraska opted for cooperatively owned utilities decades ago, and democratically elected boards there have adopted 100% clean energy targets in a region where state governments have not done so.
Those are older examples, but more recently, California’s utilities have shed millions of customers to community choice aggregators, which buy cleaner power on behalf of residents, who get to vote for power company leadership. This year, New York passed a Build Public Renewables Act intended to make its legacy public power company a more active player in building climate-friendly infrastructure.
Risks versus rewards in a public-owned utility takeover
The utilities have a clear self-interested reason to fight Pine Tree Power, and they’ve spent tens of millions of dollars trying to prolong their operations in Maine. A different, more interesting critique agrees with Pine Tree’s assessment that Maine’s grid needs fundamental improvements, but posits that scrapping the old utility system and building a new one is risky and unlikely to achieve its goals.
I heard a version of this argument from Gerry Runte, a Democratic state legislator from the southern coastal town of York who has worked for for-profit utilities, cooperative utilities and various clean energy ventures throughout his career. He helped write his town’s climate action plan before he got elected to the statehouse last year; as a legislator, he’s tried to expand performance-based regulations for utilities.
“I’m not here to argue for the utilities or that we need to keep the status quo,” Runte told Canary Media. Instead, he said, “it’s time to really roll up the sleeves and look at the regulatory path, because it doesn’t screw everything else up.”
What he means is that for however many years it takes to hash out a final sale price and any related litigation, and then actually transfer control of the grid assets, Maine would basically be stuck in a holding pattern as far as grid planning and regulation. (Pine Tree Power advocates expect the transfer to take four years.) It would be hard to enact ambitious new reforms—like strengthening a recently adopted performance-based ratemaking structure to better align utility incentives, or modernizing the distribution grid so distributed energy can play a bigger role—without knowing what the future utility structure and leadership look like.
Pine Tree Power organizer Hochschartner agrees that “better regulation is a good thing.” But even strengthening the existing system leaves customers and climate action at a disadvantage, she countered. The century-old regulatory compact was designed to balance the interests of utility customers with the interests of utility shareholders, but utility shareholders have considerably more resources at hand to advance their interests, as starkly illustrated by the fact that utilities have out-fundraised initiative supporters by 35 to 1.
“They’re just too big, and the system was never set up to be working for our people or our planet,” Hochschartner argued.
As for the feasibility, Runte cautions that the advertised savings—“$9 billion over 30 years!” per the Pine Tree Power website—derive from one economist’s assessment of an independent study that was conducted prior to Covid and the disruptions that have radically reshaped cost structures in the utility and clean energy sectors, not to mention the recent rise in interest rates. “It models a future that has nothing to do with reality today,” he said. Runte worries that, if Pine Tree Power wins in November, it will delay achievable grid reforms that need to happen and will ultimately raise costs for customers.
The independent study, by Boston-based firm London Economics, was indeed conducted before the Covid era—at this point, it’s jarring to read that its forecasts of utility expenditures “were completed on the basis of real (2018) dollars.”
As a category, nonprofit utilities have lower electricity rates than for-profit utilities and access to low-cost financing. Not having to pay taxes helps, too. The trick in Maine would be how to get to that lower-cost destination while merging two different utility footprints into one new company under new management, all while improving the grid’s performance.
The London Economics study does not say that Pine Tree Power would definitely save money. Potential savings would be a function of the ultimate payout to acquire the utilities, expenses to set up new operations, and how cheap the new utility’s financing ends up being, among other variables. Maine’s Democratic governor, Janet Mills, opposes the initiative on the grounds that it would be too costly.
Estimates circulating for the market value of both utilities range from $7.2 billion to $13.5 billion, depending on which multiple gets applied to their book value. If the utilities sell for a higher price, and Pine Tree Power’s costs end up heftier than expected, customer savings might never materialize. If the buyout comes in on the low end, customers might pay more in the first decade than they would have without the new utility, but unlock savings in subsequent decades. Or if the key variables all break in Pine Tree’s favor, savings could come sooner.
That leaves plenty of unknowns going into November 7. But if enough people decide that the current energy system is failing them and the climate, they might think it’s worth taking risks to shake it up and try something different. On Election Day in Maine, we’ll learn if an entire state is ready to take that plunge.